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me, and without whom none of this would have happened.

The first thing we did was to move beyond the failed economic policies of the past, beyond tax-and-spend and beyond trickledown. Our economic plan is imbued with ideas the DLC has been advocating for years. We had the largest deficit reduction plan in history, fueled in part by more than 350 specific spending cuts that I have now signed entirely into law. And I want to remove some of the veil of rhetoric about that. I'm not talking about smaller increases than were in the last Bush budget. I'm talking about 350 accounts in the Federal budget where we are spending less money this year than we did last year. Real spending cuts.

We did ask the wealthiest Americans to pay their fair share, and overwhelmingly, most of them told me as I was campaigning around the country, "I will do that if you'll bring the deficit down and give me value for money in what you spend the money on." This was not a question of class warfare; it was a question of fundamental fairness trying to reverse the situation in which the middle class found itself for the last 12 years of paying higher taxes on lower income.

In addition to that, for working families with less than $180,000 a year in income, there will be no tax increase. Let me read you from a review of the new tax law written by the Kiplinger personal finance magazine, hardly an arm of the Democratic Party. I quote from Kiplinger-where were these people when I needed them, when we were debating this in Congress? I quote, "About 110 million Americans will file individual tax returns next spring. On 108 million of them taxes will take a smaller bite than they did this year." That's right, smaller. The fact is, Kiplinger says, "More than 98 percent of us are not affected by the higher income tax rates which reach back to the first of the year. Our tax bills will go down a bit on the same income because taxes are indexed for inflation." If you are part of the forgotten middle class, don't forget that.

In addition, in this economic plan there are progrowth DLC ideas, investment incentives. Small business expensing is dramatically increased so that 90 percent of the small businesses in this country, because of the in

crease in the expensing, will pay lower Federal income taxes this year than they did last year, 90 percent. There is a venture capital gains tax here for small businesses and new businesses where the investment is held for

5

years or longer, tax rate cut by 50 percent. There are expansions in the resource and development tax credit and other things designed specifically to spur high technology growth in areas where we need it and where we have great opportunities moving toward the 21st century.

There are pro-work, pro-family welfare reform ideas in this economic plan, including the earned-income tax credit, about which I will speak more later, I think the most significant pro-work, pro-family economic reform we have enacted in 20 years. There are reinventing Government DLC ideas in this economic plan, including a major overhaul of the college loan program in which we save billions in administrative costs and put it into providing lower interest loans to college students who can pay them back on easier terms as a percentage of their income. But we toughen the collection terms so we make sure they can't beat the bill. These things were all in that economic plan, and because of that, what really matters is the result.

And let me say here, a cautionary note, this country is dealing with structural economic challenges of 20-year duration. We are dealing with social challenges that have been building for 30 years. We are reversing economic policies that were in place for 12 years. We will not be able to turn this around overnight. The average American has not yet felt a significant change in his or her economic circumstances. But look at the direction we are going in. We have historically low interest rates. Inflation is down to very low levels, 20-year low levels. Investment is up. Housing sales last month were at a 14-year high. The unemployment rate drop this month was the best drop in 10 years.

We've had 1.6-plus million new jobs come into this economy since January. The private sector jobs since January are about 50 percent more, almost 50 percent more than were created by the private sector in the vious 4 years. One of the ironies is that under this administration for the next 4 years, Government jobs won't grow as much as they

pre

did in the past 4 years. The private sector jobs will grow more.

Now we have a long way to go. We still are dealing with stagnant incomes. We are still dealing with the fact that more and more people who lost their jobs lose them permanently and have to find new and different jobs. And that imposes new obligations on us. But we have unemployment down, investment up, no inflation, and low interest rates. We are moving in the right direction.

The decision to go after the deficit and to do it in a progressive, fair way with new ideas was the right decision. And the rhetoric is now being wiped away by the reality. The Kiplinger report will be found now by ordinary people when they get their tax forms in April. And a lot of the blows that this administration and this party suffered unfairly and wrongly in the last year happened because people put out bogus rhetoric that could not be overcome by the reality. Now when you see the Kiplinger report and the tax forms come out, and people don't pay more taxes, they pay less and we've got inflation, high investment, more jobs, and lower unemployment, the truth will out just like it always does.

low

Again I will say, all the good ideas in the world does not relieve you of the obligation

to make the hard decisions and to do it in a way that permits us to go forward. That is, somebody has to decide, and we have to move, and we have to act, and it all has to count up to a majority so you can go forward. That's what democracies do.

But it won't be enough. This on its own terms will not be enough to expand incomes and create jobs sufficient to restore the interest of middle class America. Why? Because you have to have a growing economy in a global context. With productivity going up, a lot of big companies are downsizing. They are going to become more profitable. But what does productivity increase mean? It means the same person can produce more, right? Sometimes it means fewer people can produce more. We've had utterly astonishing growth in productivity in the manufacturing section in America, now coming into the service sector and into the Government sector, as we use more and more new technology. What does that mean? That means

fewer people do more work. That means higher unemployment, and since you got all these unemployed people out here, it means pressure to keep wages down.

So if you want incomes to go up and jobs to increase, what must you do? You must have more customers. There have to be more customers for America's goods and services. There is no other way to increase incomes and to increase jobs in this country.

That is why we have pursued another course, long advocated by the DLC, trying to broaden the opportunity for Americans to sell their goods and services. That is why last summer I met with the G-7 and got those countries to agree to expanding market access for manufacturing products. That is why I have started trying to build a new and very different relationship with Japan. It is simply unsustainable over the long run for these two great economies to have the kind of imbalance in our economic relationship that we the DLC for the North American Free Trade have. That is why I fought so hard along with Agreement. And that is why our Trade Amthe last 48 hours as we try to work out an bassador, Mickey Kantor, has hardly slept for agreement with Europe that's good for us and good for them on the GATT rounds, so that we can try to get a new worldwide trade agreement by the end of the year.

I want to say a special word of thanks to all of you who were involved in the NAFTA struggle. It was not an easy one. The Speaker of the House called it a Lazarus project: It came back from the dead. But I particularly appreciate the courageous stance taken by those who had to disagree with their friends honestly and openly because none of us could figure out how to grow this economy and grow more jobs unless we have more customers in an environment in which the global economy is growing. That's why I went

out to meet with the APEC ministers.

Someday the whole story of this great struggle will be known, but I do want to say I am very grateful to the people in the Congress who did the work, and to Mr. McLarty who kept in close touch with the President's office in Mexico, and to all the people on my staff and all the people who have made this happen, people like my good friend

Steny Hoyer, who really stuck his neck out on this and took a big risk for it.

It is a simple, elemental principle that we must grow the global economy if a rich country, whether it's America, Japan, or the European Community, is going to be able to maintain higher incomes and more jobs.

Now, the second thing we've got to do is to enable people to succeed in this economy. In other words, we have to enable people in America—if we have good economic policies and if we can get global economic growth, we have to enable more Americans to succeed. It must be possible in our country, in other words, to be a successful worker and a successful parent, since most workers are parents and most parents have to work. That's why I supported and signed the Family and Medical Leave Act, something you would support. That's why I fought so hard in the economic plan for the earned-income tax credit.

That phrase is totally Greek to most people. They don't understand it. But what it means is that on April 15th between 15 and 16 million working families in this country, representing over 40 million American citizens who worked this year for incomes of $23,000 a year or less going up to $26,000 in a couple of years—will get an income tax reduction. Why? Because even though they work 40 hours a week and they have children in the home, they are at, just below, or just hovering above the Federal poverty line. This is the most important thing we can do in welfare reform, to make a simple statement that if you have kids and you work 40 hours a week, you will not be in poverty; we will reward your work. The tax system will keep you out of poverty.

It was a very, very difficult thing to do because it costs money, and it complicated the politics of passing the budget. But it was the right thing to do because unless we can reward work and family at the same time, we are not going to get where we need to go. And it matters. We cannot ask the American people to be in the position every year-and for many of them, every week and every day-of choosing between being a good parent and a good worker. You have to be able to succeed at both in the world in which we

are living. And I think it was terribly impor

tant.

The next thing I want to say is we've got to train a whole generation to think about work in a different way, and we have to reorganize our systems. We literally have to reinvent our systems for dealing with how people deal with work, the loss of it, and the acquisition of new jobs. There are lots of things involved in that, but one of them plainly is opening the doors of college education to all Americans. I mentioned earlier that we have reformed the student loan law. We also passed one of the DLC's most cherished ideas, the national service act, into law, thanks to, literally, the parenting work of Eli Segal in developing the legislation, getting it through, setting up the organization, and maintaining the confidence of large numbers of Republicans as well as Democrats in the United States Congress.

And I know he's going to talk about that in a moment, but 3 years from now, 100,000 young people will be able to earn some money for further education while rebuilding their communities from the grassroots up. This idea has the potential to totally reshape the way Americans think about their country and to bring a dramatic change in this country on a whole range of social problems from the grassroots up. And Senator Nunn and Congressman McCurdy and any number of other people in the DLC were out there pounding on this idea for years and years and years. And I thank you for that, and I hope you are proud of the fact that it is a law of the land.

The last thing I want to say about what we've tried to do already is that we recognized in this organization a long time ago that if people didn't feel a certain level of basic security, it was very difficult for them to make the changes we need to make. If you want to challenge people to seize opportunities and to assume more responsibility, if you want people to be able to live with, basically, the chaotic nature of the world in which we find ourselves—a very exciting world if you can figure out how to win in it-there has to be some sense that the basic fabric of society is being maintained, that there is some order, some security, some discipline which we need to observe.

That is why this crime and violence issue is so important: huge increases in violent crime in many communities in this country; police at an increasingly disadvantageous position-now over three violent crimes for every police officer in the country, where it used to be the reverse, three police officers for every crime just 30 years ago; and all the stories you know about children killing children, or young teenagers being better armed than police officers.

We know there are some things that work. We know the DLC does, we've been advo

cating this for years-that community policing works. Mayor Lanier in Houston just proved it in the ultimate way, by getting over 90 percent of the vote. I was trying to think of who else could get 90 percent of the vote for anything. It tells you how passionately people care about this public safety issue.

We are trying our best in these difficult budget times to get a crime bill out that will produce 100,000 new police officers. But they must be properly trained and properly deployed. That is a challenge for you in the DLC; it is a challenge for us as Americans to make sure not only that we pass a bill in Congress that provides the police officers but that when they get down to whatever town or city they're in, that they are properly trained and properly deployed. Community policing works. You can lower crime, not just by catching more criminals but because it actually helps to prevent crime from occurring in the first place. It really matters.

There are some other things we ought to do in that crime bill, too, and I'll just mention two. We need to provide alternative punishments for youthful offenders so that we can use the prison space we have to keep people who shouldn't get out for as long as they should stay in. The boot camp proposals are in this crime bill, another DLC idea that we have advocated for years and years, something that I tried to do at home when I was a Governor. And it's an important part of the bill.

There are two other things in the bill. Senator Kohl, from Wisconsin, has put an amendment in to ban the ownership of handguns by young people under 18 and to limit access to them to properly controlled cir

cumstances by minors. And it passed overwhelmingly.

Then there was an amendment by Senator Feinstein to ban several assault weapons and to specify a number of hunting weapons that cannot be restricted at all because they're hunting rifles and they are things that people use for sporting purposes. I think it is a good, balanced amendment, and I hope it will be in the final provision of the crime bill.

Lastly, let me say that I was elated earlier this week, on Tuesday, to sign the Brady bill into law, and I thank the DLC for its longstanding support of the Brady bill.

I also want to say that it is perfectly clear to me that one of the biggest problems we face as Democrats is that we know that the Government has a role to play in dealing with that in America there is a historic distrust a lot of these problems. But we also know of Government that is healthy. And in the more recent years that distrust has risen to record levels which is not healthy, and we have to do something about it. But the only way we can do anything about it is by giving people better value for their Government. And I want to really say a special word of thanks for the work that David Osborne and Elaine Kamarck have done in helping the Vice President on this reinventing Government project.

I want you to know that this is not just a report. The report recommends that we do what most companies have been doing for years to eliminate unnecessary layers of management and empower front-line workers to become more responsive to customers to constantly improve our services. We are moving to implement that report. The House voted right before they left to implement our recommendation to reduce by 252,000 by attrition, not by laying people off, the Federal work force over a 5-year period. The Senate voted to pay for the crime bill by doing that. But both have agreed that we ought to do

it.

The question now is whether we will be given the tools to do it in a humane and responsible way, in a way that is good for the Federal employees, good for the Federal work force, good for the taxpayers of the country. But it is a very important thing. We can only make this Government work if we

have the tools to do it. We have, for example, clear evidence that the Pentagon can meet a lot more of our national security needs if we have procurement reform, that we are still wasting billions of dollars in the way we buy things.

When I was in Alameda the other day on the U.S. carrier Carl Vincent having lunch with some career Navy personnel, an enlisted man with 19 years of service told me that he had just because he was on a ship he had access to emergency procurement, sort of an escape hatch from the procurement clause-he said, "I went down to a computer store and I bought a personal computer for this ship for something we needed that cost one-half as much and had twice the capacity of the computer required to be bought in the procurement regulations of the Federal Government." That is still going on.

We have a procurement reform bill pending in the Congress. If we are going to do what you want us to do on reinventing Government we have got to be given the legal authority to manage this Government with the same sort of flexibility and common sense that people in the private sector have.

And you know, I've got my longtime friend and former colleague and your former chairman, Chuck Robb, behind me. I mean, he's been preaching this stuff for years, and when he was a Governor, he worked on it. And I can just tell you that there are things we can do to save billions of dollars and still increase investment where we need it, but we have to be given the tools to do it.

So I ask the DLC to urge the Congress to pass the structural reforms we need to have the kind of budgeting, procurement, and personnel practices that will permit us to save money and increase investment in our future at the same time.

Now, next year we have a lot of challenges ahead of us: health care, welfare reform, redoing the system of education and job training and unemployment, to mention the three biggest, perhaps. And I would like to say just a word about each of them in terms of the ideas of the DLC.

First, we have to provide our workers and businesses the security they need to know that they will not be bankrupted by an illness or paralyzed by the constant fear of the loss

of coverage. Almost nobody in America today really knows for sure that they will never lose their health care coverage for sure, no matter what happens to them or what happens to their business.

I want you to know what this budget really looks like, and the only reason the deficit is a continuing problem. I wish I had a graph here. If I had a graph here and this were zero on spending this is zero, zero increases. Here is where defense is going, down; domestic spending, flat. That means every time we put more money into Head Start we have cut that much money somewhere else. Interest on the debt is going up some because even though interest rates are low, the corpus of the debt is getting bigger. Then our revenues are going up like this, about 8 percent next year, retirement going up because of the cost-of-living that everybody gets who is on Social Security or any kind of retirement. But the big numbers are Medicare, 11 percent, one year. This is at 32 percent inflation max, right? One percent growth in the Medicare rolls, 2 percent growth in the Medicaid rolls. Medicare going up 11 percent, Medicaid going up 16 percent. That is it. At a time when the most conservative Republicans in the Congress would say we should be spending more on new high-technology ventures and in defense conversion and in trying to help us adjust from a defense to a domestic economy, that's what we're spending our money on.

And I talked to executive after executive facing the same thing. But there is good news. The Federal health insurance program, which is big and has bargaining power, has actually had many of its policies lower this year than they were last year. The State of California, which is in terrible financial shape-so everybody knows they don't have a lot of money and which has huge bargaining power-has negotiated a cost increase in its premiums less than the rate of inflation.

So what do we have to do with health care? Again, to avoid the stale debate of right and left-one side says, well, the present system is just going to cure itself, and another is saying that the Government ought to take it over and operate it--what can we do?

If you go back to what you wrote in "Mandate for Change”—when Jeremy Rosner was

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