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Chron Files November 12-18, 1995 [1]
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Chron Files November 12-18, 1995 [1]
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Records of the Office of Staff Secretary (Clinton Administration)
Todd Stern's Files
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Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001. resume
[Personally Identifiable Information] [partial] (1 page)
11/03/1995
b(6)
COLLECTION:
Clinton Presidential Records
Staff Secretary
Todd Stern
OA/Box Number: 7691
FOLDER TITLE:
Chron Files November 12-18, 1995 [1]
2019-0774-S
rs3298
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information [(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA]
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRA]
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information [(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA]
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions [(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells [(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
THE PRESIDENT HAS
Republican National Committee
Dong smill copy to Sclwen (Du
Haley Barbour
Chairman
review for poss. leveuse
Tuesday Morning hit on ken
MMC
Dear Friend,
We won't be able to defeat Bill Clinton without your continued
support of the Republican National Committee.
That's why I've sent you the enclosed Fact Sheet on the Clinton
presidency to remind you how important it is to elect a Republican
president in 1996.
Please look this Fact Sheet over and share it with your friends and
family to help make sure the Bill Clinton record is exposed and he is
held responsible for his broken promises and liberal policies.
We must not let voters forget about President Clinton's record:
* A broken campaign promise of a middle-class tax cut.
* The 1993 Clinton budget which increased spending and raised taxes
( the largest tax increase in history!)
* Clinton's confused and embarrassing foreign policy flip-flops.
* The Clinton plan to have the government takeover the nation's health
care system.
* The several Clinton Administration figures under investigation by
special prosecutors.
* A hollow attempt to join in the balanced budget debate by proposing a
so-called "balanced budget" that never actually balanced (According to
Congressional Budget Office estimates, Clinton's "balanced budget"
leaves a $209 billion deficit after 10 years).
THESE ARE THE FACTS.
Clinton knows he can't win if he is forced to defend this record --
He has ignored the will of the American people to try to please his
liberal special interest allies.
That's why Bill Clinton has been trying desperately to walk away
from the liberal record his administration has accumulated during the
past two and a half years.
The president's handlers think they can create a "new" Bill Clinton
by manipulating the media coverage and cynically pretending to embrace
Republican themes such as balancing the budget, getting tough on crime
and encouraging family values.
Remember, Bill Clinton is a life-long, professional politician who
will do or say anything to win a political advantage which could aid his
reelection.
And Clinton's first priority is to energize his base of contributors
and activists -- the trial lawyers, labor unions, Hollywood's left and
other liberal special interests.
That's why he and his liberal Democrat allies in Congress are trying
to block the Republican plan to balance the budget. And that's why they
are blocking regulatory reform, tort reform, welfare reform, term limits
and the dozens of other Republican initiatives.
(over, please)
310 First Street, S.E.
Washington, D.C. 20003
202-863-8747
Page Two
The president and the Democrats in Congress are putting politics
before policy regardless of the long-term damage they do to our country.
Bill Clinton has given up any pretense of working with the
Republican Majorities in Congress to solve the nation's problems. He is
doing what he does best, campaigning full-time. He has already raised
over $10 million and he is even running television commercials to try to
rebuild his image.
With over 15 months left until the presidential election, we must
not underestimate Clinton's resolve or his resourcefulness. There is too
much at stake.
For the first time since Dwight Eisenhower won office Republicans
have a chance to win control of the White House and both Houses of
Congress.
We have a chance to put America back on track to expanded freedom
and opportunity instead of continuing down the road to expanded
government and dependence.
The RNC is leading this fight to make our Party the majority Party
at all levels of government! But we can't do it without your continued
active support.
It is going to take an all-out effort by every concerned Republican
to defeat Bill Clinton next year and expand our majorities in Congress.
The national leadership of the Republican Party is counting on your
steadfast support of the RNC to help combat the Clinton/Democrat
onslaught.
I know from your outstanding record of support you are probably
being asked for donations by several organizations and campaigns, but
please remember the RNC is the only organization allowed by law to
directly support and work on behalf of the Republican Party's
presidential nominee -- THE only group.
If you want to defeat Bill Clinton, your continued support of the
RNC is the most effective way you can help.
And we don't have a moment to waste.
That's why I'm hoping you will use the enclosed RNC Member Special
Contribution Reply to send a contribution of $25, $50 or even $100 today
in the postage-paid envelope provided for your use.
You can make a difference --- You've proven that by helping the
Republican Party get where we are today, on the brink of an election
victory which will change the course of history.
So please, look over the enclosed Fact Sheet detailing Clinton's
liberal record, then sit down and make out a check for $25, $50 or even
as much as $100 and send it to the RNC right away.
I look forward to hearing from you soon. Thank you in advance for
your steadfast support of the Republican National Committee and the
candidates of our Party.
Sincerely,
Haley/Barbour, Chairman
P.S. The enclosed Fact Sheet on the Clinton Presidency shows how
important it is to elect a new Republican president in 1996. The
Republican National Committee is leading our Party's nationwide effort to
defeat Bill Clinton, expand our majorities in Congress and elect more
Republicans at all levels of government.
And your support as an RNC member is critical to the success of the
Republican Party's campaign strategy. So please send the largest special
contribution you can in the enclosed postage-paid envelope today. Thank
you.
FACTS ABOUT THE CLINTON PRESIDENCY
This sheet contains facts which dramatically demonstrate the need to elect a
Republican president in 1996. Please read this Fact Sheet and feel free to
make copies and distribute it to your friends, family and acquaintances.
FACT:
In 1992 candidate Clinton promised a middle class tax cut.
FACT:
Clinton began to disavow the need for a middle class tax cut almost immediately after
winning office.
FACT:
During the 1992 campaign Clinton promised to introduce a plan to balance the budget
in five years.
FACT:
Clinton's first major fiscal initiative was to try to increase federal spending by
$16 BILLION in his "stimulus" package which Senate Republicans successfully blocked.
FACT:
Clinton's first veto was used to stop a Republican recission bill which would have
eliminated close to $16 BILLION of unneeded federal spending.
FACT:
The 1993 Clinton budget contained the largest tax increase in the history of the world.
FACT:
The 1993 Clinton budget increased wasteful spending while also raising taxes.
FACT:
Not a single Republican voted for Clinton's 1993 budget.
FACT:
Clinton's first 1996 budget plan did not even attempt to cut the deficit and it was defeated
by the Senate 99-0, with not even a single Democrat supporting it.
FACT:
To try to remain "relevant" Clinton introduced a second budget plan in 1995 which he
claimed balanced the budget in 10 years.
FACT:
Clinton's 2nd 1996 budget plan never reaches a balance. According to Congressional
Budget Office estimates it leaves a deficit of $209 billion after ten years - even larger
than the current federal deficit.
FACT:
Clinton shut down the entire Los Angeles Airport for an hour while he received a
haircut from "Christophe", a Hollywood hairstylist who charges $200.
FACT:
Clinton opposes allowing school choice vouchers which let parents send children to
the school of their choice, yet he sends his own daughter to an elite private school.
FACT:
Clinton promised to have the most ethical administration ever.
FACT:
Secretary of Agriculture Mike Espy resigned and is under investigation by an
Independent Counsel.
FACT:
Commerce Secretary Ron Brown is under investigation by an Independent Counsel.
(over, please)
Please detach this portion and return with your most generous contribution. Thank you.
REPUBLICAN NATIONAL COMMITTEE
SPECIAL CONTRIBUTION REPLY
FROM:
Mr. Glenn Cowan
TO:
Haley Barbour, Chairman
10300 Fawcett St.
310 First Street, S.E.
Kensington, MD 20895-3339
Washington, D.C. 20003
Dear Haley,
I understand that the Republican Party must defeat Bill Clinton and elect more Republicans to all levels
of office in order to fully implement our agenda of change and reform. To help provide the RNC with the
resources it needs to build a winning campaign organization for 1996, I am enclosing a special contribution of:
$25
$50
$100
Other $
Please make your check payable to the Republican National Committee
S5PY08
Contributions or gifts to the Republican National Committee are not deductible as charitable contributions for federal income tax purposes.
FACT:
Transportation Secretary Henry Cisneros is under investigation by an Independent
Counsel.
Counsel.
FACT:
Webster Hubbell, a former law partner of Hillary Clinton, was the number two official at
the Justice Department until he had to resign to return to Arkansas and face felony charges
of mail fraud and tax evasion. He is now a convicted felon and must serve 21 months in
prison.
FACT:
The Clinton Administration denied a request for heavy armored vehicles for troops
stationed in Somalia just weeks before the shoot-down of U.S. helicopters in territory
unreachable with the equipment available. Over a dozen Americans died in the incident.
FACT:
The Chief White House Counsel resigned in disgrace after reports of improper contacts
between the White House and the Treasury Department were revealed in Senate hearings.
FACT:
President Clinton spent millions of taxpayer dollars to develop and try to implement a
huge, bureaucratic plan to have the government takeover and run our nation's health care
system.
FACT:
According to Clinton himself, his biggest achievement has been to start the AmeriCorps
program. This make-work government program created a new bureaucracy which costs
an average of $27,000 in direct payments, overhead and government benefits for each
volunteer it oversees.
FACT:
Clinton promised to "end welfare as we know it" during the 1992 campaign, but his
welfare reform plan was simply to spend more on the existing, failed, big-government
programs. He has proposed no welfare reform legislation to the Congress.
FACT:
Clinton has gradually escalated the U.S. military role in Bosnia.
FACT:
America is widely perceived to have lost prestige and influence with our allies because of
Clinton's various flip-flops and vague foreign policy.
FACT:
President Clinton is threatening to veto Republican budget plans because they do not
increase spending as much as Clinton would like.
FACT: Despite the report from the Medicare Trustees that the Medicare Trust Fund will go
bankrupt in seven years if nothing is done, Clinton opposes Republican efforts to protect
and preserve Medicare, and Clinton has refused to offer any plan of his own.
FACT: Clinton came to office promising to win the war on drugs, yet he slashed the federal
Drug Czar office by 83% -- And drug use by the nation's youth is up.
FACT:
As a candidate, Clinton promised to reduce regulation and red-tape, yet his
administration has produced over 66,000 pages of new rules and regulations.
FACT:
AMERICA CANNOT AFFORD FOUR MORE YEARS OF THESE KIND OF FACTS!
FACT:
Your active support of the Republican National Committee can elect a Republican
president in 1996.
Paid for by the Republican National Committee
310 First Street, SE Washington, DC 20003
Contributions or gifts to the Republican National Committee are not deductible
as charitable contributions for federal income tax purposes.
FEC INFORMATION:
CREDIT CARD INFORMATION:
Paid for by the Republican National Committee. Funds
You may make your 1995 contribution to the RNC by credit card
received in response to this solicitation will be deposited in
if you choose by completing the information below:
the RNC's federal account unless otherwise prohibited.
Type of Credit Card:
Personal
Corporate
Federal election law requires us to report the following
VISA
MasterCard
information:
American Express
Credit Card Number:
Occupation:
Expiration Date:
Employer:
Name as it appears on Card:
Please check if self-employed.
Signature
Telephone number (optional):
Amount of Contribution: $
THE WHITE HOUSE
WASHINGTON
OFFICE OF LEGISLATIVE AFFAIRS
FAX COVER SHEET
NOTE:
THE INFORMATION CONTAINED IN THIS FACSIMILE MESSAGE
IS CONFIDENTIAL AND INTENDED FOR THE RECIPIENT ONLY.
DATE:
11.10.95
TO:
Phil
FAX #:
FROM:
JOCELYN M. JOLLEY
456-7500 (TEL)
456-6221(FAX)
Diskied
RE:
Event thank you's
11-14-95
Jim.
my etc to are
in re'd. Feel
free to use DR
not use other
idets.
F
PAGE 1 OF 7
If there are any problems with this transmission, ple
FAX SENT:
DRAFT
outstending
Dear 1~:
achievement
(Hilling and
Thank you for joining me at the White House for the recent
presentation of the Presidential Medal of Freedom. Your presence
meant a great deal to me.
rewarded
Since its inception, this medal has represented the
remarkable service and indelible spirit of individuals Americans
Then, as now we celebrate people who have always been for change
America
and who have changed America for the better.
this Nation
H
seeing you aga
I am grateful for your perspective and look forward to your soon
continued involvement.
Sincerely,
Anyortime
I was so
& pleased able that
The Honorable 2-
3~
you were join LL with
Washington, D.C. 20514~
ns to in homaing
This yesk's
DRAFT
Dear 1~:
Thank you for joining me at the White House for the recent
observance of National Domestic Violence Awareness Month. Your
presence meant a great deal to me.
IS
As I said in my remarks, it is time to recognize that
domestic violence can quickly and easily become criminal violent
activity that affects us all, regardless of our race, our income,
or our age, regardless of where we live, or what we do. It is
my hope that we will lead the way to guarantee women and their
children à safe life and a chance at a good, constructive family.
lives and hope lar the leture.
I am grateful for your support and look forward to your
continued involvement.
Sincerely,
(re the keey sent & to all
Supporters!
The Honorable 2-
3~
Washington, D.C. 20514~
Isn't domestic HOW violence
already criminal activity how
Aucs it herome commin!
DRAFT
Dear 1~:
from
Thank you for joining me at the White House as I accepted
the Final Report of The Advisory Committee on Human Radiation
Experiments. Your presence meant a great deal to me.
The report is a very important piece of America's history
and it will shape America's future in ways that will make us a
more honorable, more successful and more ethical country.
Through this investigation, we have recognized that there is a
right way and a wrong way to do research. I am committed to
seeing to it that the United States of America lives up to its
responsibility.
I am grateful for your support and look forward to your
continued involvement.
Sincerely,
human subpet
(searth
of
The Honorable 2~
3~
Washington, D.C. 20514~
DRAFT
Dear 1~:
Thank you for joining me at the White House for the recent
presentation of the National Medal of Arts. Your presence meant a
great deal to me.
are
This medal represents the best of America in the Arts and
Humanities field. The honorees were a distinguished group of
Americans who lived their lives as builders -- bringing people
enlightenment and enjoyment while advancing the cause of human
knowledge and understanding, and the joy in life.
I am grateful for your support and look forward to your
continued involvement.
Sincerely,
all Suppoker. ct
the event?
another word this
of
The Honorable 2-
dusn't sand nght
3~
Washington, D.C. 20514~
DRAFT
Dear 1~:
Thank you for joining me at the White House for the Second
AmeriCorps Swearing-In Ceremony. Your presence meant a great
deal to me.
such
=5
AmeriCorps proves that the American idea is alive and well
and can meet the challenges of the 21st century CO to restore our
values to strengthen' us at the grass roots level. It is not
only consistent with our values and a good thing to do, it also
and
happens to be cost-efficient stt and it works. effective.
is
I am grateful for your support and look forward to your
continued involvement.
Sincerely,
gods as a Nation
f
The Honorable 2~
3~
Washington, D.C. 20514~
DRAFT
Dear Senator 1~:
Thank you for joining me at the White House for the recent
presentation of the National Medal of Science and Technology.
Your presence meant a great deal to me.
have
Those honored made great contributions to science and
technology that have enriched the United States along with the
entire world. All of them have performed research that will pay
off richly for the United States in the 21st century. The
achievements of these people give us confidence that the United
States will continue to lead in science and technology for many
years to come.
I am grateful for your support and look forward to your
continued involvement.
Sincerely,
3
The Honorable 2~
United States Senate
Washington, D.C. 20510
DRAFT
OK
Dear Senator 1~:
Thank you for attending Secretary Riley's Direct
Lending press conference last week. As you know, I
strongly oppose the Congressional majority's efforts
to eliminate or cap the Direct Lending program. This
program works and should not be subjected to partisan
politics and special interests.
I am grateful for your perspective and look
forward to your continued support of this important
program.
Sincerely,
The Honorable 2~
United States Senate
of
Washington, D.C. 20510
To: Phil
FROM: JOCELYN
-pu Poius' request.
THE WHITE HOUSE
WASHINGTON. D.C. 20500
DATE: 11-14
Leon
TO: Harold
Geor Alexis I
FROM: Staff Secretary
Fyl.
Todal
8148
THE WHITE HOUSE
WASHINGTON
95NOV 14 P5 : 02
INFORMATION
November 14, 1995
MEMORANDUM FOR THE PRESIDENT
FROM:
ANTHONY LAKE
SUBJECT:
Captain Everett L. Greene's Fitness for Promotion
There have been several news articles about Secretary of the Navy
John Dalton's preliminary decision to recommend that you remove
Captain Everett Greene from the promotion list to flag rank.
In February 1995, you nominated Captain Greene, a minority and
male Navy officer, for promotion to Rear Admiral. In March 1995,
Lt. Felix, a female officer, stated she had been sexually
harassed by Captain Greene while formerly assigned to his
division. His nomination for Rear Admiral was then placed on
hold at the Senate with White House concurrence.
The Navy's investigation found that Captain Greene went beyond
permissible bounds of conduct expected of a senior officer as
well as toward another subordinate female officer, Lt. Castrucci.
Captain Greene refused non-judicial punishment and requested a
court-martial. Charges of fraternization, sexual harassment and
conduct unbecoming an officer and a gentleman were preferred
The judge dismissed the charges on the offenses concerning Lt.
Castrucci for lack of evidence. The members of the court-martial
then acquitted Captain Greene of all charges concerning Lt.
Felix, unconvinced of proof beyond a reasonable doubt.
Some contend that the not-guilty verdict vindicated the propriety
of Captain Greene's conduct and that the Captain should remain on
the flag promotion list. However, the Secretary of the Navy has
a statutory responsibility to forward his recommendation to the
President regarding the qualification of each nominee.
After a review of the courts-martial testimony, the Secretary
determined that the gravity of the errors and character flaws
exhibited by Captain Greene are significant and could cause an
erosion of confidence in his leadership:
Request for sex. Captain Greene testified that Lt. Felix
requested to engage in sexual relations. It is inappropriate
CC: Vice President
Chief of Staff
2
for a senior officer, confronted with a junior subordinate who
has requested sex, to then encourage a very close personal
relationship.
Warnings to stop. Captain Greene continued to pursue close
personal relationships with Lt. Felix and Lt. Castrucci
despite repeated warnings to stop from the two women officers,
his seniors and peers. A prudent senior officer would have
immediately modified his behavior and/or leadership style.
Letters. Captain Greene used sentiments such as "adored" and
"made my dreams come true" in letters to Lt. Felix, and made a
familiar allusion to the sexual offer allegedly made by the
Lieutenant. If this relationship was professionally based,
Captain Greene should have explained that further personal
contacts were improper and must cease immediately.
Impact on subordinates. There were repeated signs that
Captain Greene's relationships with the two women -- viewed
within his division as extending preferential treatment -- had
a detrimental impact on unit cohesion and morale, and a senior
officer should have easily recognized this.
Secretary Dalton determined that Captain Greene engaged in an
unduly familiar relationship with Lt. Felix, "pestered" Lt.
Castrucci in a manner unbecoming a senior officer and displayed a
poor sense of discretion and judgment despite repeated warnings
to change his behavior. As a result, the Secretary no longer has
full trust and confidence in Captain Greene's qualification to be
a flag officer.
The Navy informed Captain Greene on Monday, November 6, that the
Secretary was considering a recommendation for his removal from
the promotion list. Because of due process, including the
Captain's right to submit comments for further review by the
Secretary, a final recommendation to you is not expected for
several weeks.
Shouldn'this
go to Joolyn
to a handlea
response ? response
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OK- + but
w) CL to
Tion S Reating
United States Senate
WASHINGTON, DC 20510-0703
OFFICIAL BUSINESS
THE PRESIDENT HAS SEEN
J hilm U.S.S.
11-10-95
won! lowa very
The Honorable William J. Clinton
President of the United States
good gium tub Bow on BY
1600 Pennsylvania Avenue, NW
Washington, DC
JOSEPH I. LIEBERMAN
THE PRESIDENT HAS SEEN
SENATE OFFICE BUILDING
CONNECTICUT
WASHINGTON, DC 20510
COMMITTEES:
11-10-95
(202) 224-4041
STATE OFFICE:
ARMED SERVICES
ONE COMMERCIAL PLAZA
ENVIRONMENT AND PUBLIC WORKS
United States Senate
21ST FLOOR
GOVERNMENTAL AFFAIRS
HARTFORD, CT 06103
SMALL BUSINESS
WASHINGTON, DC 20510
203-240-3566
TOLL FREE: 1-800-225-5605
November 9, 1995
The Honorable William J. Clinton
President of the United States
1600 Pennsylvania Avenue, N.W.
Washington, D.C.
DETERMINED TO BE AN ADMINISTRATIVE
PERSONAL AND CONFIDENTIAL MARKING INITIALS: MI DATE: 9/14/14
2019-0774-5
Dear Mr. President:
The pending budget reconciliation legislation may present an opportunity, in the "end
game" stage, for moderate Democrats to alter the tone and substance of the budget debate in a
positive way. In particular, it may present you an opportunity to put your stamp on this
legislation, and take credit for some new important provisions. These provisions could, in
turn, make the bill more palatable to Democrats, and help encourage some in our party to
accept the legislation.
From the perspective of most moderates in Congress, the outlines of a compromise
seem fairly clear: a softening of the cuts in Medicare, Medicaid, student loans and the EITC,
combined with a CPI adjustment and a reduced but still significant tax cut package (including
capital gains and a middle-class credit). Obviously, many, and probably most, Democrats still
will be reluctant to vote for such a package. A key question is whether you could negotiate
some "enhancements" that could significantly improve the package and make it more
acceptable to the party.
Below are three initiatives I have been involved in that I believe could be of use to
you. I hope you will consider actively supporting them. I believe these "enhancements"
would not only improve the package but would find signficant Republican support as well.
Enterprise Zones: I understand from Pat Griffin that you are considering a new
enterprise zone initiative at the time of your State of the Union address. Allow me to suggest
a modification of that timetable. I understand that the Republicans are working on an urban
enterprise initiative for the beginning of January as a major part of their new legislative
agenda for next year. Since your proposal would be announced a number of weeks later, their
proposal could diminish the freshness of your own.. In addition, the big tax legislation is
scheduled for this year, with no tax bill next year, so funding is available for an initiative
now, and is unlikely to available later. Put simply, we have money on the table now, and
nothing in 1996. It seems to me you could take advantage of this situation. You could insist
on an enterprise zone tax provision in the budget reconciliation negotiations, using, say,
$5 billion of the huge tax numbers under consideration, and get credit for having achieved
something very significant for the economic recovery of our cities; you could also use this
provision to help bring around Democrats. You could still go with an additional initiative in
January, building on what you may be able to achieve in the budget bill now.
I've been working with Senator Spencer Abraham on an enhanced enterprise
community bill, S. 1252. Building on the enterprise community and empowerment zone
initiative you helped finally get off the ground in 1993, we are working to provide additional
tax and housing incentives to the approximately 100 areas already designated by your
Administration as enterprise communities, but which (unlike the nine empowerment zones)
received minimal financial benefits. Joining us as cosponsors of this bill are Senators
Moseley-Braun, Breaux, DeWine, Santorum and Frist. We have strong bipartisan support
from the left and right wings of both parties. The mayors also have been giving us a lot of
support and help.
Jack Kemp observed a few weeks back at a hearing on S. 1252, "absent in all of the
talk about the budget legislation has been one important word: 'jobs." As he put it, "The
real train wreck is what those 400,000 men were saying on the Mall a few days ago: that
there are not enough jobs in America. We are not creating enough opportunities for people to
become entrepreneurs, to become owners, to become homeowners, to become business
owners. To get jobs not only as truck drivers, but someday to own the truck and maybe start
a little trucking company." I know that you strongly believe we ought to be doing more to
help economically distressed urban and rural areas in this country. You've made a good start
by identifying a number of those areas as enterprise communities and empowerment zones.
Now, I think you could use the opportunity of this tax bill to do more. I'd like to help in that
effort to build on the work we started in 1993, sooner rather than later. I think there is strong
Republican support that could help get this done, if you propose it.
Savings/Investment Initiative ("Kidsave"): I'd also ask that you take a look at
"KidSave," a proposal I've been working on with Senator Bob Kerrey, to transform the $500
middle-class tax credit being considered by the Conrgess into a long-term retirement savings
account. KidSave allows parents to set aside an annual $500 credit in an IRA in their child's
name. The tax-deferred account would be governed by IRA rules with one exception:
children would be allowed to take a ten year loan against this money for their higher
education. Thanks to the wonders of compound interest, $500 a year set aside from birth to
age 18 would, at ten percent interest a year, grow to $1.3 million by the time the child
reached age 59½, the age at which IRA funds can start to be withdrawn with no penalty. To
Good
paraphrase Huey Long, you could make every kid a king. More important, this proposal
would transform what is yet another consumption-oriented entitlement program, into a long
term savings and investment vehicle. In a comparatively short time it would become the
largest savings pool in the world. Given our disasterously low national savings rate, it could
become a critical investment in our future.
Like you, I believe that one of the greatest challenges we face is how to create
economic opportunity and wealth for the working families of this country. We both
understand that Congress is divided between those who would like to cut taxes for middle-
class families now and those who would prefer to balance the budget first. I believe that
KidSave can bridge that divide because it is a better kind of tax cut, one that helps us address
the nation's savings and investment crisis even as it provides tax relief. It achieves the same
economic goal as balancing the budget: promoting savings. And best of all, unlike any other
proposal, KidSave gives our children a tangible, financial head start on the rest of their lives.
I also understand that political realities may be such that Kidsave would have to be
offered as an option to a $500 credit for parents. If that were the case, I would suggest that
parents who opt to save for their children's future through KidSave be offered a "sweeter"
incentive to do so, say $650 or $700. As I understand it, Laura Tyson and her staff are
looking closely at this proposal and believe this proposal could be economically important.
Both the Concord Coalition and the AARP have endorsed it - practically the first time they
have agreed on anything. It could be a major new initiative that you could take credit for in
the "end game" that would be very attractive to the middle class, and acceptable to most
Republicans (both Roth and Domenici are likely supporters).
Capital Gains: Obviously, our party is going to have difficulty swallowing a capital
gains tax cut. However, as you know, I have long supported such a cut and I'm delighted
that you have left the door open on this issue. First, I believe that the Republicans will have
to have a broad-based capital gains provision for a compromise to be accepted by their party.
Second, I believe the additional "targeted" feature in the Senate capital gains version could
give you a sound reason for accepting a broad capital gains provision. The targeted feature in
the Senate bill is modelled on the provisions you advocated in your 1993 legislation,
providing an additional capital gains cut for investors who are willing to invest in riskier new
issues of small business stock. You are strongly identified with a targeted capital gains cut
and I think you can rightly claim this provision as your own. As you know, IRS regulations
blocked the full implementation of your provision; the Senate targeted provision corrects these
problems. I believe the Republicans, led by Sen. Hatch, would support you if you insisted on
this provision. While I can't promise you that a broad based capital gains tax would ever be
embraced by most of our party, the targeted feature may help make a capital gains provision
more acceptable since there have been numerous Democratic supporters of this approach in
both Houses of Congress.
In spite of all of the talk of class warfare, I know you recognize that a capital gains
cut is distinct from a cut in income taxes: we are not cutting income taxes for the wealthy,
we are cutting the rate at which we tax people who are willing to invest their money in places
where that investment has benefits for our overall economy. Additionally, it bears repeating
that anyone with money in a mutual fund or with a stock purchase plan at their workplace has
a stake in the capital gains debate. In 1994 alone, at least 310 large companies with over 8
million workers offered all of their employees the right to acquire company stock. Each of
these workers and their spouses and their children stand to gain from a cut in the capital gains
rate.
I believe that all three of these proposals are very much in keeping with your idea of
encouraging citizens to act in the public interest as well as their own interest, through
incentives, rather than through new and often duplicative social programs. I think these three
"enhancements" could be helpful in generating support in our party for a compromise that you
are going to have to engineer. If you are interested, would be delighted to talk to you or your
staff about them further as the process moves forward, if you are interested.
Sincerely,
Joseph I. Lieberman
WITH , It even COOD WISH
HE HAS N
PRESIDENT HAS SEN
-
Bach to
Ralum
THE PRESIDENT HAS SEEN
THE WHITE HOUSE
WASHINGTON
95 NOV 2 P8:41
November 2, 1995
MEMORANDUM TO THE PRESIDENT
From:
Bruce Reed
Rahm Emanuel
Dennis Burke
Subject:
The "Safety Valve" and mandatory minimums
You had mentioned that Director Brown believed you had incorrectly stated the law
on the "Safety Valve" for mandatory minimums in your Roundtable with the Trotter group on
Wednesday.
We have checked the transcript from that meeting and believe that you made a minor
misstatement of the law but it by no means had any bearing on your argument.
Your Crime Bill created a "safety valve" to permit judges to apply the sentencing
guidelines rather than the statutory mandatory minimum penalties in cases of first-time, non-
violent drug offenders. During the interview, you had stated that the judge could ignore the
guidelines under the safety valve. However, under the safety valve, what the judge is
t
ignoring is the mandatory minimum which is the real issue in this whole debate -- and
applying the guidelines instead, which results in lesser sentences. This is a very minor
misstatement that does not effect the thrust of your argument.
Without the safety valve, a defendant convicted with 5 or more grams of crack cocaine
would have to serve -- at the minimum -- 5 years. However, the safety valve provides an
exemption from that mandatory minimum if the defendant 1) doesn't have a significant
criminal history; 2) did not cause death or seriously bodily injury; 3) was not an organizer,
leader, manager or supervisor; and 4) provided information about the offense to the
Government.
The Sentencing Commission predicts that around 600 defendants - -- which will be
about 3.6% of all drug defendants --- will be sentenced under the safety valve this year and
that it will result in an average reduction in a person's sentence of 25%.
These facts support the thrust of your argument to these reporters -- you believe that
crack should be punished harsher than cocaine powder; our U.S. Attorneys are in reality
busting high-level crack traffickers and not first-time offenders; and you enacted real
sentencing reform in last year's crime bill with your "safety valve" provision.
OFFICE OF THE STATE PRESIDENT STATES WIN UNITED
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF NATIONAL DRUG CONTROL POLICY
Washington, D.C. 20503
NOV - 2 1995 95 NOV 3 P/2 : 22
MEMORANDUM FOR THE PRESIDENT
FROM:
LEE P. BROWN
R
RE:
CRACK PENALTIES
After our discussion this morning at the CADCA event, I reviewed
the sentencing provisions of the 1994 crime bill, the Violent
Crime Control and Law Enforcement Act of 1994, ("the Act")
to ascertain how the crack cocaine sentencing issue was addressed
in that law.
Crack Provision
Section 280006 of the act directed the United States Sentencing
Commission to submit a report to the Congress relating to
sentences applicable to offenses involving the possession or
distribution of all forms of cocaine. The study specifically
directed the Commission to address the differences in penalty
levels that apply to different forms of cocaine, and include
recommendations that the Commission may have for retention or
modification of such differences in penalty levels.
This directive resulted in the February 28, 1995, report to the
Congress that contained the recommendation that the current 100-1
ratio disparity between crack and cocaine which triggers a 10
year mandatory sentence under 21 USC 841 be reduced, and that the
penalty structure for simple possession which provides for a
mandatory five-year penalty for simple possession of crack but a
statutory maximum penalty of one year for simple possession of
any other drug also be reviewed. Subsequently, the commission
recommended that the penalty for crack crimes be reduced and
brought into line with penalties for powder offenses.
The Congress rejected the recommendation of the Sentencing
Commission concerning crack penalties in S.1254, which was signed
on October 20, 1995.
Limits on Mandatory Minimums
In addition, the Act in section 80001 amended Title 21 by
providing a new provision that limits the applicability of
mandatory minimums. This is commonly referred to as the safety
valve provision. It provides that in cases where mandatory
minimums would apply, the court may depart from the statutory
minimum if it finds:
(1) the defendant does not have more that 1 criminal history
point under the sentencing guidelines;
(2) the defendant did not use violence, credible threats of
violence, or a firearm or dangerous weapon in connection with the
offense;
(3) the offense did not result in death or serious bodily
harm to any person;
(4) the defendant is not a leader or organizer of the
offense under the guidelines, or engaged in a continuing criminal
enterprise; and
(5) that the defendant has fully cooperated with the
Government concerning information the defendant has concerning
the offense.
The Sentencing Commission recently promulgated regulations to
carry out the safety valve provision which provide if a defendant
meets the test promulgated by this section, the judge may drop
the sentence down two levels under the guidelines.
Conclusion
While the safety valve provision may provide relief to some
defendants who are subject to the current mandatory crack
penalties, this provision applies to all Federal criminal
defendants facing mandatory minimum sentences and does not
address the underlying disparity in the law between crack and
powder cocaine. Also, it permits judicial discretion and
therefore is not mandatory. It is the underlying disparity
between crack and powder cocaine that is the subject of intense
criticism from the Congressional Black Caucus, the media, and
other concerned parties.
I trust this is helpful, and look forward to working with you on
this matter.
SENI DI.VITICE VI SECRETARY
, 0.00AM
L/VL
C
NOV - 2 1995
THE PRESIDENT 11-14-95 HAS SEEN
MEMORANDUM TO THE PRESIDENT
FROM: RBR
RE: Suggested speech/ radio address
aood of as mulb grutty
95NOV/2 P4: 28
Lifting wages.
"I'm proud of the 7 and a half million new jobs created under my
administration. I'm proud that we've halved the deficit. I'm proud that
we've restored economic growth and productivity.
"But I'm mad as hell that ordinary workers haven't yet seen this in
their paychecks, and I'm going to fight to make sure they do. My
strategy for lifting wages is four-fold: (1) give everyone a chance to get a
good education and acquire job skills; (2) raise the minimum wage; (3)
cut taxes on low-wage workers; and (4) bring workers into true
partnership with employers, giving them bonuses when company
profits rise (instead of pink slips).
"The Republican majority wants to move in the opposite direction.
They aim to cut funding for education and job training by over one-
third. They won't raise the minimum wage. They want to raise taxes on
workers earning under $30,000. And they want to give corporations big
tax breaks without asking anything in return.
Attachment: Recent speech of Alan Greenspan. Note esp. PP 6-8.
For release on delivery
8:15pm C.D.T. (9:15pm E.D.T.)
October 19, 1995
See pages:
6-8 in
particular
Remarks by
Alan Greenspan
Chairman, Board of Governors of the Federal Reserve System
before
The Economic Club of Chicago
Chicago, Illinois
October 19, 1995
I appreciate this opportunity to address The Economic
Club of Chicago. Your organization, founded nearly 70 years ago,
has a well-established reputation as a valuable forum for
discussion of some of the key economic issues facing the Midwest
and the Nation. Tonight I hope to continue that tradition by
stepping back from the narrower concerns that occupy much of my
time to consider some of the fundamental factors that may shape
our nation's economic future, perhaps well into the first decade
of the twenty-first century.
Ancient soothsayers may have been able to penetrate the
future, but unfortunately they chose to vouchsafe precious few
tricks of their trade to today's central bankers. The most
effective means we have for looking over the horizon is to try to
identify which of the forces currently driving our economy are
transitory and which are deep seated and likely to persist in the
longer term.
One major deep-seated force that we can identify with
some assurance is the trend toward an increasing conceptual
content of output--the substitution, in effect, of ideas for
physical matter in the creation of economic value. The roots of
this trend lie deep in human history, but the pace of such
substitution probably picked up in the early stages of the
industrial revolution, when science and machines created new
leverage for human energy. Nonetheless, even as recently as the
middle of this century, the symbols of American economic strength
-2-
were our output of such products as steel, motor vehicles, and
heavy machinery--items for which sizable proportions of
production costs reflected the value of raw materials and the
sheer manual labor required to manipulate them. Since then,
trends toward conceptualization have focused today's views of
economic leadership increasingly on downsized, smaller, less
palpable evidence of output, requiring more technologically
sophisticated labor input. Our radios used to be activated by
large vacuum tubes; today we have elegantly designed pocket-sized
transistors to perform the same function--but with the higher
quality of sound and greater reliability that consumers now
expect. Thin fiber optic cable has replaced huge tonnages of
copper wire. Advances in architecture and engineering, as well
as the development of lighter but stronger materials, now give us
the same working space but in buildings with significantly less
concrete, glass, and steel tonnage than was required in an
earlier era.
The process is interactive. The development of the
insights that brought us central heating enabled lighter-weight
apparel fabrics to displace the heavier cloths of the past. The
breakthroughs in medical research that have revolutionized health
care are only the beginning of a long and growing list of almost
wholly conceptual elements in our economic output. Indeed, it is
perhaps the hallmark of our age that people are talking about
substituting computerized "virtual reality" for real-life
experiences!
-3-
These innovations are the extension of an established
and likely irreversible trend. Over the past century, our
standard measure of output of goods and services, adjusted for
price change, has increased by approximately three percent per
year, but the actual physical tonnage of that output has gone up
significantly less. The difference reflects the substitution of
impalpable concepts for physical volume. The expanding
conceptualization of output has also led to a cumulative buildup
of productive capital, which has meant less labor input per unit
of output. This is a key to increasing productivity and, with
it, our standard of living.
The process of conceptualization in output would seem
to have accelerated in recent decades with the advent of the
semiconductor, the microprocessor, the computer, and the
satellite. Under the circumstances, it has puzzled many of us
that the growth of output as customarily measured has not
evidenced a corresponding pickup. of course, output may not be
measured correctly--a subject I shall return to later. But it
also is possible that some of the frenetic pace of change is
wheel spinning--changing production inputs without increasing
output--rather than real advances in productivity.
A number of commentators, particularly Professor David
of Stanford University, have suggested that much of the wheel
spinning, if that is what it is, reflects the long time it
typically has taken to translate a major new technology into
increased productivity and higher standards of living. For
-4-
example, electric power, an innovation of the late nineteenth
century, apparently did not fully show through in our
productivity data (and one must presume our productivity) until
the 1920s. Major infrastructure investments and other changes
were needed to realize the potential of the new technology. The
same may well be true of modern information technologies: New
ways of doing business may be necessary to fully exploit the
computing and communications tools now at our disposal.
In any event, realizing the full potential of these
powerful new technologies is going to depend on the prevalence of
another fundamental of economic growth--competition. We seem to
have learned in recent years that growth can be hobbled by
unnecessary or poorly designed regulation and by protection of
business through barriers to free trade within a country and with
other countries. Indeed, the unquestioned lesson of the failures
of economic development in Eastern Europe after World War II is
that government central planning, was incompatible with a vibrant
economy. It suppressed the forces of competition and, almost
surely as a consequence, stifled economic progress and growth as
well. Virtually all of those countries are now endeavoring to
build free-market, competitive economies as rapidly as possible.
The incentives associated with a competitive market are
critical in determining the degree to which our endowments of
natural resources and human skills are turned into wealth. If
market forces are inhibited, wealth creation is almost certain to
be disappointing.
-5-
It is almost surely the case that the development of
the computer industry has done more to enhance the efficiency of
American business generally than any other recent phenomenon.
While the early development of mainframe computers was heavily
concentrated in large corporate enterprises, the industry as we
know it today owes much to the subsequent birth and growth of
many smaller and more dynamic firms.
It is hard to imagine a more competitive environment
than that which developed around the scores of small, "garage"
based firms that advanced PC and workstation technologies and
created the software that was needed to make computers more
useful and "user friendly." These firms have created an industry
that is the envy of our trading partners. Many of these garage
firms went down the wrong path and fell by the wayside. Even the
most successful remain vulnerable to the next successful
innovation by a competitor. Schumpeter's view of creative
destruction is nowhere more evident than in Silicon Valley. Our
world leadership in computing doesn't reflect any government
industrial policy; and fortunately, there has been no
constraining set of regulations that might have stifled it.
If our superiority in producing computer-based
technologies persuasively demonstrates the continuing vitality of
our economy, why does such a large part of our populace seem
discontented and insecure? There are doubtless many reasons, but
the very pace of the conceptualization process I described
earlier may provide at least a partial explanation.
-6-
As computers and various advanced telecommunications
technologies have begun to dominate what it is we produce and how
we produce it, the average age of our capital stock has undergone
a significant decline. Our current capital stock is becoming
obsolete far more rapidly than in past years.
The rapid turnover of this capital stock, and the
concepts embodied in it, has important implications for the
persons working with that capital. To keep up, to retain their
full usefulness as operators of capital, workers are having to
retool their knowledge and skills to match the accelerated pace
of change. Job insecurity has grown as significant elements of
our work force are being rendered technologically obsolete. This
is clearly much more the case for older workers than their
children who seem to have adjusted to the "computer age" much
more readily.
Expanding globalization with its attendant increasing share
of merchandise imports may also be adding to a sense of increased
competitiveness and insecurity. But globalization directly
cannot be a big player because it affects only a relatively small
part of our work force--factory jobs, which account for fifteen
percent of total employment, and some service activities.
Job insecurity, of course, is not a new phenomenon. It
has always been prevalent in free labor markets. But it appears
to have become particularly pronounced in recent years, perhaps
because the rapid pace of technological change, has occurred
alongside, and been associated with, the highly publicized
-7-
downsizing of many large corporations. Overall job growth has
remained substantial despite these layoffs, but that seems not to
have relieved the fear of displacement. And that fear has
doubtless played a significant role in the slowdown in the growth
of labor compensation as workers have in effect sought to
preserve their jobs by accepting lesser increases in wages.
While disciplined monetary policy is largely responsible for the
disinflationary trends of the last fifteen years, subdued wage
pressures have doubtless facilitated those trends.
This
is
There will eventually come a point, however, when
who
was
workers will perceive that it no longer makes sense to trade off
wage progress for incremental gains in expected job security.
picks up k
The concern about job loss will not have diminished, but there is
the
pres
a limit to how far it can go and hence to its effect on wage
increases. At that point, efforts to achieve real wage gains at
least commensurate with productivity improvements may exert
pressures toward faster nominal wage increases.
Obviously, if an acceleration is accompanied by stable
inflation and hence a growth in real earnings, that is all to the
good. But we have to be careful not to lull ourselves into the
presumption that somehow the institutional structure of the
American economy and its increasing globalization is permanently
suppressing inflation, and that monetary policy, as we move into
the twenty-first century, need no longer be vigilant against
inflationary pressures.
Heres the
-8-
part or
Also contributing to the prevailing dissatisfaction educate and
with our economic performance is the (unevenness of wage gains in
trae
recent years. As output increasingly embodies ideas, labor force
adaptation requires education. Not surprisingly, there has been
a trend toward rising relative wages for those with higher levels
of education. During the past fifteen years, the earnings of
college graduates have increased relative to those who are high
school graduates and, in turn, high school graduates have
continued to open up their advantage over those who are high
school dropouts. In fact, an increasing minority of our labor
force has experienced real wage decreases, and surely this fact
has accentuated unease, despite increases in living standards, on
average, for our populace.
Clearly, we must focus on ways to improve the skills
and earning power of those who appear to be falling behind. We
need to raise the supply of better educated workers if the recent
trend toward rising wage dispersion is to be contained. In the
long run, better child-rearing and better schools are essential.
But in the shorter run, on-the-job training is a critical
necessity--to overcome the educational deficiencies of all too
many of our young people, and to renew the skills of workers who
have fallen behind the rapidly rising curve of technological
change. It has become quite apparent that many firms have
concluded that it makes more sense to invest in such training
than to bid up wage scales in a zero-sum competition for the
existing limited pool of well-qualified workers. The bottom
-9-
line, though, as I indicated earlier, is that individuals are
going to have to be prepared to maintain skills as new procedures
and equipment become part of a rapidly evolving economy.
Finally, the changing nature of output also has
important effects on how good our statistical measures are in
capturing the reality of economic growth and thus our perceptions
of it. If we do not know how we are doing as a society, we shall
not be able to devise appropriate policy responses to changing
environments. The proliferation of cutting-edge technologies is
making it especially difficult to measure how well or poorly our
economy is performing overall.
We depend on signals from the marketplace to judge what
is adding value and providing utility and what is not: The
structure of prices and quantities that derive from free-market
interactions is a reflection of the relative worth of various
goods and services. If people like what they are offered, they
will buy, sales values will rise, and the market value of the
capital assets that produce those goods will rise as well.
The aggregate market value of goods and services, that
is the Gross Domestic Product, is an especially useful measure of
our productive capabilities. Its major component, gross business
product, is in effect the consolidated net sales of the economy.
These measures are not meant to be definitive measures
of the general well-being of a society. Increases in crime and
pollution, for example, tend to raise the outlays to combat them
-10-
and hence to raise the GDP. Depletion of natural resources in
the production process adds to business output and GDP.
GDP is strictly a measure of economic output and, when
measured against labor and capital inputs, a measure of
productivity. Whatever its shortcomings, it is by far the best
proxy that we have for the growth in our living standards.
Our conventional GDP measures for recent years exhibit
some indications of a step up in productivity growth. But, in
December, the Department of Commerce will officially shift the
focus to a new measure of economic growth. In so doing, it will
adjust for one bias in the current measure and--all other things
equal--the result will be that reported growth in output and
productivity in the last few years will be shown to be slower
than current measurement formulas have been indicating. I should
point out that the new output index has been calculated for some
time as an experimental basis; consequently, it should hold no
surprises for policymakers. But unless there are offsetting
changes in the data owing to other revisions, new figures will
accentuate the seeming conflict between the official statistics
and what is suggested by the rather compelling reports of
productivity improvement we hear from American businesses. This
leads to a broader question. Setting aside the narrow technical
issues of our formulas for aggregating diverse output, are we
measuring the output itself properly? Have we been capturing the
new types of value added which do not fall into our conventional
accounting categories?
-11-
We never had any difficulty in recognizing that an
integrated steel mill complex was of economic value, and it was
appropriately categorized as capital investment in our gross
domestic product. And we could see the addition of a steel mill
or similar large capital asset at individual companies reflected
in a comparable increment to the book value of the firm. The
stock market values of the firm tended, to a greater or lesser
extent, to match the book value that standard accounting
procedures constructed. In recent years, though, the ratios of
market to book values of American companies have risen
substantially, and at a pace that appears to be faster than can
be accounted for by declines in interest rates and equity risk
premiums. What appears to be happening is that the increasingly
important additions to the nation's capacity to produce, in the
form of new wealth-creating ideas are by convention expensed
rather than capitalized.
As a consequence, book values underestimate the true
value of an apparently rising proportion of our companies. And
because such outlays are also expensed in the construction of the
GDP, it, too, increasingly underestimates the market value of
goods and services. For example, capitalizing that part of
corporate software outlays that are currently expensed would add-
-probably significantly--to measured capital investment. The
same would be true of similar types of outlays that are currently
expensed, such as those for research and development, some
technical work force training, and other conceptual inputs. To
-12-
be sure, the net domestic product would not increase by the full
amount of capitalization, because a substantial increase in
depreciation is also implicit in such changed accounting
procedures.
Clearly, we should allow market valuations, where they
exist, to dictate what is capitalized and what is not, rather
than leave it to accountants and accounting practices. It is
market values that generally reflect what an economy believes is
of value to it. In this context, it is reasonable to conjecture
that our productivity and output have been growing faster than
our existing data imply.
Even with such adjustments, we may still not be fully
capturing the improvements in economic value and well-being that
occur as a consequence of the extraordinary innovations in
technology of late. Arthroscopic surgery has significantly
shortened hospital stays and the quality of recovery from such
surgical procedures. Supermarket check-out lines have been
speeded, as have the accuracy of computation and payment. These
types of value added, which enhance the quality of life, are not
captured by our conventional national income accounting.
Similarly, while mobile phones, cable TV, and satellite
transmission are included, in part, in many of our measurements,
the greater opportunities that they bring cannot be appropriately
embodied in current GDP measurements. Moreover, the innumerable
conveniences that have enhanced leisure and made day-by-day
living less onerous are not captured either. While such factors
-13-
have always been mismeasured in our GDP to an extent, and there
is the possibility that some elements of our GDP are
overestimates, one gets the impression that, with increased
conceptualization the relative bias has been increasing. The
implication is that, properly measured, economic output has been
growing faster than conventional measures suggest.
Moreover, as we move into the twenty-first century,
there is scant evidence that the nature and pace of change is
likely to slow materially. To be sure, the most visible force of
recent change, the continuous downsizing of microprocessors, and
hence computer and telecommunications equipment, may increasingly
encounter physical limits. But almost as surely, new
technologies will emerge, not now visible.
What we do know is that, excluding the sorrowful period
of the Dark Ages, human knowledge has rarely been lost, nor
technology reversed, and so one can presume that we will evolve
in the twenty-first century and beyond in ways not now
foreseeable. We can anticipate change to be pervasive and, if
competitive forces are allowed free rein, and our fiscal problems
resolved, we can expect ever higher living standards for all
Americans.
Will Americans adjust to a frenetic pace of change and
allow it to happen? While we have in the past, and almost surely
will in the future, it is important that we recognize that
adjustment is not automatic. We have episodes in recent human
history where, for example, pressures of change were not easily
-14-
absorbed and people chose what appeared to be a greater degree of
security rather than competitive challenge. Competitive forces
create uncertainty and dislodgment, but they also bring with them
an enhanced quality of living and the increased economic
abundance so necessary to confront the problems that exist in
societies throughout the world.
The advent of the twenty-first century will certainly
not bring an end to the challenges we are facing in a rapidly
changing world. From my viewpoint, however, there are a number
of positive things happening in our economy now, that make it
more likely that we shall be well positioned to meet those
challenges successfully.
THE PRESIDENT
11-15-95
Stuy-
Hen's the letter + tow
you about-
Thanks,
Brin
a
Sent to Congressmon Hoyer.
November 2, 1995
Roy M. Spence. Jr.
403 Lake Cliff Trail
Austin, TX 78746
512/327-8810 AM
512/327-8628 PM
Washington Post
1150 15th Street N.W.
Washington, DC 20071
To the Editor:
It was with astonishment that we read Meg Greenfield's article in Sunday's Post,
asserting that President Clinton in effect apologized for the 1993 tax increase
and blamed his fellow Democrats for having to do it. We were astonished
because we were at that particular event in Houston to which she alfuded, and
she was not. We have talked with dozens of people who were there and no one
could comprehend the total distortion of her article. The President was with
people whose taxes he raised. But he did not back off one bit. Meg Greenfield
chose to take one sentence out of context and tell the country the President said
something very different from what we who were there heard.
President Clinton very directly told us that no one likes to raise taxes, but he and
the congressional Democrats did the right thing with the deficit reduction
package. He did not blame the Congress. Nor was he "looking for ways to save
himself at his own party's and colleagues' expense." He pointed out that he and
then Secretary Lloyd Bentsen worked with the Democratic leadership to put
together a $500 billion deficit reduction plan.
The President went on to other decisions he made that have met with fierce
opposition from powerful special interests-passing the Brady Bill, banning
assault weapons, restoring democracy in Haiti, helping Mexico, etc. He
defended all of these decisions as the right thing for America in the 21st
Century. To those of us who were actually there in Houston and who live and
work outside the Beltway, this article's criticism of the President seems to us
another example of the Washington insiders' game of "gotcha."
By misrepresenting the meaning of the President's remarks to the American
people who were not in the room that night. reprinting this article has done a
disservice to the public unworthy of a great and influential newspaper.
Roy Spence
Austin, Texas
cc: President Bill Clinton
P.S. This letter reflects the opinions of the following individuals who also
attended the Houston event:
AI Acevedo, San Antonio
Carri L. Baker, San Antonio
John C. Baldwin, Houston
Monty Baer, San Antonio
Kay Bell, Houston
Nancy T. Beren, Houston
Ruben Bonilla, Corpus Christi
Cathy Bonner, Austin
George Bristol, Austin
Toby & Greg Brown, Houston
Tony Campos, Houston
Kim A. Cockins, Brownsville
Tim Crowley, Houston
Glenn Douglas, Houston
Tim Douglass, Houston
George W. Durazzo, Jr., San Antonio
Senator Rodney Ellis, Houston
Janice Gerber, Houston
Lukin T. Gilliland, Jr., San Antonio
H. Lee Godfrey, Houston
Andres Gonzalez, Austin
Monica Gonzalez, San Antonio
Norma Gonzales, San Antonio
Victor Gonzalez, Austin
Daniel Gustafson, Austin
Steve Gutow, Austin
Larry S. Jefferson, M.D., Houston
Philip Kanayan, Spring
Leslie & Hedley Karpas, Houston
Heidi Kirkpatrick, Houston
Ann L. MacNaughton, Houston
Anne Macy, Houston
David T. Marks, Houston
Garry Mauro, Austin
Councilwoman Ruth Jones McClendon, San Antonio
Phyllis & Bernard Milstein, Galveston
David M. Mincberg, Houston
Azie Taylor Morton, Austin
Roy Mullin, Austin
Henry R. Munoz, III, San Antonio
David G. Oliveira, Brownsville
Karol Rice, Austin
Jennifer & Alan Rosen, Houston
E. Jay Rosenstein, Houston
Dan Ruiz, Austin
Joyce & Arthur Schechter, Houston
Edie Schnaitter, San Antonio
Richard Secord, Jr., San Antonio
Richard Shaw, Houston
Gus Stern, M.D., Brownsville
Pat Pliego Stout, San Antonio
Judy Trabulsi, Austin
Jack Warren, Houston
Joe Bill Watkins, Austin
THE SEEN
PRESIDENT HAS
November 7, 1995
MEMORANDUM FOR THE PRESIDENT
95 NOV 7 P3: 39
FROM:
DOUG SOSNIK AND KAREN HANCOX
SUBJECT:
ELECTION NIGHT CALLS
Below is a suggested list of phone calls or possible phone calls for you to make to
Democratic candidates tonight, following the elections. We will have phone numbers later
in the day.
Polls in the most important states close as follows (all times are Eastern)
Kentucky
-- 6:00 p.m
Mississippi
-- 8:00 p.m.
New Jersey
-- 8:00 p.m.
& J shorice do lettus
Virginia
-- 7:00 p.m.
to urinen t to wren us brow
California:
San Francisco Mayor's Race
They have freeiws too Be
Willie Brown, Roberta Achtenberg and Frank Jordan (incumbent) are
neck and neck in this non-partisan race. If one candidate does not
receive 50% plus one there will a run-off. We expect this race to go to
a run-off which will be December 12. We will wait to have you call
when there is a winner.
Hurtford
know Peter - HUD, cinn
Connecticut:
Bridgeport Mayoral, Incumbent Joseph Ganim (only if he wins)
New Haven Mayoral, Incumbent John Destefano (only if he wins)
Waterbury Mayoral, Incumbent Edward Bergin (only if he wins)
We expect all three incumbent Connecticut mayors to win re-election.
Iowa:
Arthur Davis, candidate for Des Moines Mayor
Davis is the former state chair and running, in an open seat race,
against a Christian right candidate. Davis is currently trailing, but
because it is Iowa and because Davis is a former state chair, a call
from you would be helpful. CALL
Kentucky:
Governor's race, Lieutenant Governor Paul Patton
Patton is running against Larry Forgy in an open seat race. The race is
too close to call. We will have you call, win or lose. CALL
Maine:
State House Special Elections:
There are two special elections in Maine. We are expected to win one
seat, the other is a toss-up. The current balance of the House is 75R-
74D. We need to win both seats to maintain control of the House. If
we win just one seat, Republicans will control the House.
Maine:
Minority Leader Gwadowsky (Note: he still goes by Speaker)
He is a current member of the House and was Speaker until
Republicans took control of the House. He has worked very hard in
these specials, and is a strong supporter of yours. He should be called,
regardless of what happens, to thank him for his hard work. CALL
Maryland:
Baltimore Mayoral, Incumbent Kurt Schmoke
Schmoke will win re-election. CALL
Massachusetts:
Springfield Mayoral, Charles Ryan or Michael Albano
There are two Democrats in the run-off. We will hold this seat.
CALL
Worcester Mayoral, Incumbent Raymond Mariano
We will have you call only if we win. POSSIBLE CALL.
Michigan:
Incumbent Mayor Woodrow Stanley, Flint
Stanley is expected to win. CALL
Mississippi:
Governor's Race, Dick Molpus
Molpus is running against incumbent Kirk Fordice. The race is too
close to call. We will have you call, win or lose. CALL
Lt. Governor's Race, Ronnie Musgrove (only if he wins)
New Hampshire:
Manchester Aldermanic Races, Incumbent Bill Cashin (D)
Will probably win. CALL (all of the candidates will be together)
Nashua Mayoral
Seven candidates, probably will be a runoff. If the race is between
Republican and Democrat, then POSSIBLE CALL to Democrat would
be helpful since most of the Democrats are early Clinton supporters
Keene Mayoral Race, Challenger Pat Russell (D)
We expect to hold this seat. CALL
Concord Mayoral Race, Incumbent William Veroneau (D)
The Mayor should hold the seat. CALL
Portsmouth Mayoral Race, Incumbent Eileen Foley (D)
The Mayor should hold the seat. CALL
New Jersey:
Hudson County Executive, Incumbent Bobby Janiszewski
We expect to hold this seat. CALL
New York:
Erie County Executive, Incumbent Dennis Gorski (only if he wins)
We expect to hold this seat. POSSIBLE CALL
Albany County Executive, Michael Breslin (only if he wins)
We expect to hold this seat. POSSIBLE CALL
Yonkers Mayoral, Terence Zaleski (only if he wins)
This will be a close race; turn-out will be critical. POSSIBLE
CALL
TX
82-9
Ohio:
Akron Mayoral, Incumbent Donald Plusquellic
We expect to hold this seat. POSSIBLE CALL
Cincinnati Mayor Roxanne Qualls, the top vote getter in the city
council gets the title of "Mayor." It is unclear in this structure, who
will be the top vote getter. It is likely, Roxanne Qualls will become
mayor again. The Democrats should retain the seat. POSSIBLE
CALL
Pennsylvania:
Philadelphia Mayoral, Incumbent Ed Rendell
Rendell will win. CALL
South Carolina:
Mayor Joe Riley
Expected to hold his seat, in a tough fight. POSSIBLE CALL
Virginia:
Legislative Races, Majority Leaders of both Houses
We will have you call the leaders, if we maintain control. POSSIBLE
CALL
Washington:
Mayoral race, Democratic candidate Brian Ebersole, Tacoma.
This would be a pick-up for Democrats. POSSIBLE CALL.
November 8, 1995
MEMORANDUM FOR THE PRESIDENT
FROM:
DOUG SOSNIK AND KAREN HANCOX
SUBJECT: ELECTION RESULTS
Below is a summary of last nights election results.
Arizona:
Democratic mayor George Miller was re-elected with 55% of the vote
in Tuscon.
CityVote, held in Tuscon, had President Clinton leading the field by an
almost two-to-one margin over retired General Colin Powell.
Arkansas:
State House Special Election
Olan Cooke (D) won with 54% of the vote
(Open seat previously held by a Democrat)
California:
San Francisco Mayoral (with 302 of 543 precincts reporting:)
Willie Brown 34.1%
Roberta Achtenberg 26.9%
Frank Jordan (incumbent) 34.4%
Connecticut:
Bridgeport Mayoral
Incumbent Joseph Ganim (D) won with 85% of the vote.
New Haven Mayoral
Incumbent John Destefano (D) won with 78% of the vote.
Waterbury Mayoral
Edward Bergin (D) 47%
Phil Giradano (R) 53%
Hartford Mayoral
Mike Peters (D) 86%
Horton Scheff (R) 14%
New Britain
Democrat Lucian Pawlak picked up this seat with 64% of the vote.
Iowa:
Des Moines Mayoral race
Arthur Davis (D) 56%
George Flagg (R) 44%
Kentucky:
Governor's race
Lt. Gov. Paul Patton (D) 51%
Larry Forgy (R) 49%
Maine:
State House Special Elections:
Democrats won both special elections. Ralph Carr in the 124th District
won with 57% of the vote and Shirley Richard in the 97th District won
with 64% of the vote.
Question 1 was defeated by 52% - 48%.
Maryland:
Baltimore Mayoral
Incumbent Mayor Kurt Schmoke won with 78% of the vote.
Massachusetts:
Springfield Mayoral
Michael Albano (D) defeated Charles Ryan (D) in a run-off.
Worcester Mayoral
Incumbent Raymond Mariano won with 79% of the vote.
Michigan:
Flint Mayoral Race
Mayor Woodrow Stanley (D) 71%
Don Williamson (R) 29%
Mississippi:
Governor's Race
Dick Molpus (D) 45%
Kirk Fordice (R) 55%
(note: this was taken with 92% of precincts reporting.)
Lt. Governor's Race
Ronnie Musgrove (D) defeated incumbent Lt. Governor Eddie Briggs.
New Hampshire:
Manchester Aldermanic Races, Incumbent Bill Cashin
Bill Cashin (D)
Keene Mayoral Race, Challenger Pat Russell
Pat Russell
Portsmouth Mayoral Race, Incumbent Eileen Foley
Eileen Foley (D)
Nashua
Run off on December 12 between Tom Davidson (R) and
Carl Andrade (D)
New Jersey:
Hudson County Executive
Incumbent Bobby Janiszewski won with roughly 70% of the vote.
New York:
Erie County Executive
Incumbent Dennis Gorski (D) won by a twenty point margin.
Albany County Executive
Michael Breslin (D) won by a ten point margin.
Yonkers Mayoral
Terence Zaleski (D) 43%
John Spencer (R) 57%
Staten Island District Attorney
Bill Murphy (D) 65%
Guy Molinari (R) 30%
(Note: this was Molinari's first loss ever in eleven elections.
Molinari is Republican U.S. Representative Susan Molinari's fathe
and he is a big New York operative for Senator Al D'Amato.)
Ohio:
Akron Mayoral Race
Mayor Donald Plusquellic (D)- Declared Winner
No opponent-
Cincinnati City Council Race
Mayor Roxanne Qualls(D) - Declared Winner
Hemlick (R)
Tillery (D)
Pennsylvania:
Philadelphia Mayoral
Incumbent Ed Rendell won with roughly 70% of the vote. (Note: voter
turnout was the lowest in Philadelphia's history.)
Allegheny County Commissioner
In Allegheny County, two Republicans and two Democrats run in the
general election -- the three top vote-getters are elected as County
Commissioners. The results were:
Dawida (D) 27%
Dunn (R) 26%
Cramner (R) 24%
Vuono (D) 23%
The Republicans claimed victory in the race since they were successful
in winning two of three slots. Democrats Mike Dawida and Colleen
Vuono are claiming voter irregularity and plan to call for a recount.
Vuono came in roughly 350 votes short of placing third.
South Carolina:
Mayor Joe Riley (D)- Winner
Texas:
Incumbent Mayor Bob Lanier was re-elected with 84% of the vote over
two opponents in this non-partisan race.
Utah:
Incumbent Mayor DeeDee Corradini (D) was re-elected by a slim 51%
49% margin.
Virginia:
Legislative Races
Democrats maintained control of the Virginia House (52 D, 47R, 1I)
and tied the Virginia Senate (20D-20R). With the Senate tied,
Democrats will remain in control because Democratic Lt. Governor
Don Beyer serves as President of the Senate.
Washington:
Mayoral race, Democratic candidate Brian Ebersole, Tacoma.
Ebersole (D) was leading by a 2 - 1 margin with 65% of the vote
counted.
Also in Washington State, a controversial takings initiative was soundly
defeated 60% - 40%, despite last minute polls showing the initiative
with strength in the final weeks.
As for CityVote in Washington State, President Clinton came in first
out of 21 candidates in every city in the state that participated. Powell
was second, and Dole placed third.
Two state senate races that were closely watched were split, one being
won by a Republican and the other by a Democrat. Returns in these
races were incomplete however.
THE PRESIDENT HAS SEEN
EXECUTIVE OFFICE OF THE PRESIDENT
11-14-95
OFFICE PRESIDENT STATES UNITED THE
COUNCIL ON ENVIRONMENTAL QUALITY
WASHINGTON, D.C. 20503
Kathleen A. McGinty
95 NOV 7 P5: 42
Chair
November 7, 1995
MEMORANDUM FOR THE PRESIDENT
FROM:
KATHLEEN MCGINTY
CC:
LEON PANETTA
RE:
ARCTIC SLOPE REGIONAL CORPORATION
I received your note on the Arctic Slope Regional Corporation (ASRC). Attached is the
draft response to the November 2nd letter you received from the ASRC and the Inupiat
Native community. There are deep divisions among the Alaskan Native community on the
issue of oil and gas drilling in the Arctic National Wildlife Refuge (ANWR).
Also attached is an article from the Wall Street Journal which describes the Inupiat and the
Gwich'in Native communities' views on the issue. The Inupiat leaders support opening the
wildlife refuge to drilling. The Gwich'in community opposes drilling and is concerned about
the fate of the Porcupine Caribou Herd if drilling is allowed.
The Inupiat Native community has benefitted greatly from oil and gas development on
Alaska's North Slope. Inupiats are residents of the North Slope Borough, Alaska's single
biggest Alaska-owned corporation with revenues of more than $460 million. The Inupiat of
*I)
Katovik have an average income of $47,000 per person. The Gwich'in Native villages are,
in contrast, quite poor. They strongly oppose drilling because they are subsistence hunters
and any diminution of the caribou herd will cause their tenuous existence to become even
more so.
Your Administration has stated many times that we should prohibit oil drilling in this
biologically-rich wilderness of the ANWR while ensuring that Native communities can use
these lands for traditional hunting and fishing. We have underscored that the rest of the
coast is open for development, that we are in fact seeing new development in other coastal
tracts and that it is only this small area -- 110 miles -- that is being preserved.
The lobbying campaign on behalf of the Inupiat demonstrates the financial clout and
sophistication they can call into play -- they and their oil company partners are represented
by some of the best lobbying firms in the city. The Department of the Interior, at a briefing
today for White House offices, claimed that Inupiat revenues from oil should continue well
into the next century. They are not in danger of sliding back into poverty. They also claim
that oil revenues in Alaska will continue at a healthy rate, and, depending on world oil
Recycled Paper
prices, Alaska's status as a state with no income tax, one of the lowest gasoline taxes in the
U.S. and no state sales tax is not jeopardized. Every Alaskan, man woman and child
receives a substantial yearly payment due to oil revenues. This year's dividend of $990.00
was the highest since the inception of the program.
Recycled Paper
November 6, 1995
Ms. Alma M. Upicksoun
Assistant House Counsel
Arctic Slope Regional Corporation
1050 Thomas Jefferson Street, N.W.
Seventh Floor
Washington, D.C. 20007-3877
Dear Ms. Upicksoun:
Thank you for your letter offering the views of the Arctic Slope Regional Corporation
regarding the question of whether the coastal plain of the Arctic National Wildlife Refuge
should be opened to oil and gas leasing.
As you recognize in your letter, I have long opposed opening this fragile and unique
area to drilling. The Arctic National Wildlife Refuge is one of America's great natural
areas. The coastal plain is the biological heart of the Refuge and includes the core calving
grounds of the Porcupine Caribou Herd, on which many Alaska Natives depend for
subsistence, as well as a wide diversity of other wildlife, from snow geese to polar bears.
My Administration strongly supports the development of oil and gas resources in
areas where such development can proceed without damage to the environment. As you are
aware, over 90% of Alaska's Arctic coastal plain is currently open for oil and gas
exploration and development. However, we do not believe that such development would be
appropriate in the Arctic National Wildlife Refuge. To the contrary, recent assessments by
the U.S. Fish and Wildlife Service confirm the probability of significant damage to the
wildlife and wilderness resources of the coastal plain from proposed development.
The deep divisions among the Alaskan Native community that have arisen over this
issue are of great concern to me. I continue to support economic development opportunities
for the Alaskan Native communities. Having signed technical amendments to the Alaskan
Native Claims Settlement Act, I am committed to working with the Alaskan Slope Regional
Corporation and the native communities to develop the opportunities that are available.
Sincerely,
Polar Opposites
Fates of Alaska Tribes
THE WALL STREET JOURNAL THURSDAY, NOVEMBER 2, 1995
May Ride on Impact
Scientists say it is ünlikely that the
Of Drilling in Refuge
Porcupine Herd would be wiped out if there
Continued From First Page
were oil development in the wildlife ref-
Senate. The Senate plan has some steps
uge. But the disturbance caused by drilling
designed to mollify the Gwich'in, including
Inupiat Need Oil's Income;
there could well result in a lower birth rate
stipulating that the oil companies can't
and cause the herd to shrink. A smaller
drill during the time the Porcupine Herd of
Gwich'in Fear Extinction
herd wouldn't travel as far to forage,
caribou gives birth. Still, the Gwich'in
perhaps altering its migratory path. "And
worry that even these measures won't be
If Caribou Are Driven Off
if the caribou don't pass near the Gwich'in,
enough to prevent a major disruption of the
they don't exist for those people," says
herd's migration pattern. And they are
biologist Kenneth Whitten, who spends
counting on President Clinton to make
'I Cry for My Grandchildren'
much of his time tracking caribou migra-
good on his threat to veto the Republican
tion for Alaska's Fish and Game Depart-
budget.
ment. "They can't afford to charter planes
Meantime, tension between the two
By ALLANNA SULLIVAN
to track them down" as sportsmen do.
groups-whose closest villages are only 100
miles apart-has escalated. The Gwich'in,
Staff Reporter of THE WALL STREET JOURNAL
Tribal Windfall
who claim to have been in this part of the
ARCTIC VILLAGE, Alaska - After a
But the battle here doesn't just pit the
world since before the Roman Empire
tortuous journey through the mud and
Gwich'in vs. Big Oil. Another native Alas-
marched on Egypt, say the Inupiat are
underbrush, Sarah James stands on the lip
kan group, the Inupiat Eskimo of the far
simply tools of the oil companies. The
of a mountain and scours the terrain below
north, backs the industry in its efforts to
Inupiat, who are presumed to have crossed
for caribou.
have Congress open the refuge to drilling.
the land bridge from Asia many thousands
From her village, which in the distance
By native Alaskan standards, the Inu-
of years ago, say the Gwich in are pawns of
looks like a smudge pressed into the Arctic
piat have gained enormous riches from the
the environmental community.
landscape, seven caribou had been spied
huge quantities of oil tapped from their
earlier in the day. As the first of the
The environmentalists "think having
lands strung out along the edge of the
the aboriginal Gwich'in on their side is
migration north, they were allowed to pass
Beaufort Sea. But they say their situation
glamorous," says Joe Upicksoun, an exec-
unhunted; the elders of Ms. James's
is just as desperate as that of the Gwich'in,
Gwich' in Indian tribe say that to kill those
utive with Arctic Slope Regional Corp., an
many of whom live in destitute villages.
Eskimo-run company based in Barrow
first cariboù is a sign of disrespect and will
With the output from the oil fields of the
with an interest in energy projects. Sitting
discourage the herd from following.
North Slope slowly dwindling, the Inupiat
behind his desk in the company's head-
But now, with a raw wind whipping
say, it is crucial that the refuge be devel-
quarters, he clenches his fists and gri-
across the tundra, where patches of grass
oped. Although the federal government
maces. "It really gets my goat."
and scraggly bushes are already winter
controls the refuge, the Inupiat hold sub-
The fight has spilled into the halls of
gray, there isn't a hint of the animals
surface mineral rights there, which could
Congress, where members of the Gwich'in
anywhere. "Maybe they will come tomor-
well provide them a windfall if the land is
and Inupiats have been buttonholing every
row." says the Indian woman, her long
successfully drilled. That would allow the
lawmaker they can. They have called news
gray hair blowing across her face.
Inupiat to keep enjoying the lifestyle to
conferences, run newspaper ads and
Maybe not. If the oil industry has its
which they have grown accustomed.
scrapped with each other for support from
way and is allowed to drill in the Arctic
Financial planners in the northernmost
other native groups.
National Wildlife Refuge, the Gwich'in
Eskimo town of Barrow warn that revenue
The Inupiat also played host all sum-
say, the caribou migration on which they
available to the Inupiat - the bulk of it
mer to various members of Congress at the
depend could be devastated.
derived from property taxes the oil compa-
behest of the oil lobby. They treated the
A New Debate
nies pay to the group - would drop from
visiting dignitaries to feasts and cultural
For years, the bitter debate over devel-
$326 million this year to $230 million in 2005
dances in a tent pitched on a dirt-packed
opment of the wildlife refuge has centered
without drilling in the wildlife refuge.
beach that the Inupiat sometimes use for
en broader environmental, concerns, such
'It Will Be Devastating'
their whaling festivities. Although the Inu-
as what would happen if there were an oil
piat hunt caribou - not the Porcupine
A project just getting under way, to
spill similar to the 1989 disaster involving
Herd - their cultural identity is most
hook up all Inupiats to running water and
the Exxon Valdez. The oil companies, for
closely tied to twice-yearly expeditions for
sęwage lines, could be their last major
their part, defend their environmental
bowhead whales, using sealskin umiaks.
capital endeavor. Within a decade, the
record and say that new technology will
Eskimo nation would be able to do little
Eggs and Stilts
allow them to develop new finds in the
more than maintain what infrastructure
The Inupiat also showed the visiting
Arctic without doing serious damage (see
they have. And with the rugged climate
lawmakers what oil dollars have done for
article on page A5).
sure to take its toll, how long they would be
them. Barrow is hardly Paris on the Beau-
These days, though, much of the con-
able to do even that is in question.
fort, with its muddy unpaved roads that
troversy is about caribou - specifically the
Porcupine Caribou Herd, which roams
"We don't want to return to the poverty
wind willy-nilly past tiny homes on stilts, a
and hardship of our past," says Brenda
cemetery ablaze with colorful paper
northern parts of Alaska and Canada. At
about 150,000 strong, the herd is to the
Itta, an influential Inupiat who remembers
flowers embedded in the tundra, even a
Gwich'in what the buffalo were to the
as a child hauling blocks of ice by dog sled
Mexican restaurant that serves eggs with
Plains Indians in past centuries: the center
for miles to melt for drinking water. "If the
salsa for breakfast.
refuge isn't opened, it will be devastating
But since the oil companies began
of their culture and subsistence. And part
to the Inupiat."
producing there almost 20 years ago, the
of the 19 million-acre wildlife refuge,
where the oil companies are frantic to sink
At this point, it appears likely that the
eight Eskimo towns that make up the North
their wells, is the site of the birthing
Inupiat will be the winners in this struggle,
Slope Borough have gained many ameni-
grounds - the virtual nursery - for that
the Gwich'i in the losers. A provision to open
ties. Most of the Inupiat now live in
herd, the Indians say.
the wildlife refuge to development is in-
prefabricated homes with running water
"Development of the refuge would be a
cluded in the versions of the budget that
and plumbing. They have telephones and
form of genocide against the Gwich'in,"
have cleared both the U.S. House and
washers and dryers.
says Ms. James, who lives in Arctic Vil-
Please, Turn to Page A6, Column 1
lage, one of 15 Gwich'in settlements sprin-
kled along the U.S.-Canadian border.
The Inupiats are especially proud of the
alter the caribou migration.
school system they have built, with each
"We aren't antidevelopment. We aren't
Arctic Ocean
town boasting its own educational facili-
environmentalists," Mr. James says in a
Barrow
ties. It was only several decades ago that
Alaskan natives were shipped out during
booming voice tinged with anger. "We just
Circle
don't want any drilling where the caribou
Arctic
their teen years to government-run
CANADA
schools, sometimes located thousands of
have their calves." The rest of the council,
Arctic Village
Arctic National
miles away. Middle-aged Inupiat parents
sitting in broken-down chairs, nods its
Wildlife Refuge
angrily remember being physically pun-
approval.
Juneau
ished for speaking their native language,
Natal Grounds
ALASKA
rather than English, in those schools. Now,
As part of their migration, all caribou in
Anchorage
the children can stay at home.
the region head north every spring to have
But if the Inupiat are the haves, the
their calves on the coastal tundra, where
Gwich'in are the have-nots. Arctic Village,
strong breezes help them escape the
where homes are heated by empty oil cans
swarms of mosquitoes that harass any
converted into wood-burning furnaces,
living being in the Arctic during the warm
hasn't gotten the congressional traffic of
summer months. On the way, large chunks
Barrow. Some of the wooden houses, their
of the herd pass close to several Gwich'in
0
250
joints stuffed with rags and other make-
habitats, including Arctic Village. The
MILES
shift insulation, are the size of large
herd spreads out across the scrubby grass-
walk-in closets. Only two have indoor
lands during the height of the migration,
villages: without access to the Porcupine
plumbing.
dotting the landscape to the horizon. They
Herd several aren't on the migratory
One of the few lawmakers to make the
retrace their path in late summer, provid-
route-partaké through a complicated net-
trek here was Alaska's Frank Murkowski,
ing the tribe with two hunting seasons.
work of trading and gift-giving. Although
chairman of the Senate Energy Commit-
According to the Fish and Game De-
they eat other game as well, caribou is
tee, who is leading the push to open up the
partment, Porcupine caribou calves are
considered a primary food source.
refuge. The Arctic Village Gwich'in, the
born during the migration on the flat
primary advocates for native opposition,
Shared Poverty
grasslands between the Aichilik and Hula-
prepared a feast of caribou and sheep to
hula rivers, an area that is predator-free
Warren Matumeak, an Inupiat whose
honor his visit in August.
and offers lush grazing. But, confirming
role among his people is akin to an elder
"I told the senator that I didn't want my
the Gwich'ins' greatest fear, it also is in
statesman, says he is sympathetic to the
grandchildren reading about the caribou
the middle of the wildlife refuge, almost
Gwich'ins' plight. Although the two groups
in history books," Fanny Gemmill says.
smack on top of where the oil companies
have waged war in centuries past, he says
The appeals didn't work. Sen. Mur-
want to drill.
they maintain a similar dedication to their
kowski says he believes the Gwich'in are
Virtually every major oil company,
cultural heritages. "The Gwich'in are just
sincerely fearful about the fate of the
from Exxon Corp. to Chevron Corp. to
afraid, as we were 20 years ago when the
Porcupine Herd, but is confident that their
oil companies started to work on the
concerns are misplaced. He argues the
British Petroleum PLC, is interested in the
Eskimo 20 years ago expressed similar
refuge. And though the industry is loath to
Prudhoe Bay field," Mr. Matumeak says.
"I thought the drilling would hurt the
talk about the Gwich'ins' situation, execu-
worries about what drilling in the North
caribou. It didn't."
Slope would mean for the wildlife there,
tives say they are aware of keeping the
But his voice hardens as he recalls the
only to discover that the area's caribou
environment as pristine as possible. "We
poverty the groups once shared as well.
have
demonstrated
at
Prudhoe
Bay
population has grown. The Gwich'in, he
says, are being "fueled by their emo-
that we can develop and operate with
Mr. Matumeak, 67, expresses grief as he
minimal impact on the caribou," says
remembers how the harshness of everyday
tions," not facts.
Inside the worn-out log-cabin structure
Ronald Chappell, a spokesman with Atlan-
life brought death to his five-year-old
brother and then his mother. And he
that serves as the village's council hall, the
tic Richfield Co,'s Alaskan unit.
vividly recollects sleeping on the floor of a
tribal council of Arctic Village continues to
The Gwich'in, whose name means "the
12-by-16 sod house with the rest of his
plot strategy. Several of them have been
caribou people" in their Athabascan
family; the mornings without breakfast
chosen to return to Washington to keep
tongue, share with their fellow villagers
lobbying. Gideon James, a former chief,
whatever caribou they kill. Even Gwich'in
when there wasn't enough food, and his
endless daýs as a reindeer herder on the
stands up to say that the Gwich'in position
tundra.
must be clarified for lawmakers, many of
If no more oil is found on the North
whom believe the tribespeople are either
Slope, he says, "I cry, not for myself, but
environmentalists or looking for some fi-
for my grandchildren."
nancial incentive in return for backing
away from their position. Some Gwich'in
point out that they even once drilled for oil
themselves-just not in an area that would
THE PRESIDENT HAS SEEN
11-14-95
THE WHITE HOUSE
WASHINGTON
95 NOV 10 P3: 48
November 10, 1995
MEMORANDUM TO THE PRESIDENT
FROM:
LAURA D'ANDREA TYSON Law
RE:
CEA RESPONSES TO WEB QUESTIONS
Attached please find a memo to me from CEA economist Bob Murphy providing
answers to your questions on the Weekly Economic Briefing for October 13, 1995. The
materials also include some information about and writings by Robert Lucas, this year's
Nobel Prize winner in economics.
MEMORANDUM
COUNCIL OF ECONOMIC ADVISERS
October 24, 1995
To:
Laura Tyson
From:
Bob Murphy
B.M.
Subject:
President's Questions
The President had three questions that he noted on last week's WEB (10/13, see attached copy).
I've gathered answers and materials relevant to these.
1. He asked how many people (households) would be affected by a rise in interest rates on
adjustable-rate mortgages following a possible default on U.S. debt.
According to contacts at the Federal National Mortgage Association (FNMA), approximately
seven to ten million households have adjustable-rate mortgages. The value of these adjustable-
rate mortgages is approximately $800 billion. About one-half of the $800 billion in mortgages
are directly linked to rates on Treasury securities. Most of the remainder are linked to other
measures of government cost of funds. Consequently, a default on Federal debt, which raised
the cost of government borrowing, would also raise mortgage costs for between seven and ten
million households.
2. He asked a question about why the chain-weighted data give "worse" results in recent years
(quarters) for both real GDP growth and inflation, as measured by the GDP deflator, than for the
1970-93 period as a whole.
with This My sloe
The reason for lower real GDP growth in recent years is, of course, the usual story about
changing from 1987 weights to chain weights (smaller relative-price weight for fast growing
sectors, such as computers). The reason for higher inflation is that nominal GDP growth is
unchanged by changes in weighting, so a lower real growth rate must necessarily imply a higher
inflation rate. Also, the reason for "improvement" when using chain weights in the 1970-93
averages which straddle the 1987 base year is that the average is dominated by the pre-1987
years (since there are more of them).
3. He asked for some of Robert Lucas' work.
I've attached an essay on policymaking by Lucas (only thing I could find without any equations).
I've also attached the writeup in this week's Economist magazine and the chapter from Arjo
Klamer's Conversations With Economists. Let me know if you want additional copies of these
items.
cc: J. Stiglitz, M. Baily, A. Munnell, M. Jolin
FINANCE AND ECONOMICS
Great expectations, and rational too
As this week's award of the Nobel prize in economics shows, simple ideas
expectations based on history will also
are often the most powerful
still be used.
Warning governments against bad
M
OST economists have long re-
policy based on unreliable models is all
garded this year's winner of the
ECONOMICS FOCUS
very well. But how do rational expecta-
Nobel prize for economics as a laureate-
tions help them to choose a policy? To
in-waiting. Robert Lucas, a professor at
employment with a bit more inflation.
some economists and politicians in the
the University of Chicago, is the most in-
That conceit had already been shredded
early 1980s, one answer looked obvious.
fluential macroeconomist of his genera-
by Milton Friedman, another Nobel
To reduce inflation, governments had to
tion. "A matter only of when he'd win it,"
prizewinner from Chicago, and Edmund
do little more than announce a strict
declared Frederic Mishkin, chief econo-
Phelps, another American economist. But
monetary target. In the face of such a
mist of New Yorks' Federal Reserve Bank.
they had used backward-looking expecta-
tough policy, workers, consumers and
"Top of almost everybody's list," said
tions. By applying rational expectations,
firms would expect lower inflation. They
Gregory Mankiw, a professor at Harvard.
Mr Lucas nailed the illusion for good.
would moderate their wage demands and
Mr Lucas developed the idea known
In the short run an inflationary mone-
prices, and-hey presto-inflation would
as "rational expectations". His work
tary policy will boost jobs-but only be-
tumble at little cost in output and jobs.
transformed both macroeconomic theory
cause firms are fooled into thinking that a
and the way that economists think about
rise in the price they can charge signals
How to be believed
the effects of economic policies.
stronger demand for their goods; in fact,
That idea turned out to be wrong, but not
Expectations are fundamental to eco-
because of any flaw in the notion of ratio-
nomic behaviour. A trade union negotiat-
nal expectations. One reason was that
ing with employers, say, will base its wage
markets do not always "clear" quickly-
demands in part on its forecast of infla-
ie, supply and demand may be out of bal-
tion. And the final deal will affect the ac-
ance for a while-so unemployment may
tual inflation rate once it feeds through to
rise when monetary policy is tightened.
prices. By definition, you might think,
"New Keynesian" economists, such as Mr
expectations are forward-looking. But un-
Mankiw, say that wages and prices take
til the 1970s, economists modelled expec-
time to adjust, so that markets often clear
tations as if they were based on the past:
only slowly. However, such theories often
next year's expected inflation rate might
assume that expectations are rational.
be a weighted average of current and past
The principle also explains why nei-
rates. That was not daft: it is impossible to
ther an announcement of tight money
observe expectations directly; and it is
nor even a brief period of monetary strin-
reasonable to suppose that they will be
gency will lead quickly to low inflation:
based largely on experience.
governments may not be believed. If peo-
Yet it was wrong, because it supposed
ple do not think that the government is in
that people might go on believing what
earnest, they will go on expecting high in-
they knew to be false. Mr Lucas was not
flation. So financial markets will con-
the first to see this. In the early 1960s John
tinue to demand high bond yields; work-
Muth, another economist, argued that it
ers will not curb their pay demands, nor
would be better to assume that people
will firms hold down prices.
have "rational expectations". These are
Thus, again thanks to Mr Lucas, econ-
forward-looking, in that they are based on
P
omists are now obsessed with the issues of
all data to hand; expectations that are per-
The winner, as expected
credibility and sustainability. Can gov-
sistently wrong will be discarded.
ernments keep their promises, and for
Mr Lucas showed just how important
it merely reflects a rise in prices in general.
how long? Post-Lucasian economics
this simple idea is. Governments' models
In the long run, under rational expecta-
recognises that governments are perpetu-
of the economy are, of necessity, based on
tions, there can be no trade-off between
ally in temptation: although tough poli-
the past behaviour of consumers and
inflation and unemployment, because
cies eventually bring the benefits of low
firms But unless they incorporate ratio
people cannot be fooled for ever. Once
inflation, politicians can earn popularity
nal expectations, said Mr Lucas, they are
they see that inflation has risen, unem-
through an unexpected burst of inflation,
useless for assessing changes in economic
ployment will return to its old level.
which temporarily boosts incomes and
policy. This is because economic behav-
Many forecasting models now in-
employment; but if they succumb, their
iour in the past will have depended on the
clude at least some element of rational
credibility is lost.
economic policies of the time. When gov-
expectations. For instance, predictions
The rational-expectations insight has
ernments change their policies, expecta-
about the inflation rate that people will
spurred research in many other branches
tions will change, too; so the economy's
come to expect are typically made consis-
of economics. How do people use in-
response to a new policy may be different
tent with the model's own predictions of
formation? How can models capture the
from what governments expect.
inflation. The one used by America's Fed-
limited ability of people to understand
Although this principle is quite gen-
eral Reserve is being revised to make its
how the economy works? In science,
eral, the best-known examples concern
characterisation of the bond market more
"paradigm-shifts" always tend to raise
monetary policy. Until the 1970s, govern-
forward-looking; in the labour market,
more questions than they answer. Mr Lu-
ments thought they could buy lower un-
where adjustment to news is slower,
cas's work was as revolutionary as that.
96
THE ECONOMIST OCTOBER 14TH 1995
198
Finn Kydland and Edward C. Prescott
Reder, M. 1962. "Wage Differentials: Theory and Measurement." In
Aspects of Labor Economics. Princeton, N.J.: Princeton University
6
Rules, Discretion, and
Press and National Bureau of Economic Research.
Sandmo, A. 1976. "Optimal Taxation: An Introduction to the Litera-
the Role of the Economic
ture." Journal of Public Economics 6:37-54.
Sargent, T. J. 1977. "Aspects of the New Classical Macroeconomics."
Advisor
Working Paper. Minneapolis: Federal Reserve Bank of Minneapolis.
Sims, C. A. 1979. "Macroeconomics and Reality." Econometrica, forth-
Robert E. Lucas, Jr.
coming.
Taylor, J. B. 1979a. "Aggregate Dynamics and Staggered Contracts."
American Economic Review 69:108-13.
1979b. "Estimation and Control of a Macroeconomic Model
with Rational Expectations." Econometrica 47:1267-86.
United States Department of Commerce, Bureau of Census. 1976. Sta-
tistical Abstract of the United States. Washington, D.C.: U.S. Govern-
ment Printing Office.
Introduction
I take the purpose of this session to be to elicit views on economic
policy from economists of different points of view.¹ The particular title
of the session, "Macroeconomic Policy, 1974/75: What Should Have
Been Done?" does not seem to me useful for this purpose, as I will
explain below, so I will adopt a somewhat different approach. I will
begin by stating a variation on the policy proposals advanced by Milton
Friedman in "A Monetary and Fiscal Framework for Economic Sta-
bility" (1948) and A Program for Monetary Stability (1959). After
some speculations on why the Friedman program has had so limited an
impact,2 I will identify and discuss some recent developments suggesting
that its acceptance and influence may be greater in the near future. The
paper concludes with an assessment of the case for the Friedman pro-
gram as it stands today, a brief discussion of problems of transition, and
some concluding remarks.
In centering the discussion around a proposal Friedman formulated, in
its essentials, thirty years ago, I run an admitted risk of locking myself and
others into positions we may have taken up years ago and not rethought
seriously since. The alternative strategy of repackaging this proposal in
more current language is one I find distasteful, and, in any case, it
The revision has benefitted from the suggestions of Stanley Fischer, Milton
Friedman, and Robert Weintraub.
1. EDITOR'S NOTE: Comments and discussion for chaps. 6 and 7 appear in chap. 7.
2. Of course, Friedman's work in general has had an enormous impact on many
dimensions. I am here referring only to his recommendation that monetary and
fiscal policy be conducted according to fixed rules.
199
200
Robert E. Lucas
201
Rules, Discretion, and the Role of the Economic Advisor
would quickly be found out. I will begin, then, on familiar ground and,
for the most part, remain there.
the "prosperity" (as measured by unemployment rates) of the Second
A set of aggregative policies which would I believe, lead, and have
World War. It is difficult to imagine a sequence of events that could more
led, to satisfactory general economic performance are, compactly de-
forcefully illustrate both the costs of high unemployment and the ability
scribed:
of government policy to affect unemployment. In all capitalist countries,
1. A 4% annual rate of growth of M1, maintained as closely as pos-
this "lesson" had profound influences on policy. In the United States, it
sible on a quarter-to-quarter basis
was embodied in the Employment Act of 1946.
2. A pattern of real government expenditures and transfer payments,
To some contemporaries, the Employment Act was "a weak and
varying secularly but not in response to cyclical changes in eco-
meaningless wraith". (Bailey 1950, p. 253), and in some respects it is
nomic activity
easy to see why. The act granted the executive no powers which had
3. A pattern of tax rates, also varying secularly but not in response to
not been fully assumed during the New Deal period preceding, nor did it
cyclical changes in economic activity, set to balance the federal
specify either the economic targets to be achieved or the policy tools to
budget on average
be utilized. The act did, however, require the executive in very explicit
4. A clearly announced policy that wage and price agreements pri-
terms to forecast the state of the economy in the coming year and to
vately arrived at will not trigger governmental reactions of any
prescribe policies designed to alter this state in a desirable direction.
kind (aside from standard antitrust policies and the general policy
Moreover, it was clear in specifying exactly where the expertise required
of government preference for low over high bids)
to carry out this task could be found: The Council of Economic Advisors
The first three of these policy rules are taken directly from Friedman's
was established by the act as the channel by which this expertise could
writings.³ The fourth is simply a recognition of the fact that, since the
be brought to bear on practical policy.
It would be a difficult and subtle task to trace the effects of the
time Friedman's proposals were originally formulated, intervention in the
details of private price and wage negotiations has ceased to be viewed
Employment Act on the policy performance of the U.S. government in
as an emergency measure so that a position on the generally accepted
the postwar years. There is nothing subtle, however, in the effects of the
aspects of aggregative policy cannot omit mention of this fact.
act (or of the events immediately preceding it) on the practice of mone-
In restating these recommendations, I have tried to follow Friedman
tary economics in the postwar period. Renamed macroeconomics, this
in being concrete and operational concerning exactly which policies are
subdiscipline defined itself to be that body of expertise the existence of
being advocated. Under the principle that natura non facit saltum, these
which was presupposed in the Employment Act, and its practitioners
particular policies must have neighbors that would have nearly the same
devoted themselves to the development and refinement of forecasting and
consequences, and one would certainly like to have an analytical frame-
policy evaluation methods which promised to be of use in the annual
work within which one could assess the consequences of variations on
diagnosis-prescription exercise called for by the act.
them. The provision of such a framework is far beyond the scope of the
In many respects, the assumption of this rather specific, applied role
present paper. I will proceed, instead, in an entirely different direction:
had a very healthy effect on monetary economics. The set of common,
first by recalling some of the main features of the intellectual environ-
agreed-upon substantive objectives helped to unify the field and lent it
ment, both within and without our profession, into which Friedman's
a quantitative, operational character in sharp contrast with the literary,
framework was introduced and then by tracing some of the changes since
doctrinal emphasis of so much prewar monetary and business cycle
theory. A great number of talented scientists found this new character
in this environment.
congenial.
The highly productive, collective effort to make the Employment Act
The Employment Act of 1946
"work" was just getting underway when Friedman's "Framework" was
The dominant events influencing the minds of the intended readers of
published in 1948. This was a proposal "concerned
with structural
Friedman's "Framework" were the Great Depression of the 1930s and
reform [which] should not be urged on the public unless and until it has
withstood the test of professional criticism" (Friedman 1948 [1953, p.
3. Rules 2 and 3 are paraphrases of those in Friedman 1948 (1953, pp. 136-37).
156]). Perhaps this description may be taken as a comment on the haste
Rule 1 is from Friedman 1959, pp. 87-92, there presented as a desirable but sec-
with which Keynesian theory, at that time regarded as difficult and con-
ond-best alternative to the requirement of 100% reserve banking advocated in
Friedman 1948.
troversial, understood by only a handful of American economists, had
been embodied in federal legislation. In any case, it is an accurate de-
203
Rules, Discretion, and the Role of the Economic Advisor
202
Robert E. Lucas
scription of the proposals which are, implicitly, a prediction that the
where, is one of repeated failure, and failure at very high social cost.
diagnosis and prescription process called for in the Employment Act can-
One is not surprised that a large fraction of the profession found it
not be made to work, given the level of scientific understanding of mone-
worthwhile to attempt to provide the expertise presupposed by the exist-
tary dynamics at the time. The proposals are offered rather as a compro-
ing institutions. Similarly, it should surprise no one that others continued
mise, promising economic performance superior to that which had been
to question the viability of these institutions and focused their work on
observed historically, yet promising less than the performance goals
the design of alternative frameworks which might ultimately replace
them.
which are implicit, if vague, in the Employment Act. They constituted,
Friedman hoped, "a minimum program for which economists of the less
extreme shades of opinion can make common cause" (Friedman 1948
Some Signs of Change
[1953, p. 135]).
In retrospect, it is clear that Friedman underestimated by far the
Events of the current decade have brought about important changes in
extent to which his colleagues were united in the belief that the Employ-
both public and professional confidence that economic expertise can de-
ment Act, together with the Federal Reserve Act as supplemented by
liver satisfactory performance within the framework provided by the
changes in the 1930s, provided a workable policymaking apparatus.
Employment and Federal Reserve acts. They also provide examples of
Post-World War II macroeconomics has shown little interest in reforms
mechanisms, quite outside those established by this legislation, by which
of the institutional framework within which economic policy is con-
public opinion may be brought to bear on economic policy. In this sec-
ducted, and virtually no concern with formulating legislative guidelines
tion, I will briefly review a few of these, beginning with what is surely
or limits on monetary, fiscal, and now, "incomes," policy. The profes-
the most important: the experience of stagflation.
sional forum for debating alternative monetary institutions to which
In a first course in econometrics, students discover upward-sloping
Friedman addressed his proposals did not analyze them, consider them,
demand curves and production functions which impute negative pro-
reject them in favor of others. It simply passed out of existence. Instead,
ductivity to capital. Students find these shocking experiences for which
within the existing institutional framework, the role of the economic
nothing in their theory courses has prepared them. This is a standard
developmental crisis, like discovering that one's parents are not perfect,
expert as day-to-day manager expanded rapidly, and the role of the aca-
demic macroeconomist became that of equipping these experts with
and experience shows that if it occurs in a reasonably protected and
ideas, principles, formulas which gave, or appeared to give, operational
supportive environment, it can be survived and resolved with no lasting
harm done.
guidance on the tasks with which these economic managers happened to
There is a tendency on the part of many economists involved with
be faced.
From the perspective of this new role for aggregative economics, the
Keynesian macroeconometric models to view the inflation and unemploy-
ment rate forecast errors of the 1970s in much the same terms. That is,
difficulty with the Friedman proposals was not so much that they were
the error itself is not denied (this is hardly a possibility) but is inter-
demonstrably dominated by others, but that they were irrelevant. They
preted as indicating nothing deeper than a neglect in controlling for some
speak to the question: Under what rules of the game, remaining pre-
other factors which, when properly taken into account, reveal the original
dictably in force over long periods, can we expect satisfactory economic
basic structure to be sound. Thus we show our econometrics students
performance? The economic manager responsible for advising on, say,
the size of the coming fiscal year deficit is simply uninterested in this
that by controlling for income and other variables and by reducing con-
question: it seems to him merely an academic exercise, unrelated to the
tamination from supply side effects, the law of demand is revealed as
clearly in the data as it is in the theory chapters of their textbooks.
tasks he has taken it upon himself to perform.
On one level, this reaction to the Friedman proposals is understand-
I have argued elsewhere, most recently and comprehensively in
able. General economic performance in the twenty years following the
collaboration with Thomas Sargent (Lucas 1975, Lucas and Sargent
1978), that these two cases are not at all analogous scientifically and that
passage of the Employment Act was, by any historical standard, highly
the misforecast of the stagflation period is in fact a symptom of much
successful. It is not surprising, then, that there was little general discus-
sion of institutional change during this period and that this lack of in-
deeper problems. But a second, even clearer, difference in these two
cases involves the context in which the error occurred. The stagflation
terest was reflected in economists' choice of research problems. Yet the
error did not occur in the privacy of the seminar room, a puzzle of inter-
history of monetary and fiscal institutions, in the United States and else-
204 Robert E. Lucas
205
Rules, Discretion, and the Role of the Economic Advisor
est to professionals only. It occurred after the idea of a stable inflation-
unemployment trade-off had become accepted by the public generally as
it is clearly possible for people to impose limits on these technical dis-
the central construct in discussing macroeconomic policy, and after wide
cussions, to bound levels and rates of change of economic aggregates.
public acceptance of the idea that movements along the Phillips curve
Public opinion generally can do little to guide the exercise of discretion-
were technically within the control of economic managers. Even if it were
ary economic authority, but it has enormous potential to limit its scope.
true (and I believe it is not) that the sources of this error are easily
To this point I have stressed developments external to the economics
correctible and unlikely to be repeated, an enormous and far-reaching
profession, as opposed to internal, scientific developments, as influences
change has already taken place in the political climate in which eco-
on the way economists and noneconomists view the possibilities open to
nomic issues are discussed.
us for influencing economic policy. This choice of emphasis reflects the
Two early symptoms of this change are Arthur Laffer's influential
opinion that public opinion generally (or what used to be called "politi-
"Laffer curve" and Arthur Okun's proposal for controlling inflation by a
cal feasibility") was far more important than were scientific considera-
complex system of taxes and subsidies on individual producers. Though
tions in influencing professional reaction to Friedman's "Framework,"
both can be supported by theory of sorts, provided one uses the term
and that this situation is not at all unusual. (This observation is not
"theory" with sufficient looseness, neither follows in any way from any
intended as a lament: there is little to be said for isolating economics
widely accepted theoretical framework, neither has received serious
from general contemporary social thought, and the consequences of try-
analysis by either proponents or critics, neither was even mentioned in
ing to do so tend to lead to reliance on sterile aesthetic criteria in guid-
the academic literature prior to the last year or so.
ing theoretical work.)
This is the legacy of stagflation: a general loss of confidence, whether
Nevertheless, research based on the idea of rational expectations has
scientifically warranted or not, in the formerly accepted framework guid-
played a role in buttressing the case for thinking about policy, as Fried-
ing discretionary economic management. Since the demand for discre-
man argued we should, as a problem in selecting stable, predictable pol-
tionary policies remains strong, we are seeing the proliferation of new
icy rules. The main argument turns out to be a positive (as opposed to
"solutions" to "short-run" policy problems, defended by the promise of
normative) one: our ability as economists to predict the responses of
particular results but without basis in either theory or historical experi-
agents rests, in situations where expectations about the future matter,
ence. Given the entry costs into economic advising of this sort, is there
on our understanding of the stochastic environment agents believe them-
any real doubt what the future holds if economists continue to view them-
selves to be operating in. In practice, this limits the class of policies the
selves in a day-to-day management role?
consequences of which we can hope to assess in advance to policies
The experience of stagflation has, then, brought about important
generated by fixed, well understood, relatively permanent rules (or func-
changes in the nature of the postwar dialogue by means of which policy-
tions relating policy actions taken to the state of the economy).
oriented economists attempt to advance their ideas and to satisfy the
I have developed the reasoning underlying this point elsewhere (Lucas
immediate needs of economic managers. Recently, there have been a
1975). (Indeed, it follows from modern control-theoretic views of policy
number of important developments occurring outside the now-traditional
evaluation almost independently of one's views on expectations forma-
dialogue among experts and economic managers, the most striking of
tion.) I have been impressed both with how noncontroversial it seems to
which has been the passage of California's Proposition 13, limiting
be at a general level and with how widely ignored it continues to be at
property taxes. Similar measures are under consideration in other states
what some view as a "practical" level. One could ask for no better il-
and there are analogous attempts underway to influence the federal bud-
lustration of this than the question motivating this session: "Macroeco-
get at the constitutional level.
nomic Policy, 1974/75: What Should Have Been Done?" The question
The main impetus for this "tax revolt" is surely dissatisfaction over
presupposes one of two possible situations. The first is that households
the general level of taxes and government spending, and not over the
and firms in 1974/75 were describable by a fixed set of decision rules,
nature of stabilization policy. Yet there is a clear and instructive con-
so that given any hypothetical selection of 1974/75 policies, one could
nection at the political level. In policies of either type, it is evidently
simply read private-sector responses off these fixed curves to determine
impossible for large numbers of people to form opinions and exercise
the response of the economy as a whole. The second situation under
influence at anything like the level of detail at which legislators and eco-
which this question is meaningful imagines firms and households attempt-
nomic managers and their advisors carry on their discussion. In contrast,
ing to solve maximum problems involving not only current policy actions
but expected, future actions as well. The economist evaluating 1974/75
207
Rules, Discretion, and the Role of the Economic Advisor
206
Robert E. Lucas
reasons for believing that the terms of the discussion may now be shifting
policy is in this case required to understand what these expectations
toward those which Friedman presupposed in his 1948 paper. Yet be-
about the future were, and how they would have been influenced by
yond an unelaborated endorsement of this program, I have devoted no
policy actions taken in 1974/75.
space to its defense or to an assessment of its likely consequences, if
Does anyone seriously argue that either of these two situations pre-
vails in fact? If so, on what scientific ground? If not, then why are we
adopted. To an extent which, until a recent rereading, I had forgotten, this
discussing this spuriously practical question at all?
absence of a clear defense and assessment also characterizes Friedman's
This seems to me by far the most fundamental sense in which recent
"Framework." There, in outlining his strategy, Friedman says that "I
work on expectations reinforces the viewpoint toward policy which
deliberately gave primary consideration to long term objectives. That is,
Friedman espoused in his 1948 paper. It emphasizes the fact that analy-
I tried to design a framework that would be appropriate for a world in
sis of policy which utilizes economics in a scientific way necessarily in-
which cyclical movements other than those introduced by 'bad' monetary
volves choice among alternative stable, predictable policy rules, infre-
and fiscal arrangements, were of no consequence. I then examined the
quently changed and then only after extensive professional and general
discussion, minimizing (though of course never entirely eliminating) the
resulting proposal to see how it would behave in respect to cyclical [1953, fluc-
tuations.
It
behaves
surprisingly
well
(Friedman
1948
p.
role of discretionary economic management.
133]; italics mine). How well is this? "The proposal may not succeed in
Though an agreement to focus on alternative policy rules would, in my
reducing cyclical fluctuations to tolerable proportions.
I do not see
view, be the major step toward restoring some degree of rationality to
how it is possible to know now whether this is the case" (Friedman
aggregative policy discussions, it does not necessarily follow that the
1948 [1953, p. 156]).
particular set of rules advocated by Friedman would dominate others.
The strategy, then, was to design a workable stabilization policy not
On the one hand, several researchers have developed particular examples
dependent in any way on detailed knowledge of business cycle dynamics.
in which a 4% monetary growth rule is not dominated by monetary poli-
The program would (I think on this there is no serious professional dis-
cies which react to the state of the economy (Sargent and Wallace 1975,
agreement) fully protect the economy against sustained inflation. It
Barro 1976, Lucas 1972). Moreover, Sargent (1976) has shown that
would fully insure against the kind of monetary collapse which was so
one can find models of this class which account very well for the behavior
important a factor in the early stages of the Great Depression of the
of postwar, U.S. time series. On the other hand, John Taylor (1979) has
1930s. It would entirely eliminate erratic monetary and fiscal shocks as
developed an empirically implemented example in which monetary poli-
independent sources of instability. Surely these are modest claims when
cies which react to the state of the system dominate (in a particular
compared with what can be accomplished via the application of optimal
sense) a fixed monetary growth rule, though the latter is also shown, in
control to purely hypothetical economies which provide a complete de-
this context, to dominate actual postwar policies. It seems clear at this
scription of business cycle dynamics. Yet as compared with actual per-
point that the choice among alternative sets of policy rules will neces-
formance in both the distant and recent past, their appeal is evident.
sarily depend on the answer to difficult substantive questions involving
In my view, recent research has added little to strengthen Friedman's
the sources of business cycles and the nature of business cycle dynamics.
case, except in what might be called a negative way. Friedman's case
Though there seems good reason to expect that the principle of rational
was built largely on the presumption of ignorance of the nature of busi-
expectations will prove to be a powerful tool in attacking these questions,
ness cycles. Many of us confused the methodological advances in eco-
it is clearly not sufficient in itself to dictate the nature of desirable
nomic dynamics that took place in the 1950s and 1960s with the sub-
countercyclical policies.
stantive narrowing of this ignorance and consequently with the increasing
feasibility of sophisticated, reactive countercyclical policy. We have
learned, I believe, that the list of economic propositions sufficiently well
The Case for the Friedman Program
grounded in theory and evidence to be useful in formulating aggregative
policy is no longer now than it was in 1948. This situation is discourag-
I began this paper with a brief summary of a variant of Milton Fried-
ing and also, I think, improvable, but in the meantime we should be
man's well-known program for stabilization policy, and then advanced
grateful that, in the face of our ignorance, we can still do "surprisingly
some conjectures of a sociological nature about why professional dis-
well."
cussion of this program has been so unsatisfactory in the past and some
208
Robert E. Lucas
209
Rules, Discretion, and the Role of the Economic Advisor
The Problem of Transition
limits on monetary growth rates. A second example is politically less
From the point of view of those involved in economic management,
advanced: movements for constítutional limits on the federal budget
the position that policy should be dictated by a set of fixed rules seems at
deficit.⁵
best a partial response to the question: What should be done, now? To
In cases such as these, existing economic managers will not program
one with some responsibility for monetary policy in 1974, say, it is not
a transition in any formal way, though they could certainly help to mini-
very helpful to observe that monetary growth "should have" proceeded
mize disruption. But the inherent gradualism of the legislative and con-
at a constant 4% rate for the 25 years preceding. Moreover, even if a
stitutional processes will, mean that any actual move toward fixed rules
move toward a policy of fixed rules were desired, it could be done in
will necessarily occur with ample advance warning and a great deal of
innumerable ways, presumably with different consequences, and a cri-
prior adjustment on the part of both government and the private sector.
terion based on long-run average performance offers no help in choosing
Analytical elegance will clearly not be one of the virtues of such a transi-
among them. What advice, then, do advocates of rules have to offer with
tion, but I see no reason to expect large economic disruption, at least
respect to the policy decisions before us right now?
by the sorry standards of the past decade, to be an inevitable or even a
This question does have a practical, men-of-affairs ring to it, but to my
likely consequence.
ears, this ring is entirely false. It is a king-for-a-day question which has
no real-world counterpart in the decision problems actually faced by
economic advisors. In the current system of discretionary economic man-
Concluding Remarks
agement, no one or no small group has the job of deciding what to do
right now and into the middle distance with respect to the main aggrega-
As an advice-giving profession we are in way over our heads. The
tive decision variables. None of these managers is in a position to influ-
Employment Act of 1946 placed heavy demands on the ability of econ-
ence the economy in any significant way toward a regime of fixed, non-
omists to guide executive authority granted very broad powers. In the
reactive policy rules. They are simply reacting, sometimes well, some-
early postwar years, and even through the sixties, it appeared that the
times badly, to current difficulties, with no more capability of affecting
framework provided by the Keynesian theory of income determination
policy five years hence than of affecting what happened five years before.
was, intelligently applied, capable of meeting these demands. As confi-
Economists who pose this "What is to be done, today?" question as
dence has ebbed in our ability to use general monetary and fiscal policy
though it were somehow the acid test of economic competence are
to carry out the aims of the Employment Act, professionals and nonpro-
culture-bound (or institution-bound) to an extent they are probably not
fessionals alike have turned to a wide variety of complex, selective inter-
aware of. They are accepting as given the entirely unproved hypothesis
ventions in individual markets. Even to begin to assess the likely con-
that the fine-tuning exercise called for by the Employment Act is a de-
sequences of these policies in anything like a scientific way is clearly well
sirable and feasible one. In criticizing Friedman's 1948 proposal from
beyond the current limits of our discipline.
this point of view, they are simply missing its main point. It is not a
One response to this situation is to attempt to deal with this ever
recipe for making the Employment Act "work" but rather a prediction
broadening range of management questions, working and hoping for ad-
that it cannot be made to work, and an outline of an alternative set of
vances sufficiently dramatic to enable us to regain the intellectual con-
policy arrangements.
trol we thought we had in the sixties. If, as I believe to be the case, this
If one does try to think in a politically serious way about possible
will require scientific improvements of a fundamental or basic nature,
scenarios leading to a fixed-rule regime, one is led to assign the primary
then this response is not likely to succeed. Basic research, to be success-
roles to actors outside the executive-central bank system of economic
ful, requires some degree of control over the questions to be asked and
management. An encouraging example is provided by the House Concur-
the results that can be delivered. Though stimulated by practical de-
rent Resolution 133, requiring that the Federal Reserve Board announce
mands, it is rarely carried out by those in an active managerial role, even
monetary growth targets in advance and account for deviations after-
at one remove.
ward.4 One can imagine this resolution hardening into legally binding
An alternative response is to attempt to make clear to our fellow citi-
zens the questions that currently available expertise can hope to answer
4. The substance of this resolution became an amendment to the Federal Re-
serve Act in 1977. See Weintraub 1978.
5. For a proposed amendment to this effect, together with an economic and
political analysis, see Buchanan and Wagner 1977.
210
Robert E. Lucas
successfully, to base policy recommendations on the well-understood
and empirically substantiated propositions of monetary economics, dis-
7
On Activist Monetary Policy
couragingly modest as these may be, and to make it as clear as possible
with Rational Expectations
that the main task of monetary and fiscal policy is to provide a stable,
predictable environment for the private sector of the economy.
Stanley Fischer
References
Bailey, S. K. 1950. Congress Makes a Law. New York: Columbia Uni-
versity Press.
Barro, R. J. 1976. "Rational Expectations and the Role of Monetary
Policy." Journal of Monetary Economics 2:1-32.
Buchanan, J. M., and Wagner, R. E. 1977. Democracy in Deficit. New
York: Academic Press.
Friedman, M. 1948. "A Monetary and Fiscal Framework for Economic
This paper discusses the potential effectiveness and desirability of
Stability." American Economic Review 38:245-64. Reprinted in
activist monetary policy1 and also rules versus discretion. Recent aca-
Essays in Positive Economics. Chicago: University of Chicago Press,
demic discussions of the role of monetary policy have been heavily influ-
1953.
enced by the rational expectations approach to macroeconomics: it has
1959. A Program for Monetary Stability. New York: Fordham
been argued that, from the viewpoint of the behavior of output, any
University Press.
monetary policy rule strictly adhered to is as good as any other (e.g.,
Lucas, R. E., Jr. 1972. "Expectations and the Neutrality of Money."
Sargent and Wallace 1975, Barro 1976). This theoretical viewpoint re-
Journal of Economic Theory 4:103-24.
ceives support from empirical work by, among others, Sargent (1976a)
1975. "Econometric Policy Evaluation: A Critique." In The
and Barro (1977a, 1978), which appears to show that only unantici-
Phillips Curve and Labor Markets, edited by K. Brunner and A. H.
pated changes in the money stock affect output.
Meltzer, pp. 19-46. Carnegie-Rochester Conference Series no. 1. New
This paper accepts both rational expectations, as a theory of expecta-
York: North-Holland.
tions, and the view that "unanticipated" changes in the money stock have
Lucas, R. E., Jr., and Sargent, T. J. 1978. "After Keynesian Macroeco-
a greater impact on real output than anticipated changes in the money
nomics." In After the Phillips Curve: Persistence of High Inflation and
stock. It argues nonetheless that systematic countercyclical monetary
High Unemployment, pp. 49-72. Conference Series no. 19. Boston:
policy can affect the behavior of output and that activist monetary policy
Federal Reserve Bank of Boston.
should be used for that purpose.
Sargent, T. J. 1976. "A Classical Macroeconomic Model for the United
The argument starts by asking why economic agents have not made
States." Journal of Political Economy 84:207-54.
contingent arrangements-for example, wage rates indexed to the money
Sargent, T.J., and Wallace, N. 1975. " 'Rational' Expectations, the Opti-
stock or very short contracts-that would insulate them from the effects
mal Monetary Instrument, and the Optimal Money Supply Rule."
of unanticipated changes in the money stock. The answer is that such
Journal of Political Economy 83:241-54.
contingent arrangements are costly; the private sector is therefore willing
Taylor, J. B. 1979. "Estimation and Control of a Macroeconomic Model
with Rational Expectations." Econometrica, forthcoming.
I am grateful to David Modest for research assistance and to Olivier Blanchard,
Weintraub, R. E. 1978. "Congressional Supervision of Monetary Policy."
Rudiger Dornbusch, Jacob Frenkel, Robert Gordon, Robert Hall, Michael Roth-
Journal of Monetary Economics 4:341-62.
schild, Frank Schiff, and members of the M.I.T. Money Workshop for comments.
Research support was provided by the National Science Foundation.
1. While I concentrate on the same issue as Franco Modigliani in his 1977 AEA
Presidential Address, the approach will be seen to differ from his.
211
Conversations with
Economists
New Classical Economists and Their
Opponents Speak Out on the Current
Controversy in Macroeconomics
ARJO KLAMER
ROWMAN & LITTLEFIELD PUBLISHERS, INC.
2
ROBERT E. LUCAS JR.
If anyone is responsible for the current debates in macroeconomics, it is
Lucas. He is generally credited with the introduction of the rational ex-
pectations hypothesis into macro models; his articles are widely read
and discussed. He is, by acknowledgment of friend and foe alike, the
central figure in the world of new classical economics. George Stigler,
after receiving his Nobel prize, suggested that the same prize is in store
for Lucas.
In 1964, Lucas received his Ph.D. from the University of Chicago,
where he returned to teach after an 11-year stay at Carnegie-Mellon
University. In 1969 Lucas coauthored with Leonard Rapping the fa-
mous article "Real Wages, Employment, and Inflation," which has
played an important role in new classical discourse. In "Econometric
Testing of the Natural Rate Hypothesis" (1972), Lucas suggested dra-
matic implications of rational expectations for accepted economic
theory and econometrics. The conversation touches on these articles as
well as upon his "Expectations and the Neutrality of Money" (1972) and
"An Equilibrium Model of Business Cycles" (1975).
We talked in his office at the University of Chicago, a remarkably
well-ordered place where papers are neatly piled and books carefully
arranged on shelves. The desk is empty but for a note pad. It is May
1982.
BACKGROUND
Do you enjoy economics?
Oh, sure.
30 Conversations with New Classical Economists
Robert E. Lucas Jr. 31
Why did you choose it?
were Al Harberger and Martin Bailey. They're the ones who influenced
me the most. I should also mention Carl Christ, who is now at Johns
I have always liked to think about social problems. It may have some-
Hopkins. They all used the Keynesian model, so my background was
thing to do with my family. We always argued about politics and social
pretty much conventional Keynesian training.
issues. I studied history at the University of Chicago and even started
My thesis was an econometric study on capital/labor substitution.
graduate school in history at Berkeley. But I came around to the view
Harberger was my thesis chairman. He was getting quantitative esti-
that economic forces are the central forces in history, and started trying
mates of various tax distortions (in "welfare triangles"), and he had
some economics. It was a big shock to me to find books in English that
some ideas about certain parameters for which he needed estimates. He
were incomprehensible to me. Anything in English is accessible to a
farmed out pieces of his project to students, so I took elasticities of sub-
history student, so the only barrier to getting at something would be
stitution in production as my piece.
foreign languages. In economics, you could get a book out written in
English like Haberler's Prosperity and Depression without being able to
Did Gregg Lewis have any part in this?
read it. Or Keynes's General Theory. I still can't read Keynes [laughter]. I
Lewis was on my committee and helped me a lot. He gives detailed
realized I couldn't pick it up an an amateur. So I got into economics in
feedback. That's why students went to him, and that's why I wanted him
a professional way and got my Ph.D. at Chicago.
on my committee.
Who were important teachers for you?
ABOUT OTHER ECONOMISTS
Well, Friedman was the big influence here. He taught our first Ph.D.-
level price theory courses, just basic economic theory. Friedman is a
How important was your collaboration with Rapping?
really gifted teacher plus a superb economist. He spent almost all his
time on applying economics. He would start with some real world situ-
It was very important to me. I came to Carnegie in '63; he came in '62.
ation, some quote from the newspaper, some Wall Street Journal edito-
We've talked about a lot of stuff. We were good friends right from the
rial, some sentence. And then he would try and get into a class
beginning, with our wives, as couples and so on. Rapping at that time
discussion. He would draw a diagram, and then try and get at the state-
was very conservative, a libertarian. He was also a very good arguer; he
ment to see whether it was true or not true and under what conditions it
was the ideal person to have at a dinner party. He could get people
would be true. Of course, he wasn't good for teaching tools, but I was
away from talking about the weather to talking about anything.
picking up those on my own anyway, through my readings.
I try to picture for myself two people working very closely together. He told me that you
Another big influence was Samuelson's Foundations, which I read
had talks almost every afternoon about everything-including economics, of course,
when I started here at Chicago. It's a "how-to-do-it" book, a great book
but also about politics [see conversation with Rapping]. You were very good
for first-year graduate students. It says, "Here's the way you do it." It
friends. Then the '60's came along, and Rapping was deeply affected by what hap-
lets you in on the secret of how you play the game, as opposed to cutting
pened in Vietnam. He had the idea that something was wrong and that Chicago
you off with big words. I think the combination of Samuelson's book
economics didn't help explain the current problems. You were close to him, but I
plus Friedman's class was what got me going.
don't see any effect of the occurrences on you.
Who taught you macroeconomics?
Rapping was always much more interested than I am in being where
Well, as I say, Friedman taught price theory, not money. He had one
the action is. He did a lot of work for the Defense Department in those
lecture on his views in business cycles or monetary economics at the
days. He'd come back all excited about the billion-dollar decisions he
very end. We were all waiting for it, but you can't say that much in one
said they were making. I was interested in anti-trust issues in those
lecture. When I was at Chicago the main teachers of macroeconomics
days, and he'd come in and say, "Look, Bob. If you finish this paper-
32 Conversations with New Classical Economists
Robert E. Lucas Jr. 33
which you probably won't-and if anybody pays any attention to it-
which they probably won't-and if it ever gets any influence in policy-
difficult mathematical economics and mathematics, even though none
which it probably won't-it's going to be a matter of a hundred million
of us had any prior familiarity with it. It was a lot of fun; we both
learned a lot.
dollars. And I was at the Defense Department yesterday talking about
twenty billion dollars" [laughter]. So you get the feeling you're just sort
Why do you think doing economics is a lot of fun if you run into all of these
of scribbling in your office doing trivial things.
problems?
The '60s had a bigger effect on him because, as I said, he wanted to be
where the action is, and he reacted not just to Chicago economics, but
At the time it's not so much fun-you do want to get the paper out and
to his defense work.
get it finished. All the trouble on Ed's and my investment paper came
when we were 99.9 percent done, and there was one step that wouldn't
Did you then understand his change?
fall into place. That's where all the work was so it was frustrating to
No, not really. His change affected our personal relationship very
have this nearly completed paper here and then to have to do all of this
much, and Rapping lost interest in conversations by rules that I like.
work. But it was fun. I like learning new mathematics, and what I like
about working with Ed is that he and I can very quickly get to the point
Did the turbulence of the '60s affect you at all?
on very difficult technical issues without a lot of set-up costs.
Vietnam affected everybody. I eventually came around to the idea that
How did you get to know Sargent?
the war was a lousy idea about the same time everyone else did [laugh-
ter]. It was, however, never at the center of my life. Because Carnegie
Tom was at Carnegie for a while. That was his first job when he got out
was a conservative engineering school, it was an easy place to avoid the
of Harvard. I didn't know him too well then. I'll tell you what happened
issue. Students were mainly interested in what kind of job they were go-
in those days- it's ridiculous in retrospect. There was a kind of Chicago
ing to get when they got out. We had a little bit of a revolution, not
faction and a non-Chicago faction at Carnegie. Meltzer was the
much.
Chicago leader, and Mike Lovell, a Harvard guy who had been at
Yale, was the non-Chicago leader. Mike got very touchy about this
Do you talk with Rapping now about what he is doing?
whole thing and he eventually left. Even though Mike and I had been
We talk a bit at the meetings.
quite good friends, the relationship got very strained for a while. We
stayed friends, but there was a bad period.
You also worked with Prescott. Can you tell me about that collaboration?
When Tom came, I associated him with the anti-Chicago group. I
Working with Prescott was different from working with Rapping. Rap-
thought he didn't show interest in me. We didn't talk very much during
the two years he was there.
ping was my senior and at times served as a kind of father to me.
Prescott was younger. Of course I was just starting to teach, so in age
I understand that he was also a very quiet person, and that he didn't talk very easily.
we weren't that far apart. But still, I was faculty and he was a student.
That makes a difference. I got him involved when I ran into technical
Yeah, I guess he's shy. But I never had a hard time talking with Tom
trouble while working on some investment problems. I remembered
[pause]. Tom needs to make some technical set-up costs before he wants
that he had some experience in his thesis with methods that I thought
to talk about something. Look at that paper we wrote together on
Keynesian economics. There's quite a lot of notation there, more than
would be helpful. He knew them a lot better than I did, so when he was
there would have been had I written the paper myself. Tom likes to do
at Penn I got him interested in this project. We did a hell of a lot of
work on this paper "Investment under Uncertainty" [1971]. We thought
that before he can talk. It's kind of hard to get people to sit still at coffee
and lunch while you write out equations.
it was a pretty straightforward applied problem, but then we got in way
over our heads technically. We didn't want to quit, so we read tons of
I remember a seminar here while Tom was visiting in Chicago.
Everybody was talking; it was a very chaotic seminar. In the middle of
Robert E. Lucas Jr. 35
34 Conversations with New Classical Economists
Well, sure. Those are serious criticisms of econometric models. They
the seminar, Tom made some point and the speaker didn't seem to un-
derstand it. Tom dropped it and didn't say anything for the rest of the
imply that the simulations coming out of those models are worthless,
useless.
seminar. At the end, he just handed the speaker a piece of paper with a
bunch of equations on it and said, "Here's what I was trying to say." I
But then you go up against many of these reputations. You tell Solow and Tobin
thought it was a very friendly, constructive thing to do, but the speaker
and all these people that they are wrong.
said, "This is Sargent's idea of a conversation" and laughed. I think it's
just that Tom thinks he can get things settled on a more technical level.
But they were wrong [laughter]. I don't think that Solow, in particular,
has ever tried to come to grips with any of these issues except by making
Tom and I talk quite a bit. I think that we influence each other a lot.
jokes.
Who are the other economists you like to talk with?
Did you read any radical economics? Marx or Sweezy?
I'm sort of a gregarious economist. I like to talk with a lot of people.
I've read some at various times, and I tried to talk with Leonard about
But what about the neo-Keynesians? Do you ever communicate with them?
some of the stuff, but he wasn't too interested in discussing it with me. I
really haven't read much.
Yeah [pause]. We're all friends. We go to the same conferences. There's
It is surprising to discover that people with good minds have such an incredible dif-
no split of a sociological sort.
ficulty in settling down to talk sensibly about one particular issue. It seems that
I guess when we first got going it was kind of exciting because the
you are a good communicator; you like to talk. Nevertheless, you very often hint at
people who were interested in this rational expectations model were a
tiny minority at first. We were pretty confident of what we were doing,
the problem of talking with other economists.
but we were regarded as very far out by other people. I had a lot of fun
A lot of these problems get solved by age. Sargent and I have had a lot
going to Yale and other places to talk in these chaotic seminars where I
more influence on younger economists. Everybody likes the idea of ra-
stand up and people throw darts at me [laughter]. It was a lot of fun.
tional expectations. It's hardly controversial.
But now the stuff is much more widely accepted. A whole new genera-
But if you talk with post-Keynesian economists they think it's a lot of nonsense.
tion of people has gotten into these models, so they're not quite as
exotic.
Young people are actually doing the research. Post-Keynesian econo-
Tobin asked me to come and talk at Yale in 1977, and I was there for
mists, well, I don't know whether to take them seriously [laughter].
a couple of days. He was really nice in a personal way. He made it clear
that he respected my work as a professional, so I didn't feel my profes-
ABOUT HIS WORK
sional standing was at risk. When I got there he gave me a nice intro-
duction. It wasn't a question of whether I was a competent economist or
How did Rapping and you get to work on your joint paper? [Lucas and Rap-
not; there was nothing personal involved. These guys, however, had
ping, 1969]
lots of disagreements and criticisms. I'd been thinking along these lines
I can't really remember. Both of us, at one time or another, taught mas-
for many years, so I thought I did a pretty good job of taking care of the
ter's level macroeconomics courses. The labor part of macroeconomic
questions, but I don't know how it looked from the other side. It left me
models, in those days, was pretty disgraceful. If you look at an old text
with a feeling of being way ahead of the game. It was an exciting
you can't make heads or tales of it. There's no connection with ordinary
feeling.
labor economics. Rapping and I knew some labor economics, and it's
hard to get up in front of a class and talk nonsense deliberately. So we
But you use very strong terms, certainly in that paper with Sargent [1978], to indi-
were trying to cook up simple supply and demand models which would
cate that something is wrong with Keynesian economics. You talk about failures,
fit what you see happening over business cycles. We got interested
about the breakdown of consensus, and about the fact that you get disillusioned
enough in that so that we thought we'd pursue it as a research topic.
with Keynesian macroeconomics. That's quite strong.
36 Conversations with New Classical Economists
Robert E. Lucas Jr. 37
I think we overdid it. That was my fault; I was pretty much an
It's quite remarkable that you had the courage to think in terms of demand and sup-
econometrician in those days. Everything novel in the paper has to do
ply models.
with the supply of labor. The demand is entirely routine; it was even
In the tradition of Friedman and Lewis it is hard to think about labor
for those days. It would have been a better paper if we had called it a
markets without supply and demand. You have to tell how wages and
theory of labor supply and had just presented the theory of the house-
employment arise from certain shifts in supply and demand curves.
hold and then tested that. Of course we started with Ordinary Least
That was the rule we imposed on ourselves.
Squares estimates. of. labor supply curves; be we somehow thought that
But then the problem is unemployment.
wouldn't be respectable, so we added a demand side to take into account
possible simultaneity. But in some sense the formality of the
We were really developing a supply and demand model for employ-
econometrics is excessive.
ment and wages. Unemployment gets tacked on as a side story. We in-
troduced a Phillips curve to make contact with macroeconomic stuff.
Rapping says that in his understanding the econometrics was essential in order to
make connections with what had been done before.
We wanted to make sure that the labor supply piece didn't assume away
business fluctuations.
I agree with that statement. One thing all of us admired about
Friedman's book on consumption was the way Friedman integrated the
Would you characterize the model as a Chicago model?
aggregate time-series evidence and cross-sectional survey evidence. He
I wouldn't think of that paper as a Chicago paper. That paper could
gave a unified explanation of very different samples in a single theoreti-
have been written almost anywhere, I would think. We were modeling
cal model. If you ever look at my thesis, you'll see that I'm trying to rec-
it after the work of people like Modigliani and Jorgenson, who weren't
oncile time-series and cross-sectional evidence on factor substitution.
Chicago people. If you think about labor markets in our way it might
Rapping and I try to do that in our paper. That was another reason it
have been thought about as a Chicago type, but I don't know why it
was essential to work with Rapping, because he knew all the cross-
should have been. You notice in that paper we have a lot of defensive
sectional evidence and I didn't. I think we did a pretty good job with it.
comments and millions of footnotes. I think that Rapping made us put
You also wrote a paper together that got published in the American Economic
in all those footnotes because we didn't want it to be thought of as an es-
pecially Chicago paper.
Review [1970].
See, this business of microeconomic foundations has been kicking
I never liked the paper. It doesn't have any results in it. I didn't want to
around for years. Rapping's and my paper is pretty conventional; that's
publish it, but Rapping insisted we do it. I remember he took an issue
what everyone was doing. You take a sector, you get some kind of maxi-
of the AER off the shelf and flipped it open to some paper-you know in
mum problem for a household or a firm, you work it out, and then you
any issue of any journal there's a lot of crap-and he said, "Look at this.
hope that it suggests some kind of a fairly simple regression equation.
Are you going to say our paper is worse than that? And he'd start going
The idea was that if you do this for enough sectors, you can put them all
through the whole journal [laughter]. So he talked me into publishing
together and you have a model of the whole. That was really what
it. When you do joint work you always argue about stuff like that. But I
Jorgenson, for example, was trying to do with investment. Friedman
didn't want to reprint it in the collection of papers [Lucas, 1980].
wasn't trying to do it because he really didn't care about these models.
Shortly after that I learned why tests of the sort we ran in that paper
But everyone who was involved in econometric model building of the
don't settle anything and aren't interesting. It didn't have much interest
consumption sector was influenced by Friedman's work. Modigliani was
for me in the first place, and once I understood the econometric ques-
explicitly interested as he went from his work in consumption to actu-
tions it had no interest whatsoever. The only economics in that paper is
ally building econometric models. That was a very common enterprise.
done better in Rapping's and my original paper, and that concerns the
Was the econometrics important in that paper?
way the business cycle looks from the household's point of view.
38 Conversations with New Classical Economists
Robert E. Lucas Jr. 39
In the papers with Rapping you used adaptive expectations. Did you know about
write down formal models in which price is a decision variable. The
rational expectations at that time?
only barrier to doing that is that, at the present time, I don't know how
Sure. Of course we knew about it. Muth was a colleague of ours at that
to write down equilibrium games which have that feature. The features
time. We just didn't think it was important. The hypothesis was more
could look a lot like the competitive models, but some of the feaures
or less buried during the '60s. Arrow used it in his paper on learning-
would obviously be different. For example, it's a big thing in that paper
by-doing in the '60s. Prescott and I used it in that paper of ours on in-
on "Expectations and Neutrality of Money" [1972] that people get infor-
vestment. People were aware of it, but I didn't understand then how
mation from price movements. That really complicates the paper tre-
fundamental a difference it made econometrically. I didn't realize that
mendously; that's the feature that makes the paper hard technically.
if you took it seriously you had to rethink the whole question of testing
Now, if I choose what price I set, I obviously can't learn anything from
and estimation. I guess no one else did either, except for Muth.
it. You can't get information from something you choose. So the infor-
mational structure of those models would change a lot.
But he didn't do much with it later, did he?
And did that make the analysis much more complicated?
No, but in the volume of Sargent's and mine we had a second paper of
I don't know. You never know-until you do it. I'm not much good even
Muth's on the econometric implications of the rational expectations hy-
at writing down noncompetitive models. I spend a lot of time trying,
pothesis. Maybe he just got discouraged because no one paid any atten-
tion. It must be quite an experience to write papers that radical and
though.
have people just pat you on the head and say "That's interesting," and
Your equilibrium modeling strategy seems to be essential. It also seems to have elic-
nothing happens.
ited quite a few comments. The question that always comes up is how can you ex-
plain depression, how do you explain a 9.4 percent unemployment. Can you ex-
The models you are working on are obviously more than just rational expectations
plain it all by referring to mistakes or to information problems?
models. How would you characterize them?
Well, what's the alternative?
The term I use is equilibrium models. The decision problems faced by
individual agents in the model are clear, and the rules by which they
People talk about learning problems; people talk about wage contracts and about the
interact are clear. You've got to spell out individual preferences and
resulting rigidity of wages. About uncertainty
technology and you've got to spell out the rules of the game. In practice,
Learning, uncertainty
.
These things have a lot to do with informa-
in macroeconomics right now, that leads to competitive equilibrium
tion. Learning, for example, is a red herring. According to the way I
models.
look at things, this is just a question of how you like to think about
But then you exclude monopolistic behavior
probabilities. Things that we model which have probability distribu-
tions I call "random variables" and things that don't, "parameters."
I don't think that that is crucial to business cycles. I'll give you an exam-
Some people like to use Bayesian language in which some things that
ple: In a competitive model, prices are never a decision variable;
have distributions are called "random variables," and some other things
they're always parameters in people's decision problems. When you're
that have distributions are, for some unexplained reason, called "pa-
informally telling these rational expectations stories, though, it's much
rameters." From that point of view, there seems to be a distinction be-
more natural to think of prices being a decision variable. So somebody
tween learning and information. Name them all "random variables,"
sets a price, and then inventories or sales give them the signal as to
and then you name everything that is "learned," "information." Just two
what's happening to demand. You put some goods on the shelf at a par-
points of view. Nothing operational is at stake here.
ticular price, and if demand is high you learn about that because you
A Bayesian would describe somebody as having a certain prior distri-
sell a lot more at that price than you expected to. So it would be nice to
bution on a particular parameter. I'll describe that guy as "knowing"
40 Conversations with New Classical Economists
Robert E. Lucas Jr. 41
that this thing is drawn from a distribution with a particular shape.
you get someone, acting in his own self-interest, to do something that
We're using different words, but the formalism is identical. I like to talk
injures himself in the same way over and over again?
about distributions being known, and parameters being known, so that
To put it another way, we know that monetary changes ought to be ir-
what one "learns" about is the realizations of paticular random varia-
relevant, because units don't matter. Accepting the Friedman-Schwartz
bles. That's purely a question of language. But I know my language
evidence that monetary changes are not only relevant, but the major
puts some people off.
cause of all these events, it is difficult to talk about a system responding
in a very sharp way, to. something to which it "ought" not to have re-
Like whom?
sponded at all. These considerations lead into questions about informa-
Milton Friedman, for example. He's very influenced by Savage and by
tion of some kind or another. That's a very old view. The particular
this Bayesian way of thinking about probabilities. So when I talk about
mistake that people get led into by monetary changes is hard to deter-
people "knowing" a probability, he just can't reach that language.
mine, and the specific examples I've cooked up are dictated a lot by
But I'm evading your question about 9.4 percent unemployment.
what's technically doable by me, given the methods I've got.
You have difficulty with our thinking that this is a mistake.
But you can attribute those events to "mistakes"?
Or an information problem. I say that this is the reaction you get. And I'm just
If you look back at the 1929 to-1933 episode, there were a lot of deci-
wondering how you react to that. My taxi driver here is driving a taxi, even
sions made that, after the fact, people wished they had not made; there
though he is an accountant, because he can't find a job. He is obviously frus-
were a lot of jobs people quit that they wished they had hung on to;
trated. It seems a lot of people are running around in that position.
there were job offers that people turned down because they thought the
I would describe him as a taxi driver [laughing], if what he is doing is
wage offer was crappy. Then three months later they wished they had
driving a taxi.
grabbed. Accountants who lost their accounting jobs passed over a cab-
But a frustrated taxi driver.
driver job, and now they're sitting on the street while their pal's driving
a cab. So they wish they'd taken the cab-driver job. People are making
Well, we draw these things out of urns, and sometimes we get good
this kind of mistake all the time. Anybody can look back over the '30s
draws, sometimes we get bad draws.
and think of decisions which would have made millions-purchasing
How do you account for the Depression. What is your story?
particular stocks, all kinds of things. I don't see what's hard about this
question of people making mistakes in the business cycle. From the in-
A possible way of looking at economic time series is as a competitive
dividual point of view, it's obvious.
system's response to outside shocks. If you just think of an economy in
The biggest puzzle is the changes in the average, the natural rate.
competitive equilibrium you wouldn't expect its output series to be
Nine point four percent is a recession rate, and it's not that high above
completely smooth; you would expect it to oscillate'a bit. In such a
the natural rate. It's about as far above the natural rate as recession
set-up the usual connections between equilibrium and optimality
rates were in the '50s and '60s. The big difference is that the natural rate
would hold. There wouldn't be any policy problems raised by these
has gone way up, and no one seems to know why that's true. The
fluctuations. That would be one point of view. And I should think it
unemployment rates at recent business cycle peaks are as much of a
would be a point of view that would be embarrassed by your question,
puzzle as the unemployment rates at business cycle troughs. I've heard
although it's hard to explain why. By calling the 1929 to 1933 episode a
a lot of stories, but I don't know if that problem has been nailed down.
"mistake," I'm trying to treat these events not as serving a social
Some of it has to do with demographics, some of it has to do with sec-
purpose.
ondary workers.
If intelligent actors pursuing their own self-interest are going
through the same mistake over and over again, which is what seems to
So, in this Keynesian work, you haven't found any reasonable explanation as to why
happen, we are led to think of informational difficulties. How else do
the Great Depression occurred?
42 Conversations with New Classical Economists
Robert E. Lucas Jr. 43
As I say, I find the Friedman and Schwartz story combined with Rap-
Yes. But both Friedman's line and my line have a hell of a lot to do with
ping's and mine to be very good for '29-'33. Afterward, I really don't
what we think is strong evidence that money is in some sense the villain
know. There are many aspects of what happened after that I can't figure
in business cycles. It is in fact responsible for these depressions.
at all. But I don't think that unemployment is at the center of the story.
If all we had was the postwar data set we wouldn't know a lot, because
For those who do think it is the center, I can see why they don't look to
there hasn't been enough action in this period. The '70s are an excep-
me for enlightenment.
tion, as they give us a.lot of information on inflation, but there haven't
How important-is the neutrality proposition in your research program?
been any big depressions in the postwar period. In the old days,
however-the pre-World War II period-the typical depression would
It's an ancient proposition. There's going to be a neutrality theorem in
imply a decrease in real output by 10 percent in a year. That's a differ-
any well-formulated model of money. There's always a "units don't
ent order of magnitude from anything we've seen in the postwar period.
matter" feature somewhere in the model. A pretty severe criticism of
What Friedman and Schwartz do in their monograph is try to link up
old-fashioned Keynesian models is that they simply neglected that.
these big episodes with large-scale monetary collapses. The idea is that
How important, then, are the policy conclusions you draw in your research pro-
all you have to do is stop the large-scale monetary collapse. The col-
gram? It seems you are committed to the idea that economic policy cannot be ef-
lapses aren't caused by the government-they're all private system bank
fective, at least as long as it is systematic. And if any people show that economic
failures. Friedman's policy exactly laissez-faire, since he's calling
policy is feasible, you say that it is not desirable because of the uncertainty it gen-
for government intervention in the banking sector to override events in
erates. In your 1975 paper on business cycles, for example, you argue that policy
the private sector. I don't think of the Friedman countercyclical policies
may be effective in case of an accelerator effect, but is undesirable.
as stemming from a general dislike for government as much as calling
for a very specific, well-defined form of government intervention.
All I said in that paper was that there is no reason to think that
That's all it takes. You don't need all of this fine-tuning; it's beside the
amplitude-reducing and welfare-increasing are the same thing. In that
point and dangerous as well.
paper this is well enough spelled out. You can't gauge welfare effects
with a model like that. I didn't mean to say I knew there wouldn't be
I talked with several neo-Keynesian economists about your equilibrium modeling
welfare increases; I just don't know why you would assume there would
strategies. They usually said, "I've never understood that. I've never understood
be. That's a difficulty of macroeconomics generally. Economics' only
what they mean." Benjamin Friedman clarified this with a story about people
criterion really is efficiency, but if you write down one of these standard
who get into a rainshower without an umbrella-for him, a disequilibrium situ-
macro models you can't say anything about efficiency.
ation. They couldn't anticipate the rain, so they walk around in the rain without
an umbrella. It takes some time, some learning, before they will carry around
Might I say that you believe markets do work more or less, and that government in-
umbrellas.
tervention is in general destabilizing, rather than stabilizing, and that it is
undesirable?
What does he think about the question whether people have the same
number of umbrellas in Phoenix, in Alaska, in London, in Rome?
I'm not very friendly toward government intervention in a lot of cases.
Surely the frequencies of people carrying umbrellas have something to
If I were to focus on business cycles, and this is very much influenced
do with the objective amount of rainfall in these places. People who live
by Friedman and Mitchell, it's a substantive question whether, in fact,
in the desert don't have any umbrellas. If you were seriously studying
fluctuations in monetary aggregate cause major depressions, and all
the demand for umbrellas as an economist, you'd get rainfall data by
government needs to do is simply stop that from happening. And that's
cities, and you wouldn't hesitate for two seconds to assume that every-
it.
one living in London knows how much it rains there. That would be as-
Rules, predictable government behavior: you follow the line of Friedman.
sumption number one. And no one would argue with you either. In
44 Conversations with New Classical Economists
Robert E. Lucas Jr. 45
macroeconomics, people argue about things like that. But if you were
when there's nothing at stake. They start doing all kinds of things that,
presenting that in an ordinary econometrics seminar, everyone would
to an adult or someone who knows what school really is, are crazy and
say, "Of course. That's obvious." So we're not very interested in the dy-
irrational. They're in a new situation and they're trying to match it with
namics of how someone comes to know whether he's in a rainy situation
their experience, but it's not at all clear how to do it because it's so dif-
or not.
ferent. So their reactions look crazy to an outsider. An hypothesis like
Other people say that there are periods with fundamental uncertainty. They refer to
rational behavior, in the sense of a rational response to an objectivesit-
the Keynesian concept of uncertainty. As a matter of fact, Rapping tells this
uation, just isn't helpful in understanding that. You've got to find out
story, too.
what these kids think is happening to them.
There are a lot of similar issues. For me, life-cycle issues are the ones
It's Knight, not Keynes.
that are easiest to think about as nonrecurrent, because you have these
Keynes also has that in his Treatise on Probability and in his 1936 journal ar-
events that you only go through once. On the other hand, the thing
ticle. He refers, for example, to the Napoleonic Wars as events that we can never
we're all trying to do is to look at other people a few years older with the
anticipate, just like we cannot anticipate scientific predictions or innovations be-
idea that we're pretty much like they are. I try to turn it into a recurrent
cause, if we could, we would have invented what scientists will invent. Uncer-
event by viewing myself as a drawing from some probability distribu-
tainty is prevalent in some periods. Like now. People really don't know what's
tion on which I have some information from observing others.
going on; there is uncertainty as to what the government is doing, uncertainty as
What do you think of the disequilibrium economics that is still done?
to the future of nuclear power and so on. It's very unlike the '60s, when there was
a general optimism. Post-Keynesians say that in some periods the uncertainty is
Look. You and I have been talking about human behavior. Those guys
so prevalent that talking in terms of probability distribution doesn't make sense,
aren't talking about human behavior. These psychologists are. They're
and that people have to go by rules of thumb. Different people go by different rules
closely observing actual people doing something, and they're asking
because in that environment there is no clear basis for rational decisions. What do
what are they doing and why are they doing it? What's going through
you think of that?
their heads? What situation do they think they're in? I just don't think
this disequilibrium economics is I won't make pronouncements
I think there is something to that. I don't know how you could really
about it. You never know whether a line that you may not sympathize
disagree with it. It just seems to me something that has to be handled
with will turn up something interesting or not. But I just don't get the
question by question. I don't see talking about rules of thumb as being
sense that their theory is being driven by an attempt to get at, or model,
helpful. I certainly agree that people behave by rules of thumb, but if
some specific kind of human behavior. They're trying to explain other
people want to know about where they are and how they got there and
economists' words, but they're not thinking about human decision-
how they're going to change the circumstances, you have to talk about
making. That's why the key actors are always some external force in
probabilities, too. That is why I try to view the business cycle as much
their models, like a price that just won't change. Why won't it change?
as possible as a recurring event, because if it isn't you have a hard time
In whose interest is it to keep it where it is? None of these questions is
thinking about how people are going to respond to it rationally.
ever addressed. So in that sense I'm very unsympathetic with the way
(Maybe I overstress that, because no two business cycles are exactly
they're doing things.
alike and no two years are exactly alike.) But a lot of it depends on your
But I've been in this business long enough to know that there are a lot
imagination.
of guys you don't have to be sympathetic with to benefit from what they
A lot of behavior appears inappropriate or irrational. The example I
do. People who seem to have the craziest motivations turn up really in-
use in class is that of little children on the first day of school. You see
teresting economics. Often I dislike the introductory paragraph of a pa-
them doing things that you know don't suit the situation. They'll start
per and dislike the conclusion, but think that the midddle is extremely
crying when there's nothing to cry about. They'll kick another little kid
interesting.
46 Conversations with New Classical Economists
Robert E. Lucas Jr. 47
You seem to have abandoned econometrics.
rigid wages? I don't understand it. But I can see how someone trying to
I'm not a very good econometrician any more.
explain 1934 to 1939 could be puzzled about rigid wages. I have been
puzzled about that, too.
Would you be able to use these new innovation techniques?
When I suggest to students the idea that people form their expectations such that they
Well, you can do anything if you just take the time to learn it. But it's
are consistent with the predictions of a rather complicated model, I usually get a
not stuff I'm very familiar with. Part of it is that I started with some em-
roaring protest. People think that it is absolutely absurd that people can know
pirical work a few years ago in which I was interested and to which I
something that must be beyond their comprehension. How do you convince your
was going to put a fair amount of time. Then, I learned that Sargent
students of that? Or your wife?
and Sims were starting on the same line. That was very discouraging.
First of all, I don't like races. Second, those guys know a lot more time-
My wife isn't interested in economics. And Ph.D. students are pretty
series econometrics than I do. Somehow the idea that they were working
passive; they'll take anything [laughter].
on the same thing, and probably doing it better up in Minneapolis, just
I try to turn it around. People in business usually like to get into con-
completely dampened my enthusiasm for my own work. And insofar as
versations about what they do all day and how they make their deci-
I had any ideas, I just tried to tell them, tried to influence them and not
sions. I'm always impressed with how sophisticated their thinking and
carry on some parallel investigation. I have regrets now because they
their information-processing is. What puzzles me is the number of
lost interest in the line, too, so now no one is doing it.
economists who seem to believe the reverse. It would be a miracle if I
could write down a model for the demand for shoes and the supply of
ON THE REALISM OF ASSUMPTIONS
shoes, cook up a little difference equation, solve it, and the solution
would reveal profits available to me from the shoe business that weren't
Your story on the labor market emphasizes information problems and ignores phe-
obvious to people who have been working in the shoe business for 20,
nomena such as wage rigidity. Doesn't that story sound highly implausible to
30, 40 years. It seems ludicrous to imagine that we could discover siza-
you? I know that my father, for example, who is rather suspicious of economists'
ble rents with our simple equations without knowing anything about
talk, would find the story unbelievable. I am sure many people think the same.
shoes. But some economists think we can get an insight into someone
Do you think, then, that your story has any correspondence with the way in which
else's business without knowing anything about the substance of his
the labor market actually works?
business.
Did you ever look at Steinbeck's book The Grapes of Wrath? It's kind of a
Have you read Simon's The Sciences of the Artificial? He's got examples
protest pamphlet from the '30s about migrant farmers in California.
like "Why is it that Arctic animals have white fur?" You know it is
There's one passage in there that is a better anecdote than I could have
handy if you're trying to escape predators to be able to blend into the
written for the kind of models I like. It illustrates the auction character-
snow, but that doesn't explain anything about how it came about. [Si-
istic of the labor market for migrant farm workers. He writes about a
mon] says its outcome would be useful for animals trying to survive in
hundred guys who show up at a farm where there are only ten jobs
the Arctic.
available. The farmer will let the wage fall until ten people are willing
A lot of our theorizing is about outcomes and is very weak on the
to work for that wage and ninety people say "the hell with it," and just
process, so I'm not surprised it doesn't look like the way businessmen
go on down the road. Steinbeck thinks the cure would be government-
think. But this is nothing new for economics. When you present a de-
enforced wage rigidity [laughing], so he's not trying to support laissez-
mand curve, you suggest that people solve some nonlinear program or
faire economics. He's describing what he thinks went on in the '30s.
find a tangency point. It's fairly complicated to write an algorithm for
There is nothing about wage rigidity. Nominal wages and prices
actually doing that. It wouldn't have any resemblance to the way a
came down by half between 1929 and 1933. Why would anyone look at
household makes decisions about anything. When I get the objection on
a period like that and say that the difficult problem would be to explain
the expectations point, which I often do, I say, "Why didn't you say that
48 Conversations with New Classical Economists
Robert E. Lucas Jr. 49
when I was talking about demand?" There's nothing descriptive in de-
ON DOING ECONOMICS
mand theory in terms of the process by which human people, families,
and whole business firms make decisions. Economists have lived with
Are you after truth?
that for years.
Yeah. But I don't know what we mean by truth in our business. I don't
Do you like the rigorous way in which Gary Becker tries to model household
see economics as pushing that deeply in some respects. We're
decisions?
programming robot imitations of people, and there are real limits on
what you can get out of that.
Yes. But again, I think Gary's work is focused on outcomes. Sometimes
people react to it because they don't like it as a description of the proc-
So far, we have discussed your ideas. However, it seems to me that the ways in
ess. They think about marriage; they think about what they went
which those ideas are expressed are just as important as the ideas themselves. In
through when you got married, and they say it didn't resemble Gary's
our case, your preference for mathematical expression is striking.
model. One doesn't think, "Was I calculating what my wife could get or
I'm not really a mathematician, so
could produce?" No one thinks about getting married in these terms ex-
plicitly. But the idea is that somehow those considerations are suffi-
But do you like the language?
ciently important that they must be incorporated into the process.
The only way I feel I understand something is if I can write it down in a
Moreover, you can test the model; so that if the theory is off, the data
model and make it work. I felt that from the beginning. That's why I
will let you know about it.
liked Samuelson's book. He'll take these incomprehensible verbal de-
Herbert Simon, whom you just mentioned, is highly critical of such a neoclassical
bates that go on and on and never end and just end them; formulate the
analysis of decison-making. He argues that we have to pay attention to the proc-
issue in such a way that the question is answerable, and then get the
ess. How did he react to your approach when you were both at Carnegie-Mellon?
answer.
He used to give us a hard time. He likes to take on the devil's advocate
Economists seem to have different styles of argument; they use different languages.
role. In his Sciences of the Artificial he's pretty balanced. The point of the
Might differences in language be responsible for problems of communication be-
Arctic-fur example is that for some questions, a superficial view of the
tween, say, the Chicago and Harvard or M.I.T. people?
process is safe enough. There's a sense in which that's a perfectly valid
Tom and I have a very self-serving way of arguing. Look, for example,
explanation. For other purposes it's inadequate.
at my paper "Methods and Problems in Business Cycle Theory" [1980].
In my house we don't use words like "marginal" every day. I don't
We want to claim ourselves to be right in the mainstream of the language
find the language of economics to be useful to think about individual
that is shared by the best economic theorists and econometricians.
decision problems. I also don't use economic principles at home. I
We think we're using the language of modern economics that, sooner
never pay my children to do their jobs. I try to use family loyalty or an
or later, everyone will be using. I recall the responses to a paper that I
exchange system; you help me, I'll help you.
presented in Washington on the methods and problems of business cy-
I remember that Rapping used to tell his wife years ago, if she told
cles; they strictly had to do with age. The older people like Phil Cagan,
him that the faucet was leaking and he should fix it, "Call a plumber.
who's a Chicago student of Friedman, said "overkill" and "you don't
My consulting rate is so much per day: that's my opportunity cost. A
need all this mathematics." He was very negative about the paper. I
plumber only costs half as much, so it's ridiculous to have me fixing
don't know whether he thought it was a bad paper, or whether he was
faucets." He would go upstairs and watch a football game on the televi-
just sorry that this was the way things were going. Sargent and I had a
sion [laughter]. At some point she just lost patience and said, "To hell
much easier time talking to younger theorists than more-traditional
with you, you're not making a hundred dollars a day watching a foot-
macroeconomists. When I was at Yale once, a young guy, an assistant
ball game." I think a lot of this opportunity cost stuff is just to push peo-
professor, came up to me and looked like he thought it was probably not
ple around who haven't caught up with the jargon yet.
a good idea to be seen talking with me. He said he'd been trying to get
50 Conversations with New Classical Economists
Robert E. Lucas Jr. 51
interested in monetary economics. He'd read my paper "Expectations
for an American to come up with the idea that workers are homogene-
and Neutrality of Money," and it had been the only paper on monetary
ous. It's a ridiculous idea. What the hell was he thinking about? But it's
economics he could understand. I do think that we're using the lan-
written loosely enough that if I liked the book, I probably would find
guage that everybody uses, or will be in a few years.
enough quotes in there that I could use to motivate arguments. But
there's so much arbitrariness in that book.
The M.I.T. people have great problems with what you are doing.
I noticed from reading your recent work that you have become reflective on what you
I think they're just missing the boat, mainly for political reasons. When
have been doing.
new techniques come in, they get combined in accidental ways with
A lot of it has to do with writing papers for a conference. I am influ-
particular positions and substantive presumptions. Sargent, Wallace,
enced a lot by who's going to be at a conference, where they are coming
Barro, and I think that money is very important in business cycles.
from, what their point of view is, what they understand, what they don't
When we started working on our rational expectations models, the key
understand, and what the common background is. You mostly can tell
variable was monetary shocks. And that's just chance. There's no neces-
that it is a group of people thinking about economic policy in a particu-
sary connection between rational expectations as an idea and the im-
lar way, and you just try to get at them. You wonder what's wrong with
portance of money in business cycles. The latter is an empirical ques-
their way of thinking and why we are missing each other's point. This
tion: it's either true or it's not. But since Sargent and I were the guys
happened also at a conference of the Boston Federal Reserve Bank for
that did it, it all got tied up with money. That's just transient. It's per-
which Tom and I wrote a paper. We knew we were going to be outsid-
fectly simple to have models in which fiscal policy plays a central role
ers, and we wanted to come on strong. We don't write papers like that
and have rational expectations. It's just a matter of time until people do
for the Journal of Political Economy. They are very much specific to confer-
that. Some people are talking the same language that I talk; but they've
ences. This really is very helpful, I find.
got substantively different ideas about what's important in business cy-
The first paper I ever wrote for a conference was "Econometric
cles. They think there are crucial difficulties with my models and are
Testing of the Natural Rate Hypothesis." I knew Tobin was going to be
trying to write down other models that don't have the same difficulties.
there. And I knew that he was an honest guy and if I couldn't get
So, I think a lot of these connections are going to pass. Don't forget that
a lot of macroeconomists are not well-trained economic theorists. They
through to him, it was my fault and not his fault. That really helped me
don't know modern mathematical economics. I think a lot of these dif-
in writing the paper; I tried to think about what he was going to see. I
knew he and Friedman could never talk. Tobin and I haven't gotten
ferences have to do with that.
that good at it either, but I figured that I could say what I wanted to say
You told me that reading Keynes is impossible for you. Has that anything to do with
in a way that would get through to him, and I did.
language?
Are you conservative?
I was just kidding. But I don't like that book. It's not a very congenial
I don't know. I thought I was at Carnegie, but around here I don't
book to read.
know. This place has a pretty wide spread of political opinions, and I'm
Some people find it the best economic book ever written.
never going to be anywhere near the far-right end of the spectrum for
Chicago. But I'm not too close to the far-left end either. It's hard to be a
I really find that amazing. I find it carelessly written, not especially
conservative with the Reagan administration turning to fine-tuning,
gracefully written, sometimes dishonestly written. I don't like the bul-
which seems insane to me. So, if being conservative means liking their
lying tone. I don't like the sort of British aristocratic stuff. He's got this
economics, I guess I'm not.
great idea for solving index number problems-we'll measure every-
thing in units of workers. Workers are obviously homogeneous: that
But do you, more or less, agree with Friedman's ideas in Free to Choose or Capi-
solves the index number problem [laughter]. It would be impossible
talism and Freedom?
52 Conversations with New Classical Economists
Robert E. Lucas Jr. 53
I like Capitalism and Freedom a lot. It's really written for economists in a
esting question for social scientists to study. It has some good effects, as
way that Free to Choose isn't. Free to Choose gets careless about a lot of
it makes you think operationally. I'll often think of hypothetical policy
points that Capitalism and Freedom is very careful about.
questions, when I'm doing some theoretical work, just to force myself to
Do you think that there are ethical problems in a capitalistic system? Do you think
be clear on what question I'm asking and what it would mean to have an
answer to it. But it is certainly not the only question.
there is something like social injustice?
Well, sure. Governments involve social injustice.
But politicians must make decisions. What can the role of economists be in this
decision-making process when they can't agree?
But doesn't government try to resolve social injustice?
Some people think that the most useful thing to think about is how to
That wouldn't be anything like my view. I can't think of explaining the
make things work better within the set of institutions under which our
pharaohs as being in existence to resolve social injustice in Egypt. I
economy is operating. Others think that there are basic flaws in these
think they perpetrated most of the injustice in Egypt.
institutions and that sooner or later we're going to have to reform
them in some fundamental way. I can't imagine how one could prove,
Are you an optimist as far as the economy is concerned?
given the state of knowledge now, that one of those positions is correct
Yes, I guess so. I think most economists are. I think this economy is go-
and the other is not. Our experience is too indecisive.
ing to grow at 3 percent a year, no matter what happens. Forever
I don't find it very useful to think through in very much detail how
[laughter]. One administration, like the current one, can mess things
intellectuals influence things, but they do. When trouble comes in a set
up, but that's all transient. There's an incredible amount of stability in
of institutions there's no time to think up new ones, so people take
the last 100 years of U.S. economic history. I don't know why it's there
something off the shelf and do it. In the 1929 to 1932 period they went
and, of course, it could disappear at any minute. So I don't know why I
back to World War I and looked at how the economy was run then.
think it's going to go on forever.
They didn't have a good enough inventory of ideas. It was too quick.
You don't share the ideas of radicals on an imminent crisis.
They couldn't cook up fundamental new ways of dealing with things on
such short notice, so they grabbed something that was handy. And that's
They have to talk about an imminent crisis; that's their job. I don't see
what societies always do in difficult situations.
it.
A lot depends on what's around. I think Friedman's work has really
Do you think that the distinction between the positive and the normative side of eco-
proved this, in a way. A lot of the things he was writing about twenty
years ago seemed almost utopian and silly for a serious person even to
nomics is useful?
be thinking about, such as criticizing public housing, for which all of us
Yeah. It's an essential distinction [pause]. We've been arguing about
had so much hope. And now twenty years later with the failure of the
that around here a lot lately. There's a feeling, and I guess I've helped
system, you can't find anyone who will endorse the public housing we
encourage it, among a lot of younger people that the politics and the po-
have in Chicago. These projects are horrible places. And so you look
litical role that economists play has had a very bad effect on macro-
back to the people who were explaining to you why this wasn't going to
economics. A lot of older economists seem to me to be solely con-
work and pay them a little more attention. The consensus of the '60s
cerned with politics, as opposed to scientific matters. People are asking
was artificial and unhealthy. Look at the way Friedman's work was crit-
the wrong questions; they are taking questions from Washington,
icized during that period. I think it's just a disgrace to the profession
rather than thinking about what's puzzling them or taking more scien-
that he was treated as though he were some kind of nut. I'm glad that's
tific points of view.
changed; he was one of the most eminent scientists around.
Macroeconomics really got itself devoted to the question "What
Economic policy is not a matter for a few economists to settle. There's
would I do if I were on the Council?," which may or may not be an inter-
too much else involved in it.
Robert E. Lucas Jr. 55
54 Conversations with New Classical Economists
have any good ideas on most of them, but I've got a general confidence
But what do you say when journalists ask for your opinion on economic policy
that they are not fundamental, although I don't know why. I don't feel
issues?
personally responsible for fixing it up, so I try to encourage other peo-
ple to get interested in them.
Journalists are fine-tuners. One reporter once asked me what I'd do if I
were on the Council. I told him that I would resign. I guess he thought I
What are the problems that intrigue you right now?
was making fun of him. But I thought that if he was personalizing the
question, it was alright if I personalized the answer. These just aren't
I've been thinking about monetary and fiscal policy from a public fi-
questions that have much interest for me.
nance point of view. This question of time-inconsistency. A lot of these
models have the property that an optimum policy, calculated from time
So you advocate a modest role for economists?
zero on, wouldn't, if you recalculated it from time one, be optimal to
Again, the consensus of the '60s was a very artificial period and not at
continue from time one on. In which case, unless a policy-maker could
all a model for how you can expect economics normally to interact with
bind himself to a whole infinite sequence of future policies, you could
the rest of society. At that time it looked like economics was taking over
call it optimum, but there's no way the thing could be implemented.
the world. You had the Kennedy Council, the tax cut (which I thought
These are just interesting problems in game theory. In the work Nancy
then was a good idea), and Kennedy's eloquent speech at Yale, in which
Stokey and I are doing on this, we're abstracting from business cycles.
he used good economic reasoning, without a lot of political nonsense.
Have you ever considered being more serious about the theory of economic policy?
This way of thinking subsequently spread to other branches of govern-
Why would policy-makers not anticipate the anticipations of the private sector?
ment. It looked like rationality was settling in, but it all unraveled.
That's the nature of the game I'm talking about. The private sector is
Do you oppose government activity altogether?
one player, the government is another, and both of them correctly take
I don't like talking about how big government should be. I like talking
account of the other player's actions. Kydland and Prescott are the guys
who started along that line in macroeconomics.
about costs and benefits of particular projects. That seems to be the
right way to talk about it.
Do you find that promising?
As far as I see, the criticism of your approach is sometimes quite severe. People make
I think it's the only way to think about these problems in some sense
jokes of it. Does it ever bother you that people argue that way?
[pause], but it's discouraging since we're short on good solution meth-
We've been going through this for years, so it doesn't surprise me. If any-
ods and it's easy to write down interesting definitions of equilibria that
thing, I've been surprised at how generous people have been. The criti-
you can't do anything with. You can't prove there exist any equilibria,
cism pisses me off sometimes, and I guess it showed in that review of
you can't characterize them. We're technically frustrated. In my work I
Tobin's book [Tobin, 1980; Lucas, 1981]. I don't think that this is an
always have the feeling that I can only think of one way to go: I never
ideal way to carry on these arguments, but people are always going to
think of myself choosing between six different explanations for some-
make jokes. I make jokes, too, when I can think of them.
thing. A typical situation is having no decent explanations for some-
thing, or one sort of half-way decent explantion. That is why
But do you have the experience that you don't know it anymore, that you wonder
econometric horse races don't interest me. You've got to get some horses
"Am I right?"
first [laughter].
Yes. Sometimes I get so deep into a problem that I just lose the ability
Do you think that what you have done is a revolution in economics?
to hang on to all the pieces, and start being afraid that I'm thinking
about everything in the wrong way. I read criticisms of my work that
No, I don't see that. I don't like the term. I do not consider the term
seem to me to be important, pointing up serious deficiencies in these
"Keynesian revolution" appropriate, either. It seemed to be a more po-
models. But I just don't feel like working on all those problems. I don't
56 Conversations with New Classical Economists
Robert E. Lucas Jr. 57
litical event than a scientific event. The Depression discredited the
luck. Most samples cannot tell you which of these stories about the
whole profession; people were alarmed about it. The General Theory is a
Phillips curve is the best one. If you just get data from the 1950s and
political response to the Depression and to the discrediting of conven-
'60s, you can never answer that question. There just wasn't enough of
tional economics that resulted from it.
an experiment, there wasn't enough inflation to tell. From that point of
But I should acknowledge that Keynes left an opening for younger
view we got lucky [laughing] with the more recent samples. From a so-
econometricians and mathematical economists to take over and to write
cial point of view, however, it is not quite so lucky.
down models. When their senior colleagues criticized their models,
they could say, "Well, these are Keynesian models." And since the older
people still hadn't caught up with Keynes, that shut them up. So people
like Klein and Tinbergen took over because they had the exciting new
methods.
Do you see that what you have started is comparable to what Keynes has done?
Well, I suppose everyone thinks his work is important. The sort of
things I do are a return to a traditional research program, a pre-
Keynesian research program, with the difference being that I, and peo-
ple such as Sargent, are not hostile to mathematical methods. We love
them [laughter]. The ideas of Hayek or Mitchell are interesting-worth
building on- but their methods are not.
A lot of traditional economists were hostile to mathematical econom-
ics. I think it's an accident of timing that the early econometric, mathe-
matical models of aggregate economies were called Keynesian.
In a way your timing was also kind of an accident, since there was a general discon-
tent with Keynesian economics. Does that explain why your theories have gotten
so much attention?
Yeah, very much so. But it's really not my theories, but those of
Friedman or Phelps. They went way out on a limb in the late '60s, say-
ing that high inflation wasn't going to give us anything by way of lower
unemployment. So Friedman and Phelps have really pushed things
away from the macroeconomics of the '60s, because they jumped to a
general equilibrium level of thinking about these problems. You could
see right away that what they were getting was a lot different from what
you were getting from any of the conventional econometric models. If
you look at the Phelps volume [1970] you can see where it all started.
The question was how to get that down in modern mathematical theory.
But it was not easy for Friedman and Phelps in those times. Go back
and look at the Brookings Economic Papers and you see that they were
treated like crackpots. But they got lucky, I would say; it was just dumb
To
Rahul
Fyr BG
THE PRESIDENT 11-14-95 HAS SEEN
Dolm
Breamy
Senator John Breaux
United States
Democrat-Louisiana
of America
Contact: Bette Phelan, Laine Glisson, 202-224-4623; Bob Mann, 504-382-2050
FOR IMMEDIATE RELEASE
November 9, 1995
BREAUX: WELFARE REFORM FIGHT CONTINUES, MUST INCLUDE WORK
WASHINGTON (Nov. 9) -- Sen. John Breaux (D-La.) issued the following
statement today on welfare reform:
"It is morally indefensible to argue that the status quo in welfare is the
right position for Democrats or Republicans. No one -- Republicans or
Democrats -- wants to put more children in poverty.
Today, the large numbers being bandied about Washington are not ones
based on the official definition of poverty. The Senate bill does not, according
to the Office of Management and Budget (OMB) analysis, put 1.2 million
children in poverty, if you use the official definition of poverty.
In fact, using the official measure of poverty, OMB estimates that the
Senate passed welfare bill would put 300,000 children in poverty and the
Democratic welfare alternative may lift 200,000 out of poverty.
But despite the release of these new Administration numbers, it should be
clear to everyone that we cannot continue to maintain a welfare program that is
simply an unconditional entitlement. It should be clear that our current welfare
system is already hurting millions of children.
Today, 22 percent of children live in poverty and more than 9 million
children receive Aid to Families with Dependent Children (AFDC).
Work must be a part of the solution. A government check is not a
substitute for a good job. Entitlement to a check, without the responsibility to
community and work, is a formula for disaster.
Furthermore, welfare reform cannot be achieved by a preconceived
number reached in the dark rooms by the budget conferees of just one political
party in search of money to reduce the deficit and cut taxes for the rich.
(more)
Right now, real welfare reform is being held hostage to back room, GOP
budget negotiations where money is being squeezed from essential social
programs to pay for their promised budget cuts. And that's wrong.
This means we moderates, who still want to pass a good welfare reform
bill this year, must continue to push key elements that are essential to changing
welfare as we know it. We want a welfare reform bill that will:
* Keep additional child care funds.
*
Require states to contribute in a "maintenance of effort."
*
Strengthen child support enforcement but not punish custodial.
mothers.
*
Reject the draconian cuts in SSI for children as proposed by the
House.
*
Maintain federal guarantees for abused and neglected children,
unlike the House bill.
*
Maintain benefits to teen mothers who live at home and stay in
school.
* Reject a mandatory family cap."
Sen. Breaux referred to the following chart during his afternoon press
conference:
Number of Additional Children in Poverty in the Year 2005
House-passed
Senate-passed
Senate Democratic
Welfare Bill
Welfare Bill
Welfare Bill
Official Measure of
500,000
300,000
-200,000 to
Poverty
200,000
Alternate Measure
2.1 million
1.2 million
100,000 to 500,000
of Poverty
Source: Tables 1 and 2 of November 9, 1995 report by OMB and other agencies.
Sen. Breaux's comments from the press conference are available by
calling 1-800-511-0763 or D.C. 202-228-1253 PIN #1400.
###
While the numbers released today do concern me, I do not think they mean we
should turn our backs on welfare reform. We just can't keep the status quo. We
need to restructure our welfare system. We need to require people on welfare to
work and to be responsible parents. Remember, the current system keeps 9 million
children in poverty. Is that something we should be proud of?
Let me make a few points about these numbers to show why I don't think they
should keep us from passing a welfare reform bill this year.
First, you should note that the statement that the Senate bill will put 1.2
million more children in poverty is based on an alternative definition of
300,000
poverty never before used by the federal government. Under the official
measure, which is also included in the OMB report, the Senate passed bill
will increase the number of children in poverty from 15.5 to 15.8 million, or
1.9% -- still not something to be proud of, but not as dramatic a change.
Note also that using the official poverty definition, the Senate Democratic
alternative will not increase poverty among children.
Second, more children will be put into poverty only if welfare reform fails.
Welfare reform is about work -- about requiring people on welfare to work
and giving them the tools the need to get jobs. All the welfare reform plans
ever proposed -- including the Family Support Act which passed the Senate
96 to 1 in 1988 -- enforce work requirements by sanctions which cut
benefits to those who don't work. No one knows for sure how many
recipients will go to work and how many will refuse and take the sanctions
instead. Under welfare reform, some families will go to work and will be
better off. Some may refuse to work and will be worse off. We don't really
know how many will be in each category. This analysis assumes 60% will
reach the end of the five year time limit without finding a job. It assumes
welfare reform fails.
Third, this analysis contradicts the best findings we have about welfare
reform. The GAIN program in California, which has been rigorously
studied by the Manpower Demonstration Research Corporation, improved
the economic well-being of welfare families. In all six counties studied --
including average performers as well as high performing Riverside county
-- families had a net gain in income. On average, welfare recipients gained
$923 dollars -- using a definition of income similar to the alternative one
used by OMB.
Number of Additional Children in Poverty in the Year 2005
House-passed
Senate-passed
Senate Democratic
Welfare Bill
Welfare Bill
Welfare Bill
Official Measure of
500,000
300,000
-200,000 to
Poverty
200,000
Alternate Measure
2.1 million
1.2 million
100,000 to 500,000
of Poverty
Source: Tables 1 and 2 of November 9, 1995 report by OMB and other agencies.
Differences between the Official and Alternate Measures of Poverty
in the OMB Report
Includes as Income
Official Measure of
Alternate Measure of
Poverty
Poverty
Earned income
Yes
Yes
Cash assistance (AFDC,
Yes
Yes
SSI, Social Security)
Food Stamps
No
Yes
School Lunch
No
Yes
EITC
No
Yes
Housing Assistance
No
Yes
BACKGROUND INFORMATION
OMB REPORT ON WELFARE REFORM
Findings of the Report
The report compares the welfare bills passed by the House and Senate and proposed by
the Senate Democrats. It also examines the income distributional effects of the GOP
budget.
The report estimates how many children will be put into poverty by both plans. The
report uses two different definitions of poverty -- the official poverty measure and an
alternative. It is under the alternative -- not the official measure -- that over one million
children are put into poverty. The report presents a range for the Democratic alternative
because OMB did not have time to develop a full model of the effects of the plan.
Number of Additional Children in Poverty in the Year 2005
House-passed
Senate-passed
Senate Democratic
Welfare Bill
Welfare Bill
Welfare Bill
Official Measure of
500,000
300,000
-200,000 to
Poverty
200,000
Alternate Measure
2.1 million
1.2 million
100,000 to 500,000
of Poverty
It's important to note that the 1.2 million figure is reached using an alternate definition of
poverty never before relied upon by the federal government. When people say "poverty"
they usually mean the official poverty measure, which counts only a family's cash income
(such as AFDC, SSI, and Social Security checks). Using the official measure of poverty,
the Senate passed bill would increase the number of children in poverty from 15.5 million
to 15.8 million, or an increase of 1.9 percent. Under the official poverty measure, the
Senate Democratic alternative would not increase poverty at all. The alternate measure
counts cash and in-kind income (such as food stamps and EITC as well as AFDC, SSI,
and Social Security), which exaggerates the "poverty" effect of the bills.
ocw,incoming Bob Nash
30
/HITE HOUSE
w.
caus
carol Rasw
ASHINGTON
sundida wt awt
sucome
November 13, 1995
Ruth Burks
115 Valley View
Hot Springs, Arkansas 71901
Dear Ruth:
Thanks for your letter of November 1 and for
your recommendation that both you and John
Anderson be appointed as delegates to the White
House Conference on HIV/AIDS. I know how much
you care about this issue, and I've passed your
letter along to Bob Nash, Director of
Presidential Personnel, for consideration.
It was good to hear from you, as always, and to
get an update on your activities. Please say
hello to Allison for me.
Sincerely,
Rillcenta
November
Dear mu. President,
shope that this letter
finds all well with you.
recommend two people who,
Immuriting this letter to
Libelieve, should be invite
to the Presidential Conference
on HIV/AIDS onDec 2,1995, the
first one is Dr. John anderson
S) washington D.C. alhave Known
Dr. anderson for over five
years und and with have been his very
of Phauledge. frontline
pressed depth
experience and his never
fight acquinst d think AIDS.
endin s) dedecation HIV and to the
We aferew words, Depth Jd of say: Pnauledge it would
that John should attend
20 sum up why in
Research on QUIV/AIDS and
on the area of Beh avidal
more importantly. his
inorrative approach to 2
training. as you will be
able to see from the include
expertise many
Haining
areas of HIV/AIDS education
2 would like to recommend
and call. the second person
is been me, involved as you know, in HIV/AIDS due
ion care, in Arkansas since this
education and present
epidemic startee d here in
the mid eightes. Lile done
it all from testing peoplayer who
have died from AIDS. I
HIV to Burying these
will bring fothe conference and
my expertise rast experience in Direct patient
care and case management
also how to work throw gh
the system when there the isint
or at the west
onein one place is
Bath John and d have been3.
on the frantlines of this
epidemic in professional
need us at this conference.
and personal ways. you
also December 1st is world
AIDS Day. It would he
a perfect time for our
reset to food and friends
and Grandmais House.
the visit would give you
that uno other us President
the first hand knauledge
has bothered to get The
risits would say more about
your commitment than you
Could even say
See amped So dill keep this
2 know that you are
Short, John and 2 look
forward to hearing from
you and Billey Webster,
P.S,
can be invite d let it
If only one of uns
be John He has the
ability to reach more
people than I do.
RB
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an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
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financial information [(a)(4) of the PRA]
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NOV 03 '95 15:50 OAKLAWN JOCKEY CLUB
P.2
CURRICULUM VITAE
John R. Anderson, PhD
District of Columbia License *1571
Maryland License *2500
Work Addresses: Office on AIDS
American Psychological Association
750 First Street, NE
Washington, DC 20002-4242
Phone:
(202) 336-6051 Pax (202) 336-6040
PERSONAL INFORMATION
Home Address:
1276 North Wayne Street, PH11
Arlington, VA 22201
(703) 525-0580
Date of Birth:
(b)(6)
Age:
42
Marital Status:
Single
EDUCATION
Undergraduate:
Southern Methodist University
August 1971 - December 1975
Degree: Bachelor of Business Administration
Graduate:
Stephen F. Austin State University
August 1977 - May 1980
Degree: Master of Arts in Clinical Psychology
University of Kansas
August 1980 - February 1988
Degree: PhD in Clinical Psychology
Internship:
George Washington University Medical Center
Washington, DC
Internship Director: Robert L. Jenkins, PhD
July 1986 - July 1987
Residency:
DC Institute of Hypnotherapy
Washington, DC
Director: Colin Frank, PhD
July 1987 - July 1988
NOV 03 '95 15:50 OAKLAWN JOCKEY CLUB
P.3
John R. Anderson, PhD
Page 2
CURRENT POSITIONS
Private Practice
Washington, DC & Bethesda, MD
March 1988 - Present
Duties Include:
1)
Providing individual, couple, family, group, and hypnosis therapies
2)
Conducting psychological assessments
3)
Specializing in work with people with HIV Disease, cancer, and other chronic illnesses
Director, HIV Office for Psychology Education
American Psychological Association, Washington, DC
October 1991 - Present
Duties Include:
1)
Directing the American Psychological Association's (APA's) $600,000.00 contract with
the National Institute of Mental Health created for the purpose of establishing a
nationwide program for training psychologists about working with people infected
and affected by HIV disease
2)
Developing model curricula for educating psychologists about working with people
infected and affected by HIV disease
3)
Recruiting nationally recognized experts in the areas of HIV services, research, and
training to serve as senior faculty for training regional networks of psychologists
trainers
4)
Planning and coordinating four-day Regional Training Conferences in which senior
faculty train regional networks of psychologist trainers how to use model curricula
and how to set up effective HIV-related continuing education workshops for
psychologists in their area
5)
Providing technical assistance and support to regional networks of psychologist
trainers as they conduct HIV-related continuing education programs for psychologists
in their area
6)
Promoting linkages between health and mental health care service delivery systems
and between training programs in psychology, social work, medicine, and nursing to
ensure coordinated and comprehensive psychosocial care for persons infected and
affected by HIV disease
7)
Providing technical assistance and consultation to members of APA involved in
research, education, and service delivery associated with HIV disease
8)
Supervising three people working in APA's Office on AIDS
NOV 03 '95 15:51 OAKLAWN JOCKEY CLUB
P.4
John R. Anderson, PhD
Page 3
CLINICAL EMPLOYMENT
Chief Resident
DC Institute of Hypnotherapy
Washington, DC
Supervisor: Colin Frank,PhD
August 1988 - May 1989
Duties Included:
1) Coordinating intake services
2) Conducting intake assessments
3) Supervision of post-graduate trainees
4) Conducting demonstration cases of individual hypnotherapy
Program Consultant
Osawatomie State Hospital
Osawatomie, Kansas
Supervisor: Joanne Hindeman, PhD
August 1985 - June 1986
Duties Included:
1)
Providing client-centered clinical consultation to multi-disciplinary staff of transitional
care unit of a state hospital
2)
Designing treatment program policies, procedures, and objectives for transitional care
unit
3)
Conducting group psychotherapy and anger management groups for inpatients
4)
Providing individual therapy and psychological assessments for inpatients
5)
Conducting staff development groups
Staff Psychologist
Osawatomie State Hospital
Osawatomie, Kansas
Supervisor: Brad Kahler, PhD
August 1984 - August 1985
Duties Included:
1)
Providing psychological assessments and conducting multi-disciplinary staffing for
admissions to Young Adult and Adult Admissions Units
2)
Providing individual, group, and family therapies for inpatients
3)
Developing treatment programs for inpatients
4)
Conducting in-service training for staff
5)
Providing supervision of counseling conducted by Licensed Mental Health Workers
6)
Providing program-centered consultation to the Team Consultants Unit of the state
hospital
NOV 03 '95 15:51 OAKLAWN JOCKEY CLUB
P.5
John R. Anderson, PhD
Page 4
Private Practice Associate
Private Practice, Gerald Gentry, PhD
Olathe, Kansas
October 1984 - May 1985
Duties Included:
1)
Providing psychological evaluations for inpatients and outpatients referred by
physicians in the Kansas City area
School Psychologist
Supervisors: Ray Eastman, PhD and Larry Pollock, PhD
Nacogdoches, Texas
December 1979 - August 1980
Duties Included:
1)
Providing intellectual, educational and psychological assessments, and individual and
family therapies for children and adolescents referred to the Special Education
Department of the Lufkin, Texas Independent School District
2)
Consulting with principals and classroom teachers to develop procedures for meeting
legal obligations as set forth in PL94-142
3)
Participating in Individual Educational Planning Conferences
4)
Consulting with special education teachers to design and implement contingency
management programs for special education classrooms
Psychological Resident
Nacogdoches Medical Center Hospital
Supervisors: Ray Eastman, PhD & Max Himel, MD
May 1979 - December 1979
Duties Included:
1)
Developing intake, assessment, ward, and after-care procedures for a newly
established psychiatric ward of a general hospital
2)
Developing treatment plans for psychiatric patients
3)
Providing psychological assessments for inpatients and outpatients
4)
Providing individual, group, family, and biofeedback therapies for inpatients and
outpatients
5)
Conducting staff development groups to aid with the resolution of procedural and
interpersonal staff conflicts
6)
Conducting in-service seminars on biofeedback and pain management for physical
therapy and psychiatric nursing staffs
NOV 03 '95 15:52 OAKLAWN JOCKEY CLUB
P.6
John R. Anderson, PhD
Page 7
TRAINING & TEACHING EMPLOYMENT
Director, AIDS Community Training Project
American Psychological Association, Washington, DC
June 1989 - September 1991
Duties Include:
1)
Directing the American Psychological Association's (APA's) $750,000.00 contract with
the National Institute of Mental Health for training health and mental health care
providers about psychosocial interventions for people with HIV Disease
2)
Coordinating three-day AIDS Community Training (ACT) Conferences in twelve
medium-sized cities across the country
3)
Conducting pre-conference site visits to determine AIDS-related training needs of
caregivers working in private practice, hospitals, health clinics, community mental
health centers, home health care agencies, substance abuse clinics, street outreach
programs, community-based AIDS service organizations, pastoral counseling facilities,
social service agencies, and departments of public health.
4)
Promoting linkages between health and mental health care service delivery systems
and training programs in psychology social work, medicine, and nursing
5)
Providing technical assistance to health care delivery institutions and community-
based agencies involved in delivering services to people with HIV disease
6)
Developing AIDS-related curricula for training conferences, symposia, and workshops
sponsored by the Continuing Education Committee of APA
7)
Providing technical assistance and consultation to members of APA involved in
research, education, and service delivery associated with HIV disease
8)
Supervising four people working in APA's Office on AIDS
Assistant Director, AIDS Community Training Project
American Psychological Association, Washington, DC
June 1988 - June 1989
Duties included:
1)
Managed logistics of three-day AIDS Community Training (ACT) Conferences for
health and mental health care providers in four medium-sized cities across the country
2)
Assisted in developing AIDS-related curricula for training conferences, symposia, and
workshops sponsored by the Continuing Education Committee of APA
3)
Assisted in providing technical assistance and consultation to members of APA
involved in research, education, and service delivery associated with HIV disease
4)
Assisted in developing measurement instruments and methodological procedures for
evaluating the impact of ACT Conferences
5)
Supervised one person working in APA's Office on AIDS
NOV 03 '95 15:49 OAKLAWN JOCKEY CLUB
P.1
November 3 1995
attn: maureen Lewis
20: President Bill Clinton
from: Ruth Burks 2dat Springs, AR
mauseen.
Here are the pages that d
spoke to you about Pages 1-4 17:
dwill mail the entirety this
afternoon. Please explain to
the Resident thatd left this
also, please Kell him that
out of the overne ght Package.
involved in AIDS Direct care
mcst of the people who were
arechaw dead. The 2ying were
in the beginning of this exidence
taking care of each other. That's
where my Experience is
critical to this conference.
Thank Sincerely you,
RUTH COKER-BURKS
PO Box 1433
(501) 623-0444
Hot Springs, AR 71902
Professional Experience
Executive Director, Helping People With AIDS, Little Rock, AR, 1991-present: 1994
* Conduct financial and social service needs assesments for clients
living with AIDS, allocate distribution of financial support, and
assist clients in working their way through the social service
delivery system;
*
Perform all fund-raising, including solicitation of financial
contributions and donation of in-kind services, organization of
fund-raisers, and coordination of benefit events with community
charitable foundations;
* Design and present community-based awareness and prevention education
and outreach programs.
On-site Conference Coordinator, AIDS Community Training Project, American
Psychological Association, Washington, DC, 1990-1991:
* Initiated proposal to APA staff which lead to the presentation of the
most successful and widely attended of eleven NIMH funded AIDS
Community Training Conferences in Little Rock, AR;
Organized comprehensive, week-long, state-wide needs assessment site
visit for APA staff and faculty consultant;
*
Supervised volunteer recruitment, solicited community endorsements
and funding, and coordinated conference logistics.
Sales Representative, Sunbay Resort Hotel, Hot Springs, AR, 1988-1990:
*
Developed a loyal customer base and increased sales volume through
personal attention to customers;
* Consistently ranked among the top three sales representatives in a 32
person sales force;
* Implemented monthly newsletter serving four resort communities.
Marketing Director/Sales Representative, South Shore Lake Resort, Hot
Springs, AR, 1984-1987:
* Developed innovative concepts and strategies to persuade potential
customers to visit the resort which increased overall sales by 42%
over a three month period and reduced marketing costs by 150%;
* Coordinated, managed, and trained a 23 person telemarketing staff;
*
Developed and implemented a liaison program between resort property
owners and management which is still highly effective today.
Volunteer Experience
Freelance Community-based Case Manager and HIV/AIDS Educator, Hot Springs,
AR, 1987-1991:
* In the absence of an institutional response to HIV in Garland County,
initiated a program of HIV/AIDS educational outreach to parks and
bars as well as speaking to church, school, medical, and business
groups;
Provided case management services to people newly diagnosed with
AIDS, including coordination of documentation for SSI and Medicaid
benefits, food stamps, housing and utilities assistance;
identification of appropriate health and dental care providers and
pharmacists; arrangement of appointments and transportation, and
organization of home-based files of complete medical records and
benefit support documentation;
Notes from home
$1.4 trillion budget proposed
See Page 4-A
See Page 10-B
Cloudy and cool with rain
likely. High of to 50.
Feb. 4, 1991
The Sentinel
35 cents
"Serving the National Park since 1877"
CALLING
From Page One
Caring for AIDS
One thing that made her
"People like to spread a litt.
patients calling
open about her involvement
cheer when they party here
for Spa resident
was when she took her eight-
she said.
year-old daughter, five at the
She said her favorite way
-
By Laura R. Felder
time, to visit some AIDS
approach the subject is wit
patients.
humor.
Staff Writer
"I said she couldn't tell any-
"You can approach it in S
one where we were," Burks
many different ways
There
Ruth Burks found her true
said. "It really bothered me
no reason not to be educated."
calling on Christmas 1987.
The Hot Springs resident
telling her that."
Burks recently attended a
She said once Allison, her
AIDS conference in Memphi
was visiting an AIDS patient,
lying near death, in a Little
daughter, started talking about
Tenn., to further educate he
it to her classmates, Burks
self about the disease and ho
Rock hospital. The man had
realized people were curious
to deal with it.
developed dementia and
repeatedly called for his moth-
about the disease more than
"These were real people tall
scared and judgmental.
ing to us about a real subject.
er.
"My big emphasis is on edu-
Some conference leader
When Burks realized his
cation," Burks said.
came to Arkansas and Burk
mother would not come, she
stayed in the room and soothed
"I'm very open about it. I
took them to hospitals an
the man.
talk about it all the time."
AIDS support groups aroun
"He was so relaxed and in
Burks, a Hot Springs native,
the state.
peace, I couldn't leave," she
thinks educating youths about
After the tour, a conferend
said. "I ended up staying there
the disease will slow the pace it
was set for February 14-16 i
until the man died.
is being spread. AIDS currently
Little Rock. A symposium a
"That's when I was hooked.
is growing by 32 percent per
AIDS on Ethnic Minority Con
I'd be doggone if I let another
year in Arkansas, as opposed to
munities will be Feb. 14 in con
person die alone."
the five percent increases in
junction with the AIDS Con
Since then, Burks, 31, has
urban, metropolitan areas.
munity Training (ACT) Confe
spent countless hours working
"I want my daughter to be
ence Feb. 15-16, at the Camel
with people who have Acquired
prepared and have compas-
Hotel. The ACT Conference
Immune Deficiency Syndrome,
sion," she said.
sponsored in part by the Ame
and educating others about the
"Chances are if you wait
ican Psychological Association
disease.
until your child is 16, 18, 19, to
of which Burks is a volunte
AIDS is a fatal disease
have a father-son talk, it'll be
consultant.
caused by a virus that breaks
too late We've got to protect
Burks' latest target is chi
down the body's immune sys-
our children."
dren who have a parent wit
tem, leaving people with the
She called Hot Springs, with
AIDS. Besides the addition
virus susceptible to a variety of
the number of people who visit,
burden on the social service
illnesses.
a "hotbed" for the AIDS virus.
funds, like social security, th
"When I first started, I was
children would receive whe
afraid to tell anyone what I
PHOTO BY DAVID VANN
the parent dies, Burks is con
was doing," she said.
CARE GIVER - Ruth Burks was nominated recently for an Arkansas Community
cerned with the psychologic
She said she was afraid the
Services Award for the Arkansas Division of Volunteers, mainly because of her
affects on the youths.
stigma attached to the disease
Burks thinks people may
I
would turn away her friends.
volunteer work with patients with Acquired Immune Deficiency Syndrome. Burks has
been taking care of people with AIDS since 1987 and was instrumental in bringing an
getting a test on how they rea
to those with AIDS.
See CALLING on Page 2-A
AIDS conference to Little Rock this month.
"How do we know this isr
God's call to Christians? We'
just now getting the chance
give unconditional love an
like people for who they are."
CC
w/inc.
THE WHITE HOUSE
Bob wash
WASHINGTON
Pstyto weep
Mack McLarty
spoke w Bob Nary E
Patti Me Hughn res this)
November 13, 1995
Kay M. McClanahan
Apartment 932
4600 South Four Mile Run
Alexandria, Virginia 22314
Dear Kay:
Thanks for your letter of November 1 and for
the update. I know Mack and Bob are working
hard to find something for you in the
Administration and that they'll continue doing
all they can to help. Please know how very
much I appreciate your desire to serve our
country.
It was so good to visit with you at the
concert, and I hope you'll keep me informed
about the interviewing process. See you soon.
Sincerely,
Biu
NOV- 1-95 WED 16:07
emaled
&
KAY M. McCLANAHAN
4600 S. Four Mile Run #932
Alexandria, Virginia 22314
703-820-7327
November 1, 1995
The President
The White House
(gue with
1600 Pennsylvania Avenue
Washington, DC 20005
Dear Mr. President:
M
As I mentioned to you at. the "Concert on the South Lawn" for
Arkansans (which was a wonderful event by the way) Mack contacted
me about eventually working with him on the next Hemispheric
Conference. For now. however, since my current position ends in a
few days, Mack and Bob Nash have encouraged me to work with them to
find something appropriate in the administration. I am delighted
and eager to begin after all this time. I was recently intervicwed
by Dr. Jue Nye for the position of Deputy Assistant Secretary at
Defenoc for Inter-American Affairs. Although I was not chosen, I
was honored to be considered.
In my search you might be interested to know what I have learned
concerning the Organization of American Slates. Of the 32 Country
Director positions at the OAStates 34 directorships are held by
men, none are held by women, and eight are vacant. The vacant
positions are:
Bahamas
Jamaica
Bolivia
Panama
Ecuador
Paraguay
El Salvador
The Dominican Republic
I would be happy to serve in any country, and already have ties to
a number listed here. Some of these connections are described
briefly in a memo I sent LU both Mack and Bob.
On another subject, Betsy Myers' new position and the briefings
being given to women on various topics are a terrific idea. I
recently attended one on the Impact of the Republican Budget on
Women. The speakers were focused and effective, offering great
arquments for us LU use. You'll see the resulto in the campaign.
The presentation by Hillary, Donna Shalala and Madeleine Albright
on the Beijing Conference was also wonderful. I have to keep
pinching myself to make sure I'm really having these opportunities.
Thank you again for your interest on my behalf.
Most sincerely,
Jay
NOV- 1-95 WED 18:07
P.01
DEVELOPMENT ASSOCIATES, INC.
1730 North Lynn Street
Arlington, Virginia 22209-2023. U.S.A.
Tel. No. (703) 276-0677; Fax No. (703) 276-0432
Facslmile Cover Page
TO:
Betty Curry
FROM:
Kay McClanahan
FAX No: 202-456-2883
DATE:
November 1, 1995
TEL NO: 202-456 2990
CHARGE TO:
Dear Betty,
Thanks alot tor passing this on for me. My parents finally got the pictures from the Oval
Office from this summer. Believe it or nol the Cleburne County Sun Times (which comes
out Wednesdays and Fridays) ran the picture on the front page even though it was five
month old news. Among other nice comments the article gave The President credit for
being liie good friend that he is. On one side was an article about the local Humane
Society and on the other, an announcement that John Sununu would be speaking that
night at Harding College in Searcy. Small towne are greatl
Hope to see you soon,
Fay
Kay
No. of pages, including cover page: 2
Note: If you do not receive all of the following pages or they are not legible, please call
us on the telephone number listed above.
The Information contained in this facimile message is contidermal information intended only for the use of the Individual UI vality named above.
II the reader of this maranga is not the intended recipient. you are requested not lo disseminate, distribute or copy this communication. If you have
received this communication in orror, please immediately notify us by telephone and return the original mossage 10 Sender at the above address
via regular mail. Thank you.
THE IZAAK WALTON
THE PRESIDENT HAS SEEN
Scheduling
11/13/2020
to
KALAIS
S
LEAGUE OF AMERICA
&
WILDLIFE CONSERVATION ORGANIZATIONS
Prepared by: Paul D. Hansen, Executive Director
mot 98 u E 3r TWH thea anour
Izaak Walton League of America
707 Conservation Lane
Gaithersburg, MD 20878
100
SPAND
American Fisheries Society (9,200)
5410 Grosvenor Ln.
Suite 110
Bethesda, MD 20814
Executive Director: Paul Brouha
Professional society promoting conservation, development and wise use
of fisheries.
American Sport Fishing Association
1033 North Fairfax St.
Suite 200
Alexandria, VA 22314
President: Mike Hayden
Sportfishing industry association whose goals include ensuring a healthy
and sustainable fisheries resource and increasing participation in sportfishing
through promotion and education.
Bass Anglers Sportsman Society (610,000)
5845 Carmichael Rd.
Montgomery, AL 36117
Chairman-CEO Helen Sevier
Organized to fight pollution and assist conservation agencies in educating
young people about good conservation practices.
National Office:
Midwest Office:
707 Conservation Lane Gaithersburg, Maryland 20878-2983
5701 Normandale Road Minneapolis, Minnesota 55424
Phone: (301) 548-0150 Fax: (301) 548-0146
Phone: (612) 922-1608 Fax: (612) 922-0240
Printed on Recycled Paper
2
Ducks Unlimited (536,633)
One Waterfowl Way
Memphis, TN 38120-2351
President: Donald L. Rollins
Organized to protect, enhance, restore, and manage important wetlands to
fulfill the life cycle needs of North American Waterfowl.
International Association of Fish and Wildlife Agencies
444 North Capitol St., NW
Suite 544
Washington, DC 20001
Executive V.P.: Max Peterson
Association of public agencies of countries in the Western hemisphere and
associate members whose principle objective is conservation, protection, and
management of wildlife and related resources.
Izaak Walton League of America (54,000)
707 Conservation Lane
Gaithersburg, MD 20878
President: Samuel E. Gibbons
Non-profit organization promoting conservation, protection, and
restoration of North America's natural resources and their wholesome use.
The National Wild Turkey Federation, Inc. (90,000)
Wild Turkey Building
P.O. Box 530
Edgefield, SC 29824-0530
President: Glenn Harrelson
Non-profit organization promoting wise conservation and management of
the American Wild Turkey.
Pheasants Forever, Inc. (75,000)
P.O. Box 75473
St. Paul, MN 55175
President: Robert C. Brengman
Non-profit organization to protect and enhance pheasant and other
upland wildlife populations.
Quail Unlimited, Inc. (44,000)
P.O. Box 10041
Augusta, GA 30903
President: M. McNeill Holloway
Non-profit organization to improve quail and upland game populations.
3
Rocky Mountain Elk Foundation (84,000)
P.O. Box 8249
Missoula, MT 59807-8249
President: Keith I. Ward
Organized to ensure the future of elk and other wildlife by conserving,
restoring, and enhancing natural habitats.
The Ruffed Grouse Society (23,000)
451 McCormick Rd.
Coraopolis. PA 15108
Executive Director: Samuel R. Pursglove, Jr.
Non-profit organization to improve the environment for ruffed grouse,
woodcock, and other forest wildlife.
Trout Unlimited (75,000)
1500 Wilson Blvd.
Suite 310
Arlington, VA 22209-2310
Contact: Steve Moyer
Non-profit organization dedicated to the conservation and restoration of
coldwater fisheries and their watersheds.
Wildlife Management Institute
1101 14th Street, NW
Suite 801
Washington, DC 20005
President: Rollin D. Sparrowe
Non-profit, scientific, and educational organization to promote
professional management of natural resources for the benefit of the resources
and the North America.
The Wildlife Society (8,900)
5410 Grosvenor Ln.
Bethesda, MD 20814
Executive Director: Harry E. Hodgdon
Professional scientific and educational organization dedicated to sound
stewardship of wildlife resources and the environment upon which wildlife and
humans depend.
THE PRESIDENT HAS JL.N 11-13-95
Laura 1903/100 {
p.cp- D-) should
eugliance referred before
gong to Jagan,
$ +ge 1
unit Queen
Mp6,8- - BC
THE PRESIDENT 11.13.95 HAS SEEN
SPECIAL ANALYSIS
U.S. Trade Policy with Japan: Assessing the Record
The Council of Economic Advisers and the Treasury Department recently released
an interim assessment of the Administration's trade policy with Japan that finds
evidence of improved access to Japan's markets. Although the solid export
performance detailed in the report has been influenced by a variety of factors, the
Administration's trade agreements with Japan appear to have contributed to the
growth in exports.
Export growth is strong. The report shows that, since the beginning of the
Administration, growth in U.S. exports to Japan has been strong-more than twice
the growth in U.S. exports to the
U.S. Exports to Japan
European Union. Moreover, export
In Covered Sectors and Other Sectors
growth in sectors covered by Clinton
180
Covered Exports
Administration trade agreements has
6-month moving average, January 1993 = 100
been even stronger. U.S. exports to
160
Japan in sectors covered by Clinton
140
Administration agreements have grown
nearly 80 percent since January 1993,
120
or about twice as fast as other exports
100
Other Exports
to Japan (see chart). Furthermore,
80
growth in U.S. exports to Japan in
1992
1993
1994
1995
these sectors has been accelerating-
exports in these sectors grew one-
seventh in 1993, one-quarter in 1994, and by nearly one-third in the first 8 months
of 1995.
Sectoral successes. The report also details gains in specific sectors where there
has been sufficient time since the agreements were signed to judge the results:
U.S. exports to Japan of medical instruments have grown over 50 percent
since an agreement on public sector procurement of medical technology
was signed in November 1994. This is over twice the rate of growth of
U.S. medical-instrument exports to the European Union.
Since the agreement on cellular telephones was signed in March 1994 and
the Japanese Government instituted deregulation measures, subscribers in
the Tokyo-Nagoya region have grown from 22,000 to 500,000. Motorola,
which had tried unsuccessfully for years to break into this market, provides
the bulk of equipment to build and maintain this system, with sales in the
hundreds-of-millions of dollars per year.
The Administration targeted apples as one of its first bilateral trade
initiatives with Japan. Whereas U.S. apple exports to Japan were once
banned, apple exports are now expected to reach $15 million in 1995.
Weekly Economic Briefing
4
November 10, 1995
THE PRESIDENT HAS SEEN
ARTICLE
District of Columbia's Economy Struggles with Job Loss
A bill recently passed by the House would set spending for the District of
Columbia at $4.9 billion for fiscal year 1996, representing a reduction of
$256 million below the budget level recommended by the District's financial
control board. This proposed cut comes at a time when the District's economy
is struggling to cope with substantial job loss due to continuing downsizing of the
Federal and local governments, as well as its ongoing budgetary and social
problems.
Analysis. The District has shed nearly
Payroll Employment in Washington, D.C.
45,000 jobs about 6.5 percent over
415
300
the past 5 years. While a fall in
410
Government (right scale)
290
private-sector jobs drove the decline
405
during the early 1990s, a sharp
280
400
Thousands
395
270
Thousands
reduction in government jobs (24,000
Federal and 7,000 local) was
390
260
responsible for the decline over the past
385
2 years (see chart).
Private sector (left scale)
250
380
375
240
Jobs in the District, of course, can be
1990
1991
1992
1993
1994
1995
held by residents of neighboring states,
and District residents likewise can hold
jobs outside the District, so changes in
Transfer Payments to Washington, D.C. Residents
3.1
jobs don't translate directly into
3
changes in employment of District
2.9
residents. In fact, the drop in
Billions of 1987 Dollars
2.8
employment of District residents has
2.7
been relatively greater than the number
2.6
of jobs eliminated in the District would
suggest. Employment has declined
2.5
18 percent over the past 5 years, and
2.4
about 20 percent since it peaked in
2.3
1980
1985
1990
1995
1988
This drop in employment has nearly doubled the District's unemployment rate,
from 4.8 percent in 1988 to 9.1 percent today. By comparison, the national rate
was 5.5 percent in 1988, the same as today. The weak job market has been one
factor pushing more residents on to public assistance, and causing Federal and
local government transfer payments to increase 20 percent since 1988 (see chart).
Outlook. With further cutbacks in Federal employment likely, the District's
future employment prospects depend on job creation in the private sector. On this
score the outlook is uncertain: although activity appears to have picked up
Weekly Economic Briefing
6
November 10, 1995
THE
PRESIDENT
HAS
SEN
BUSINESS, CONSUMER, AND REGIONAL ROUNDUP
Budget Cuts Threaten Federal Statistics Agencies. Both the House and Senate
Appropriations bills include sizable cuts (relative to Administration requests) in
the budgets for the major Federal statistics agencies. The Bureau of the Census
has said these cuts will require a large reduction in preparatory activities for the
2000 Decennial Census and elimination of some data gathering necessary for
scheduled improvements of the National Accounts. The Bureau of Economic
Analysis will have to end tabulation of regional, state, and local data. Perhaps the
highest profile cut, however, is to the Bureau of Labor Statistics, for which the
Administration requested $377 million, while the House budget was $30 million
less, and the Senate Appropriations Committee was $46 million less. If such cuts
E 3
are enacted. BLS likely will be forced to slow its research into correcting ways
in which the Consumer Price Index overstates rises in the cost of living. Such
corrections would have powerful effects on budget projections. In reaction,
Republican Congressional leaders recently have changed their tune and asked the
BLS whether it needs more funding to carry out such research.
THE Lou in 3.35 the
3 allano
by The
Official Warns Banks About Increasing Loan Risk. The nation's 40 largest
federally chartered banks have relaxed standards for consumer loans, according to
a survey and letter released by the Comptroller of the Currency. The survey
found that 48 percent of the banks had eased home equity lending standards. Of
the banks loosening standards, more than half said they are lowering collateral
requirements, with some reporting higher maximum credit lines. Standards for
I
indirect consumer lending (e.g., credit card balances) eased at 33 percent of the
surveyed banks, while 35 percent reported somewhat increased credit risk in this
area. The study also found that banks made more exceptions for individual loans
not conforming to the banks' established policies. The Comptroller concluded his
letter to the banks by expressing concern that banks not lose sight of the added
risk.
Education Department Releases Annual Report. In its annual study entitled,
"The Condition of Education," the Department of Education reports that the drop-
out rate for students in grades 10 to 12 held steady between 1992 and 1993. The
study also finds that high school graduates have taken more courses overall,
particularly in core academic fields. While the share taking remedial math courses
fell from 33 percent in 1982 to 17 percent in 1992, the proportion taking both
advanced algebra and geometry rose from 29 percent to 50 percent. In addition,
the study finds that more high school graduates are choosing to go to college
immediately after high school graduation, though it is very common for college
students to enroll, leave, possibly return, and thus not finish within the expected
period of time.
Weekly Economic Briefing
8
November 10, 1995
CLINTO GORE
THE PRESIDENT HAS SEEN
11.13.95
To: President Clinton
good
From: Ann Lewis
Date: November 8, 1995
I met with Drs. Steve Gleason and Rick Boxer this morning to discuss how we can best move
forward with the tremendous resources represented by the NHPC. We agreed on the following:
good
- We will try to schedule a December event for their 80-100 person speakers bureau, which includes
their top leaders. This day would include a briefing on current status of health and other domestic policy.
issues, a tour of the holiday decorations, and a meeting at the campaign for a more political briefing.
- We will build on this event as the next step in increasing contact with the speakers bureau.
Meanwhile, we will begin to design a 1996 surrogates campaign that has been updated for issues, language,
etc.
- We will make a desk available to them at the headquarters with a volunteer assigned to serve as
their presence here. They will consider how such a position should eventually be staffed; they would prefer
someone already familiar with NHPC.
- NHPC is a 501(c)(3) with a mailing list of 10,000 names and a 501(c)(4) which has been
established but not used. We will design a mail plan with them by which the (c)(4), as the action arm, can
mail to the (c)(3) list, asking for support and giving more electorally oriented information. This program
should enable us to mail 4 times to the entire membership at little or no cost.
- Message: We talked about the health care message for 1996 and the importance of including the
right reference to health care within the basic message. Among the likely components:
- post-budget, appropriate reference to Medicare, Medicaid, etc;
- inclusion of family safety and health, which would include the need for basic regulations such as
nursing home standards;
- violence (this could be another component of family safety and health, above);
- children and children's health
Other issues, including women's health, will also be important either for the main message or for
surrogates.
- Convention and delegate selection: We talked about a health care event at the convention and they
asked for a staff contact at the convention. We also introduced them to Jeff Forbes to begin talking about
delegate selection.
cc: Harold Ickes/Doug Sosnik
CLINTON/GORE '96
P.O. Box 19300 WASHINGTON, D.C. 20036-9300 PHONE 202/331-1996
Paid for by the Clinton/Gore '96 Primary Committee, Inc.
Contributions to Clinton/Gore '96 are not Tax Deductible.
THE PRESIDENT HAS SEEN
11-9.95
THE WHITE HOUSE
WASHINGTON
95 OCT 31 P6:56
October 27, 1995
MEMORANDUM FOR THE PRESIDENT
FROM:
PATRICK J. GRIFFIN My
SUBJECT:
CONGRESSIONAL CORRESPONDENCE
Attached are letters from Sen. Harry Reid (D-NV) and Rep.
Patricia Schroeder (D-CO) that I thought you might like to see.
11-13
SUUD copies
Copy to Jocelyn Jolley
M
5 us TOTAL
Copies of
Oct14 a Radio Address
Oct16 Austin Speech
sent to Congressional
for dispatch to Patricia
I chrocder.
HARRY REID
NEVADA
10.25.95
Dur mr. Pres.,
your internation regarding
nuclear waste, on the energy & water
appropriation hill was the fair &
reasonable thing to do. a prouth
result was of
you nerada is grateful as am I.
sincerely, Marry
HOUSE OF
PATRICIA Schroeder
15
FIRST DISTRICT, COLORADO
Pres.
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RADIO ADDRESS BY THE PRESIDENT TO THE NATION
October 14, 1995
The Roosevelt Room
Good morning. In recent weeks, all of us have had reason to
focus on two of the biggest problems facing our country -- the
problem of continuing racial divisions and the problem of violence
in our homes, violence against women and children.
Today, I want to talk to you about that violence in our homes.
It is prevalent, unforgivable and sometimes deadly. In the latest
statistics from the Justice Department, we find that close to a third
of all women murdered in this country were killed by their husbands,
former husbands or boyfriends.
For too long, domestic violence has been swept under the rug,
treated as a private family matter that was nobody's business but
those involved. Fortunately, that's changing.
In recent years, a huge public outcry against domestic violence
has been rising all across the nation. In our churches, schools and
throughout communities, we've begun to bring this problem out in
the open and deal with it. Now everyone knows it is cowardly,
destructive of families, immoral and criminal to abuse the women
in our families.
Just last week at the White House, I met with a group of women
who are survivors of domestic abuse. One woman told me of being
battered and terrorized for more than 20 years, all the while blaming
herself for the brutality she endured. It wasn't until her husband
attacked her son that she got up the courage to leave the marriage
and to seek help.
It's important to remember that when children witness or are
victimized by violence in the home, they often later grow up to abuse
their own families. So it can become a vicious cycle, as many
abusers were once those abused themselves.
The good news is we can do something about this. The same day I
met with the women survivors, I also met a remarkable Nashville
police sergeant named Mark Wynn, a young man who himself grew up in a
home where his father abused his mother and the children. But that
experience motivated him to become a police officer and to dedicate
his life to preventing domestic violence. For the past 10 years,
he's been educating police nationwide about the seriousness of this
problem and what to do about it. And he spearheaded the creation of
a special domestic violence unit in the Nashville Police Department
that has helped to reduce domestic murders by 70 percent in the last
six months alone.
2
One year ago, we made a major commitment in Washington to
ensuring the securities of our families with the bipartisan passage
of my anti-crime bill. That law banned assault weapons from our
streets and our schools and imposed tougher penalties for repeat
offenders, including the three-strikes-and-your-out law. It provided
resources for community-based prevention programs to give our
children something to say yes to. And it put 100,000 more police
officers behind our efforts at effective community policing. That's
an increase of about 20 percent in the number of police who are
protecting our citizens. In just a year, 25,000 of these new
officers are already out there working to help make your life safer.
And I've put aside $20 million to train our police to effectively
deal with the problems of domestic violence.
The Crime Bill also included the landmark Violence Against Women
Act. For the first time in our history, the federal government is
now a full partner in the effort to stop domestic violence. The
Violence Against Women Act combines tough new sanctions against
abusers with assistance to police, to prosecutors and to shelters
in the fight against domestic violence.
Just last week, we awarded grants to organizations in 16
different states to assist in their efforts to stop the violence and
support the victims. And soon we'll establish an 800 number where
women facing abuse can get assistance, counseling and shelter.
Yet at the very moment our nation has been focused on the
abuse against women by their husbands -- or former husbands or
boyfriends -- the House of Representatives has voted to cut
$50 million from our efforts to protect battered women and their
children, to preserve families and to punish these crimes. I'm happy
that the Senate agreed with me to fully fund the Violence Against
Women Act, and I certainly hope the House will reconsider its
decision.
Violence against women within our families will not go away
unless we all take responsibility for ending it. So let me close
today by speaking directly to the men of America -- not just as
President, or a father or a husband, but also as a son who has seen
domestic violence firsthand.
We all know how much we owe to the sacrifices of the women
who are our mothers, our wives, our sisters, our daughters. I was
fortunate enough to be raised by a loving mother who taught me right
from wrong and made me believe I could accomplish anything I was
willing to work hard for. Hillary and I were blessed to celebrate
our 20th wedding anniversary just this week. And of course, our
daughter Chelsea is the great joy of our lives.
3
I know that all of us support stronger law enforcement efforts
to deal with violence against all of the mothers, all of the wives,
all of the daughters in America. But the real solution to this
problem starts with us, with our personal responsibility and a simple
pledge that we will never, never lift a hand against a woman for as
long as we live. And that we will teach our children that violence
is never the answer. Then we can do all we can to end violence in
our homes, in our neighborhoods and in everyone else's homes and
neighborhoods throughout our beloved country.
Thank you for listening.
REMARKS BY THE PRESIDENT
IN ADDRESS TO THE LIZ SUTHERLAND CARPENTER
DISTINGUISHED LECTURESHIP
IN THE HUMANITIES AND SCIENCES
The Erwin Center
The University of Texas at Austin
Austin, Texas
October 16, 1995
My fellow Americans, I want to begin by telling you that
I am hopeful about America. When I looked at Nikole Bell up
here introducing me, and I shook hands with these other young
students, I looked into their eyes, and I saw the AmeriCorps
button on that gentlemen's shirt, I was reminded, as I talk about
this thorny subject of race today, of what Winston Churchill said
about the United States when President Roosevelt was trying to
pass the Lend-Lease Act so that we could help Britain in their
war against Nazi Germany before we, ourselves, were involved.
And for a good while the issue was hanging fire. And it was
unclear whether the Congress would permit us to help Britain,
who at that time was the only bulwark against tyranny in Europe.
And Winston Churchill said, "I have great confidence in the
judgment and the common sense of the American people and their
leaders. They invariably do the right thing after they have
examined every other alternative." So I say to you, let me begin
by saying that I can see in the eyes of these students and in the
spirit of this moment, we will do the right thing.
In recent weeks, every one of us has been made aware of a
simple truth -- white Americans and black Americans often see the
same world in drastically different ways -- ways that go beyond
and beneath the Simpson trial. and its aftermath, which brought
these perceptions so starkly into the open.
The rift we see before us that is tearing at the heart
of America exists in spite of the remarkable progress black
Americans have made in the last generation, since Martin Luther
King swept America up in his dream and President Johnson spoke
so powerfully for the dignity of man and the destiny of democracy
in demanding that Congress guarantee full voting rights to
blacks. The rift between blacks and whites exists still in a
very special way in America, in spite of the fact that we have
become much more racially and ethnically diverse, and that
Hispanic Americans -- themselves no strangers to discrimina-
tion -- are now almost 10 percent of our national population.
2
The reasons for this divide are many. Some are rooted in
the awful history and stubborn persistence of racism. Some are
rooted in the different ways we experience the threats of modern
life to personal security, family values, and strong communities.
Some are rooted in the fact that we still haven't learned to talk
frankly, to listen carefully, and to work together across racial
lines.
Almost 30 years ago, Dr. Martin Luther King took his last
march with sanitation workers in Memphis. They marched for
dignity, equality, and economic justice. Many carried placards
that read simply, "I am a man." The throngs of men marching in
Washington today, almost all of them, are doing so for the same
stated reason. But there is a profound difference between this
march today and those of 30 years ago. Thirty years ago, the
marchers were demanding the dignity and opportunity they were due
because in the face of terrible discrimination, they had worked
hard, raised their children, paid their taxes, obeyed the laws,
and fought our wars.
Well, today's march is also about pride and dignity and
respect. But after a generation of deepening social problems
that disproportionately impact black Americans, it is also about
black men taking renewed responsibility for themselves, their
families, and their communities. It's about saying no to crime
and drugs and violence. It's about standing up for atonement and
reconciliation. It's about insisting that others do the same,
and offering to help them. It's about the frank admission that
unless black men shoulder their load, no one else can help them
or their brothers, their sisters, and their children escape the
hard, bleak lives that too many of them still face.
Of course, some of those in the march do have a history
that is far from its message of atonement and reconciliation.
One million men are right to be standing up for personal
responsibility. But one million men do not make right one man's
message of malice and division. No good house was ever built on
a bad foundation. Nothing good ever came of hate. So let us
pray today that all who march and all who speak will stand for
atonement, for reconciliation, for responsibility.
Let us pray that those who have spoken for hatred and
division in the past will turn away from that past and give voice
to the true message of those ordinary Americans who march. If
that happens, the men and the women who are there with them will
be marching into better lives for themselves and their families.
And they could be marching into a better future for America.
3
Today we face a choice -- one way leads to further
separation and bitterness and more lost futures. The other
way, the path of courage and wisdom, leads to unity, to
reconciliation, to a rich opportunity for all Americans to make
the most of the lives God gave them. This moment in which the
racial divide is so clearly out in the open need not be a setback
for us. It presents us with a great opportunity, and we dare not
let it pass us by.
In the past when we've had the courage to face the truth
about our failure to live up to our own best ideals, we've grown
stronger, moved forward, and restored proud American optimism.
At such turning points America moved to preserve the union and
abolished slavery; to embrace women's suffrage; to guarantee
basic legal rights to Americans without regard to race, under
the leadership of President Johnson. At each of these moments,
we looked in the national mirror and were brave enough to say,
this is not who we are; we're better than that.
Abraham Lincoln reminded us that a house divided against
itself cannot stand. When divisions have threatened to bring our
house down, somehow we have always moved together to shore it up.
My fellow Americans, our house is the greatest democracy in all
human history. And with all its racial and ethnic diversity, it
has beaten the odds of human history. But we know that divisions
remain, and we still have work to do.
The two worlds we see now each contain both truth and
distortion. Both black and white Americans must face this, for
honesty is the only gateway to the many acts of reconciliation
that will unite our worlds at last into one America.
White America must understand and acknowledge the roots of
black pain. It began with unequal treatment first in law and
later in fact. African Americans indeed have lived too long with
a justice system that in too many cases has been and continues to
be less than just. The record of abuses extends from lynchings
and trumped-up charges to false arrests and police brutality.
The tragedies of Emmett Till and Rodney King are bloody markers
on the very same road.
Still, today, too many of our police officers play by the
rules of the bad old days. It is beyond wrong when law-abiding
black parents have to tell their law-abiding children to fear the
police whose salaries are paid by their own taxes.
4
And blacks are right to think something is terribly wrong
when African American men are many times more likely to be
victims of homicide than any other group in this country; when
there are more African American men in our corrections system
than in our colleges; when almost one in three African American
men in their 20s are either in jail, on parole, or otherwise
under the supervision of the criminal justice system -- nearly
one in three. And that is a disproportionate percentage in
comparison to the percentage of blacks who use drugs in our
society. Now, I would like every white person here and in
America to take a moment to think how he or she would feel if
one in three white men were in similar circumstances.
And there is still unacceptable economic disparity between
blacks and whites. It is so fashionable to talk today about
African Americans as if they have been some sort of protected
class. Many whites think blacks are getting more than their fair
share in terms of jobs and promotions. That is not true. That
is not true.
The truth is that African Americans still make on average
about 60 percent of what white people do; that more than half of
African American children live in poverty. And at the very time
our young Americans need access to college more than ever before,
black college enrollment is dropping in America.
On the other hand, blacks must understand and acknowledge
the roots of white fear in America. There is a legitimate fear
of the violence that is too prevalent in our urban areas; and
often by experience or at least what people see on the news at
night, violence for those white people too often has a black
face.
It isn't racist for a parent to pull his or her child close
when walking through a high-crime neighborhood, or to wish to
stay away from neighborhoods where innocent children can be shot
in school or standing at bus stops by thugs driving by with
assault weapons or toting handguns like Old West desperados.
It isn't racist for parents to recoil in disgust when they
read about a national survey of gang members saying that
two-thirds of them feel justified in shooting someone simply for
showing them disrespect. It isn't racist for whites to say they
don't understand why people put up with gangs on the corner or in
the projects, or with drugs being sold in the schools or in the
open. It's not racist for whites to assert that the culture of
welfare dependency, out-of-wedlock pregnancy, and absent
fatherhood cannot be broken by social programs unless there is
first more personal responsibility.
5
The great potential for this march today, beyond the black
community, is that whites will come to see a larger truth -- that
blacks share their fears and embrace their convictions, and they
openly assert that without changes in the black community and
within individuals, real change for our society will not come.
This march could remind white people that most black
people share their old-fashioned American values, for most black
Americans still do work hard, care for their families, pay their
taxes, and obey the law, often under circumstances that are far
more difficult than those their white counterparts face.
Imagine how you would feel if you were a young parent in
your 20s with a young child living in a housing project, working
somewhere for $5 an hour with no health insurance, passing every
day people on the street selling drugs, making 100 times what you
make. Those people are the real heroes of America today, and we
should recognize that.
And white people too often forget that they are not immune
to the problems black Americans face -- crime, drugs, domestic
abuse, and teen pregnancy. They are too prevalent among whites
as well, and some of those problems are growing faster in our
white population than in our minority population.
So we all have a stake in solving these common problems
together. It is therefore wrong for white Americans to do what
they have done too often -- simply to move further away from the
problems and support policies that will only make them worse.
Finally, both sides seem to fear deep down inside that
they'll never quite be able to see each other as more than enemy
faces, all of whom carry at least a sliver of bigotry in their
hearts. Differences of opinion rooted in different experiences
are healthy, indeed essential, for democracies. But differences
so great and so rooted in race threaten to divide the house
Mr. Lincoln gave his life to save. As Dr. King said, "We must
learn to live together as brothers, or we will perish as fools."
Recognizing one another's real grievances is only the first
step. We must all take responsibility for ourselves, our conduct
and our attitudes. America, we must clean our house of racism.
To our white citizens, I say, I know most of you every day
do your very best by your own lights to live a life free of
discrimination. Nevertheless, too many destructive ideas are
gaining currency in our midst. The taped voice of one policeman
should fill you with outrage. And so I say, we must clean the
6
house of white America of racism. Americans who are in the white
majority should be proud to stand up and be heard denouncing the
sort of racist rhetoric we heard on that tape -- so loudly and
clearly denouncing it, that our black fellow citizens can hear
us. White racism may be black people's burden, but it's white
people's problem. We must clean our house.
To our black citizens, I honor the presence of hundreds of
thousands of men in Washington today, committed to atonement and
to personal responsibility, and the commitment of millions of
other men and women who are African Americans to this cause. I
call upon you to build on this effort, to share equally in the
promise of America. But to do that, your house, too, must be
cleaned of racism. There are too many today, white and black,
W
on the left and the right, on the street corners and radio waves,
who seek to SOW division for their own purposes. To them I say,
no more. We must be one.
Long before we were so diverse, our nation's motto was
"E Pluribus Unum" -- out of many, we are one. We must be
one -- as neighbors, as fellow citizens; not separate camps,
but family -- white, black, Latino, all of us, no matter how
different, who share basic American values and are willing to
live by them.
When a child is gunned down on a street in the Bronx, no
matter what our race, he is our American child. When a woman
dies from a beating, no matter what our race or hers, she is our
American sister. And every time drugs course through the vein of
another child, it clouds the future of all our American children.
Whether we like it or not, we are one nation, one family,
indivisible. And for us, divorce or separation are not options.
Here, in 1995, on the edge of the 21st century, we dare not
tolerate the existence of two Americas. Under my watch, I will
do everything I can to see that as soon as possible there is only
one -- one America under the rule of law; one social contract
committed not to winner take all, but to giving all Americans
a chance to win together one America.
Well, how do we get there? First, today I ask every
governor, every mayor, every business leader, every church
leader, every civic leader, every union steward, every student
leader -- most important, every citizen -- in every workplace
and learning place and meeting place all across America to take
personal responsibility for reaching out to people of different
races; for taking time to sit down and talk through this issue;
to have the courage to speak honestly and frankly; and then to
have the discipline to listen quietly with an open mind and an
open heart, as others do the same.
7
This may seem like a simple request, but for tens of
millions of Americans, this has never been a reality. They have
never spoken, and they have never listened -- not really. I am
convinced, based on a rich lifetime of friendships and common
endeavors with people of different races, that the American
people will find out they have a lot more in common than they
think they do.
The second thing we have to do is to defend and enhance
real opportunity. I'm not talking about opportunity for black
Americans or opportunity for white Americans; I'm talking
about opportunity for all Americans. Sooner or later, all
our speaking, all our listening, all our caring has to lead to
constructive action together for our words and our intentions
to have meaning. We can do this first by truly rewarding work
and family in government policies, in employment policies, in
community practices.
We also have to realize that there are some areas of our
country -- whether in urban areas or poor rural areas like south
Texas or eastern Arkansas -- where these problems are going to be
more prevalent just because there is no opportunity. There is
only so much temptation some people can stand when they turn up
against a brick wall day after day after day. And if we can
spread the benefits of education and free enterprise to those who
have been denied them too long and who are isolated in enclaves
in this country, then we have a moral obligation to do it. It
will be good for our country.
Third, and perhaps most important of all, we have to give
every child in this country, and every adult who still needs it,
the opportunity to get a good education. President Johnson
understood that; and now that I am privileged to have this job
and to look back across the whole sweep of American history, I
can appreciate how truly historic his commitment to the simple
idea that every child in this country ought to have an
opportunity to get a good, safe, decent, fulfilling education
was. It was revolutionary then, and it is revolutionary today.
Today that matters more than ever. I'm trying to do my
part. I am fighting hard against efforts to roll back family
security, aid to distressed communities, and support for
education. I want it to be easier for poor children to get off
to a good start in school, not harder. I want it to be easier
for everybody to go to college and stay there, not harder. I
want to mend affirmative action, but I do not think America is
at a place today where we can end it. The evidence of the last
several weeks shows that.
8
But let us remember, the people marching in Washington today
are right about one fundamental thing -- at its base, this issue
of race is not about government or political leaders; it is about
what is in the heart and the minds and life of the American
people. There will be no progress in the absence of real
responsibility on the part of all Americans. Nowhere is that
responsibility more important than in our efforts to promote
public safety and preserve the rule of law.
Law and order is the first responsibility of government.
Our citizens must respect the law and those who enforce it.
Police have a life and death responsibility never, never to abuse
the power granted them by the people. We know, by the way, what
works in fighting crime also happens to improve relationships
between the races. What works in fighting crime is community
policing. We have seen it working all across America. The crime
rate is down. The murder rate is down where people relate to
each other across the lines of police and community in an open,
honest, respectful, supportive way. We can lower crime and raise
the state of race relations in America if we will remember this
simple truth.
But if this is going to work, police departments have to be
fair and engaged with, not estranged from, their communities. I
am committed to making this kind of community policing a reality
all across our country. But you must be committed to making it a
reality in your communities. We have to root out the remnants of
racism in our police departments. We've got to get it out of our
entire criminal justice system. But just as the police have a
sacred duty to protect the community fairly, all of our citizens
have a sacred responsibility to respect the police; to teach our
young people to respect them; and then to support them and work
with them so that they can succeed in making us safer.
Let's not forget, most police officers of whatever race are
honest people who love the law and put their lives on the lines
so that the citizens they' re protecting can lead decent, secure
lives, and so that their children can grow up to do the same.
Finally, I want to say, on the day of this march, a moment
about a crucial area of responsibility -- the responsibility of
fatherhood. The single biggest social problem in our society may
be the growing absence of fathers from their children's homes,
because it contributes to so many other social problems. One
child in four grows up in a fatherless home. Without a father
to help guide, without a father to care, without a father to
teach boys to be men and to teach girls to expect respect from
men, it's harder. There are a lot of mothers out there doing a
9
magnificent job alone, but it is harder. It is harder. This,
of course, is not a black problem or a Latino problem or a white
problem; it is an American problem. But it aggravates the
conditions of the racial divide.
I know from my own life it is harder because my own father
died before I was born, and my stepfather's battle with alcohol
kept him from being the father he might have been. But for all
fathers, parenting is not easy and every parent makes mistakes.
I know that, too, from my own experience. The point is that
we need people to be there for their children day after day.
Building a family is the hardest job a man can do, but it's
also the most important.
For those who are neglecting their children, I say it is
not too late; your children still need you. To those who only
send money in the form of child support, I say keep sending the
checks; your kids count on them, and we'll catch you and enforce
the law if you stop. But the message of this march today -- one
message is that your money is no replacement for your guiding,
your caring, your loving the children you brought into this
world.
We can only build strong families when men and women respect
each other; when they have partnerships; when men are as involved
in the homeplace as women have become involved in the workplace.
It means, among other things, that we must keep working until we
end domestic violence against women and children. I hope those
men in Washington today pledge among other things to never, never
raise their hand in violence against a woman.
So today, my fellow Americans, I honor the black men
marching in Washington to demonstrate their commitment to
themselves, their families, and their communities. I honor the
millions of men and women in America, the vast majority of every
color, who without fanfare or recognition do what it takes to be
good fathers and good mothers, good workers and good citizens.
They all deserve the thanks of America.
But when we leave here today, what are you going to do?
What are you going to do? Let all of us who want to stand up
against racism do our part to roll back the divide. Begin
by seeking out people in the workplace, the classroom, the
community, the neighborhood across town, the places of worship
to actually sit down and have those honest conversations I
talked about -- conversations where we speak openly and listen
and understand how others view this world of ours.
10
Make no mistake about it, we can bridge this great divide.
This is, after all, a very great country. And we have become
great by what we have overcome. We have the world's strongest
economy, and it's on the move. But we've really lasted because
we have understood that our success could never be measured
solely by the size of our Gross National Product.
I believe the march in Washington today spawned such an
outpouring because it is a reflection of something deeper and
stronger that is running throughout our American community. I
believe that in millions and millions of different ways, our
entire country is reasserting our commitment to the bedrock
values that made our country great and that make life worth
living.
The great divides of the past called for and were addressed
by legal and legislative changes. They were addressed by leaders
like Lyndon Johnson, who passed the Civil Rights Act and the
Voting Rights Act. And to be sure, this great divide requires a
public response by democratically elected leaders. But today we
are really dealing, and we know it, with problems that grow in
large measure out of the way all of us look at the world with
our minds and the way we feel about the world with our hearts.
And therefore, while leaders and legislation may be
important, this is work that has to be done by every single one
of you. And this is the ultimate test of our democracy, for
today the house divided exists largely in the minds and hearts
of the American people. And it must be united there in the minds
and hearts of our people.
Yes, there are some who would poison our progress by selling
short the great character of our people and our enormous capacity
to change and grow. But they will not win the day; we will win
the day.
With your help -- with your help -- that day will come a lot
sooner. I will do my part, but you, my fellow citizens, must do
yours.
Thank you, and God bless you.