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"A New Covenant for Economic Change"
Governor Bill Clinton
Georgetown University
November 20, 1991
:
Thank you for being here today. A better future for your
generation -- a better life for all who
will work for it -- is what this campaign is about.
But I come here today convinced that your future -- the very
future of our country -- the
American Dream -- is in peril. This country is in trouble. As
I've travelled around this country, I've
seen too much pain on people's faces, too much fear in people's
eyes. We've got to do better.
This month, I visited with a couple from New Hampshire named
David and Rita Springs. He's
a chemical engineer by training; she's studying to be a lab
technician. They told me that a month before
his pension was vested, the people who ran his company fired him to
cut their payrolls. Then they
turned around and sold the company, and bailed out with a golden
parachute while David Springs and
his family got the shaft.
Last week, at a bowling alley in Manchester, I met a fireman
who was working two jobs and his
wife who was working 50 hours a week in a mill. They told me they
were worried that even though
both of them were working like this and their son was a straight A
student, they still wouldn't be able to
afford to send him to college because of the rising cost of college
education and because they were too
well-off to get government help.
At a breakfast in a cafe in New Hampshire, I met a young man
whose 12-year-old child had had
open-heart surgery, and now no one will hire him because they can't
afford his health insurance.
The families I met are from New Hampshire, but they could be
from anywhere in America.
They're the backbone of the country, the ones who do the work and
pay the taxes and send their children
off to war. They're a lot like people I've seen in Arkansas for
years, living with the real consequences
of our national neglect. These are the real victims of the Reagan
Revolution, the Bush Succession, and
this awful national recession.
During this administration, the economy has grown more slowly
and fewer jobs have been
created than in any administration since World War II. People who
have jobs are working longer hours
for less money; people who don't are looking harder to find less.
Middle-class people are paying more
for health care, housing, education, and taxes, when government
services have been cut.
And as these hard-working middle-class families look to their
President to make good on his
promises, his answer to them is: Tough luck. It's your fault. Go
buy a house or a car.
Just this week, George Bush said we don't need a plan to end
this recession -- that if we wait
long enough, our problems will go away. Well, he's right about
that part: If he doesn't have a plan to
turn this country around by November of 1992, we're going to lay
George Bush off, put America back
to work, and our problems will go away.
We need a President who will take responsibility for getting
this country moving again. A
President who will provide the leadership to pull us together and
challenge our nation to compete in the
world and win again.
Ten years ago, America had the highest wages in the world.
Now we're 10th, and falling. Last
year, Germany and Japan had productivity growth rates three and
four times ours because they educate
their people better, invest more in their future, and organize
their economies for global competition and
we don't.
For 12 years of this Reagan-Bush era, the Republicans have let
S&L crooks and self-serving
CEOs try to build an economy out of paper and perks instead of
people and products. It's the
Republican way: every man for himself and get it while you can.
They stacked the odds in favor of
their friends at the top, and told everybody else to wait for
whatever trickled down.
And every step of the way, the Republicans forgot about the
very people they had promised to
help -- the very people who elected them in the first place -- the
forgotten middle class Americans who
still live by American values and whose hopes, hearts, and hands
still carry the American Dream.
But Democrats forgot about real people, too.
Democrats in Congress joined the White House in tripling the
national debt and raising the
deficit to the point of paralysis. Democrats and Republicans in
Congress joined the White House on the
sidelines, cheering on an S&L boom until it went bust to the tune
of $500 billion.
For too many Americans, for too long, it's seemed that
Congress and the White House have
been more interested in looking out for themselves and for their
friends, but not for the country and not
for the people who make it great.
And, now, after 12 years of Reagan-Bush, the forgotten middle
class is discovering that the
reward for 12 years of sacrifice and hard work is more sacrifice
and more hard times: They've paid
higher taxes on lower incomes for service cuts, while the rich got
tax cuts, while poverty increased, and
the President and Congress got pay raises and health insurance.
We've got to move in a radically different direction. The
Republicans' failed experiment in
supply-side economics doesn't produce growth. It doesn't create
upward mobility. And most important,
it doesn't prepare millions and millions of Americans to compete
and win in the new world economy.
And we've got to move away from the old Democratic theory that
says we can just tax and
spend our way out of any problem we face. Expanding government
doesn't expand opportunity. And
big deficits don't produce sustained economic growth, especially
when the borrowed money is spent on
yesterday's mistakes, not tomorrow's investments.
Stale theories produce nothing but stalemate. The old
economic answers are obsolete. We've
seen the limits of Keynesian economics. We've seen the worst of
supply-side economics. We need a
new approach.
For 12 years, we've had no economic vision, no economic
leadership, no national economic
strategy. What America needs is a President with a radical new
approach to our economic problems that
will give new life to the American Dream.
We need a New Covenant for economic change, a new economics
that empowers people,
rewards work, and organizes America to compete and win again. A
national economic strategy to
liberate and energize the abilities of millions of Americans who
are paying more taxes when the
government is doing less for them, who are working harder while
their wages go down.
This New Covenant isn't liberal or conservative. It's both
and it's different. The American
people don't care about the idle rhetoric of left and right.
They're real people, with real problems, and
they think no one in Washington wants to solve their problems or
stand up for them.
The goals of our New Covenant for economic change are
straightforward:
o We need a President who will put economic opportunity in the
hands of ordinary people, not
rich and powerful special interests;
o A President who will revolutionize government to invest more
in the future;
o A President who will encourage the private sector to
organize in new ways and cooperate to
produce economic growth;
o A President who will challenge and lead America to compete
and win in the global economy,
not retreat from the world;
That's how we'll turn this country's economy around, recapture
America's leadership in the
world, and build a better future for our children. That's how
we'll show the forgotten middle class we
really understand their struggle. That's how we'll reduce poverty
and rebuild the ladder from poverty to
the middle class. And that, my friends, is why I'm running for
President of the United States.
Our first responsibility under this New Covenant is to move
quickly to put this recession behind
us. Last week, I released a plan for what I would do right away to
help working people and get the
economy moving again. I'd not only extend unemployment benefits,
as Congress and the President have
finally done, but I'd push through a middle-class tax cut, an
accelerated highway bill to create 40-45,000
new construction jobs over the next six months, and an increase in
the ceiling on FHA mortgage
guarantee so half a million families could pump up the economy by
buying their first home. I do think
good credit card customers should receive a break from the 18 and
19 percent rates of banks, which
have cut the rates the customers get paid on their deposit
accounts. And I'm proud to say that four of
the ten banks charging the lowest credit card rates nationwide are
in my state.
I would also make sure federal regulators send a clear signal
to the financial community not to
call in loans that are performing, and not to fear making good
loans to local businesses.
But even if we did all those things tomorrow, it wouldn't
change the fundamental challenge of
the 1990s. We need to get out of this recession, and soon. But we
also need a long-term national
strategy to create a high-wage, high-growth, high-opportunity
economy, not a hard-work, low-wage
economy that's sinking when it ought to be rising.
It doesn't have to be that way. I believe we can win again.
In the global economy of the 1990s,
economic growth won't come from government spending. It will come
instead from individuals working
smarter and learning more, from entrepreneurs taking more risks and
going after new markets, and from
corporations designing better products and taking a longer view.
We're going to reward work, expand
opportunity, empower people, and we are going to win again.
EMPOWERING EVERY AMERICAN
There are two reasons why middle-class people today are
working harder for less pay. First,
their taxes have gone up -- but that's only 30% of their problem.
The other 70% of the problem is
America's loss of economic growth and world economic leadership.
If we're going to turn this country around, we've not only got
to liberate ordinary people from
unfair taxes, we've got to empower every American with the
education and training essential to get
ahead.
Let me make this clear: Education is economic development.
We can only be a high-wage,
high-growth country if we are a high-skills country. In a world in
which money and production are
mobile, the only way middle-class people can keep good jobs with
growing incomes is to be lifetime
learners and innovators. Without world-class skills, the middle
class will surely continue to decline.
With them, middle-class workers will generate more high-wage jobs
in America in the '90s.
Empowering everybody begins with preschool for every child who
needs it, and fully funding
Head Start. It includes a national examination system to push our
students to meet world-class standards
in core subjects like math and science, and an annual report card
for every state, every school district,
and every school to measure our progress in meeting those
standards.
Empowerment means training young people for high-wage jobs,
not dead-end ones. Young
Americans with only a high school education make 25 percent less
today than they would have 15 years
ago. In a Clinton Administration we'll have a national
apprenticeship program that will enable high
school students who aren't bound for college to enter a course of
study, designed by schools and local
businesses, to teach them valuable skills, with a promise of a real
job with growing incomes when they
graduate.
Empowerment means challenging our students and every American
with a system of voluntary
national service. In a Clinton Administration we will offer a
domestic GI Bill that will say to middle
class as well as low income people: We want you to go to college
and we're glad to pay for it, but
you've got to give something back to your country in return. As
President, I'll ask Congress to establish
a trust fund out of which any American can borrow money for a
college education, so long as they pay it
back either as a small percentage of their income over time or with
a couple of years of national service
as teachers, police officers, child care workers -- doing work our
country urgently needs. The fund
would be financed with a portion of the peace dividend and by
redirecting the present student loan
program, which is nowhere near as cost-effective as it should be.
This program will pay for itself many
times over.
But in an era when what you can earn depends largely on what
you can learn, education can't
stop at the schoolhouse door. From now on, anyone who's willing to
work will have a chance to learn.
In a Clinton Administration, we'll make adult literacy programs
available to all who need it, by working
with states to make sure every state has a clear, achievable plan
to teach everyone with a job to read, to
give them a chance to earn a GED, and wherever possible, to do it
where they work. In Arkansas we
had 14,000 people in adult education programs in 1983. Today we
have over 50,000. By 1993, we'll
have over 70,000. Every state can do the same for a modest cost
with a disciplined plan and a flexible
delivery system.
And we will ensure that every working American has the
opportunity to learn new skills every
year. Today, American business spends billions of dollars on
training -- the equivalent of 1.5 percent of
the costs of their payrolls -- but 70 percent of it goes to the 10
percent at the top of the ladder. In a
Clinton Administration, we'll require employers to offer every
worker his or her share of those training
dollars, or contribute the equivalent to a national training fund.
Workers will get the training they need,
and companies will learn that the more you train your workers, the
more your profits increase.
We need special efforts to empower the poor to work their way
out of poverty. We'll make
work pay by expanding the Earned Income Tax Credit for the working
poor, and by supporting private
and public partnerships to give low-income entrepreneurs the tools
to start new businesses, through
innovative institutions like Shore Bank in Chicago and its rural
counterpart, the Southern Development
Bancorporation in Arkansas. We've got to break the cycle of
dependency and put an end to permanent
dependence on welfare as a way of life, by really investing in the
development of poor people and giving
them the means, the incentives, and the requirement to go to work.
Finally, empowering working Americans means letting them keep
more of what they earn.
Ronald Reagan and George Bush raised taxes on the middle class. I'm
going to cut them. In a Clinton
Administration, we'll cut income tax rates on the middle class: an
average family's tax bill will go
down 10 percent, a savings of $350 a year. And the deficit won't
go up -- instead, those earning over
$200,000 a year will pay more, though still a smaller percentage of
their incomes than they paid in the
'70s, not to soak the rich but to return to basic fairness.
A REVOLUTION IN GOVERNMENT
Besides empowering citizens, we must lead a revolution in
government so it becomes an engine
of opportunity again, not an obstacle to it. Voters who went to
the polls in this month's elections sent us
a clear message: People want more for their money. The experts in
Washington think that is a
contradiction. But I think the experts are wrong and the people are
right. People want a better deal from
government, and they'll get it in a Clinton Administration.
Too many Washington insiders of both parties think the only
way to provide more services is to
spend more on programs already on the books in education, housing,
and health care. But if we reinvent
government to deliver new services in different ways, eliminate
unnecessary layers of management, and
offer people more choices, we really can give taxpayers more
services with fewer bureaucrats for the
same or less money.
Every successful major corporation in America had to
restructure itself to compete in the last
decade, to decentralize, become more entrepreneurial, give workers
more authority to make decisions,
and offer customers more choices and better products.
That's what we're trying to do in Arkansas -- balancing the
budget every year, improving
services, and treating taxpayers like our customers and our bosses,
because they are. Arkansas was the
first state to initiate a statewide total quality management
program. We've dramatically reduced the
number of reports the Department of Education requires of school
districts, slashed bureaucratic costs in
the Department of Human Services and put the money into direct
services that help real people, and
speeded up customer services in the Revenue Department. We measure
the job placement rate of
graduates from vocational-technical programs, and if a program
can't show results, we shut it down.
So I know it can be done. But let us be clear: Serious
restructuring of government for greater
productivity is very different from the traditional top-down
reorganization plans that have been offered
over the last 20 years, including in this campaign. Those require
a lot of time and energy and generally
leave us with more of the same government, not less.
What I am proposing is hard, unglamorous work. It will
require us to reexamine every dollar of
the taxpayers' money we spend and every minute of time that the
government puts in on business. It
will require us to enlist the energies of front-line public
servants who are often as frustrated as the rest
of us with bureaucracy. And if we do it in Arkansas, which has
among the lowest taxes in the country,
imagine how much more important and productive it will be at the
federal level. In a Clinton
Administration, we'll make government more effective by holding
ourselves to the same standard of
productivity growth as business and insisting on 3%
across-the-board cuts in the administrative costs of
the federal bureaucracy every year.
If we're going to get more for our money, we ought to have a
federal budget which invests more
in the future and spends less on the present and the past. As
President, I'll throw out last year's budget
deal, which brought us the biggest deficits in American history and
the fastest-growing spending since
World War II. In its place, I'll establish a new three-part
federal budget: a past budget for interest
payments; a present budget for spending on current consumption, and
a future budget for investments in
things that will make us richer.
Today the federal government spends only 9% of the budget on
investing in the future -- in
education, child health, environmental technology, infrastructure,
and basic research. We'll double that
in a Clinton Administration. We'll begin to finance the future
budget by converting resources no longer
needed for national defense to the investments needed to rebuild
our economic security, and by
controlling health care costs.
We can bring the deficit down over time, but only if we
control spending on current
consumption programs by tying overall increases to real revenue
increases, not estimates. I propose to
limit overall increases in the consumption budget to increases in
personal income, so that the federal
budget can't go up any faster than the average American's paycheck.
Making Congress and the
President live by this rule will cut the deficit drastically in
five years, in a dramatic budget reform.
Finally, if we're serious about reinventing government, we
must reinvent the way we deliver
health care in this country. We spend 30% more than any other
country on health care and do less with
it. For many Americans, the rising cost of health care and the
loss of it is the number one fear they face
on a daily basis. Thousands of American businesses are losing jobs
because health care costs are a 30%
handicap in the global marketplace. Two-thirds of the strikes
today are about health care, and no matter
how they come out, both sides lose. We are the only nation in the
world that doesn't help control health
care costs.
We could cover every American with the money we're spending if
we had the courage to
demand insurance reform and slash health care bureaucracies, and if
we followed the lead of other
nations in controlling the unnecessary spread of technology,
stopping drug prices from going up three
times the rate of inflation, and forcing the people who send bills
and the people who pay them to agree
on how much health care should cost. We don't need to reduce
quality; we need to restructure the
system. And no nation has ever done it without a national
government that took the lead in controlling
costs and providing health care for all.
In the first year of the Clinton Administration, Congress and
I will deliver quality, affordable
health care for all Americans.
A REVOLUTION IN THE WORKPLACE
These changes are vital, but American workers and American
businesses are going to have to
change too, the private sector is where the jobs are created. Many
of the most urgent changes cannot be
legally mandated, but we know they're overdue after a decade in
which the stock market tripled and
average wages went down.
Old economic arrangements are holding America back. It's time
for a revolution in the
American workplace that will radically raise the status of the
American worker and tear down the Berlin
Wall between labor and management.
It's been years since the U.S. could outproduce the rest of
the world by treating workers like so
many cogs in a machine. We need a whole new organization of work,
where workers at the front lines
make decisions, not just follow orders, and entire levels of
bureaucratic middle management become
obsolete. And we need a new style of management, where front-line
workers and managers have more
responsibility to make decisions that improve quality and increase
productivity.
Dynamic, flexible, well-trained workers who cooperate with
savvy, sensitive managers to make
changes every day are the keys to high growth in manufacturing and
in the service sector, including
government, education, and health care, areas where productivity
growth was very weak in the 1980s.
Everyone will have to change, but everyone will get something
in return. Workers will gain
new prosperity and independence, but they'll have to give up
non-productive work rules and rigid job
classifications and be more open to change. Managers will reap
more profits but will have to manage
for the long-run, train all workers, and not treat themselves
better than their workers are treated.
Corporations will reach new heights in productivity, growth and
profitability, but CEOs will have to put
the long-term interests of their workers, their customers, and
their companies first.
We should restore the link between pay and performance by
encouraging companies to provide
for employee ownership, profit-sharing for all employees, not just
executives. And executives should
profit when their companies do. We should all go up or down
together. We'll say to America's
corporate leaders: No more taking bonuses for yourselves if you
don't give bonuses to everybody. And
no more golden parachutes if you don't make good severance packages
available for your workers.
It's wrong for executives to do what so many did in the '80s.
Executives at the biggest
companies raised their pay by four times the percentage their
workers' pay went up and three times the
percentage their profits went up. It's wrong to drive a company
into the ground and have the boss bail
out with a golden parachute to a cushy life.
The average CEO at a major American corporation is paid 85
times as much as the average
worker. And our government today rewards that excess with a tax
break for executive pay, no matter
how high it is, or whether it reflects increased performance. If
a company wants to overpay its
executives to perform less well, and underinvest in the future, it
shouldn't get any special treatment from
Uncle Sam.
If a company wants to transfer jobs abroad and cut the
security of working people, it shouldn't
get special treatment from the Treasury. In the 1980s, we didn't
do enough to help our companies to
compete and win in a global economy. We did too much to transfer
wealth away from hard-working
middle-class people to the rich without good reason and too much to
weaken our country with debt that
wasn't invested in America. That's got to stop. There should be
no more deductibility for
irresponsibility.
I believe in business. I believe in the marketplace. I
believe that the best jobs program this
country will ever have is economic growth. Most new jobs in this
country are created by small
businesses and entrepreneurs who get little help from the
government.
Too often, especially in this environment, banks and other
investors won't take a chance on good
ideas and good people. I want to encourage small business people
and entrepreneurs. In a Clinton
Administration, we'll offer a tax incentive to those who take risks
by starting new businesses and
developing new technologies. Instead of offering a capital gains
tax cut for the wealthy who will churn
stocks on Wall Street anyway, we'll put forth a new enterprise tax
cut that rewards those with the
patience, the courage, and the determination to create new jobs.
Those who risk their savings on new
businesses that create most of the jobs in the country will receive
a 50% tax exclusion for gains held
more than five years.
And I want to encourage investment here in America in other
ways -- by making the R&D tax
credit permanent, by taking away incentives for companies to shut
down their plants in the U.S. and
move their jobs overseas, and by offering a targeted investment tax
credit to medium and small-size
businesses who'll create new jobs with new plant and equipment.
A NEW STRATEGY TO COMPETE AND WIN
Finally, we owe American workers, entrepreneurs, and industry
a pledge that all their hard work
will not go down the drain.
We must have a national strategy to compete and win in the
global economy. The American
people aren't protectionists. Protectionism is just a fancy word
for giving up; we want to compete and
win. That is why our New Covenant must include a new trade policy
that says to Europe, Japan and our
other trading partners: we favor an open trading system, but if
you won't play by those rules, we'll play
by yours. That's why we need a stronger, sharper "Super 301" bill
as the means to enforce that policy.
I supported fast track negotiations with Mexico for a free
trade agreement, but our negotiators
need to insist upon tough conditions that prevent our trading
partners from exploiting their workers or by
lowering costs through pollution to gain an advantage. We should
seek out similar agreements with all
of Latin America, because rich countries will get richer by helping
other countries grow into strong
trading partners.
We also need a new energy policy to lower the trade deficit,
increase productivity, and improve
the environment. We must rely less on imported oil, and more on
cheap and abundant natural gas, and
on research and development into renewable energy resources. We
must achieve European standards of
energy efficiency in factories and office buildings. That will
free up billions of dollars to invest in the
American economy.
If we want to help U.S. companies keep pace in the world
economy, we need to restore America
to the forefront not just in inventing products, but in bringing
them to market. Too often, we have won
the battle of the patents but lost the war of creating jobs,
profits, and wealth. American scientists
invented the microwave, the VCR, the color TV, and the memory chip,
and yet today the Koreans, the
Japanese, and other nations make most of those products.
The research and development arm of the Defense Department did
a great job of developing
products and taking them to production because we didn't want them
produced overseas. We should
launch the civilian equivalent -- an agency to provide basic
research for new and critical technologies and
make it easier to move these ideas into the marketplace. And we
can pledge right now that for every
dollar we reduce the defense budget on research and development,
we'll increase the civilian R&D
budget by the same amount. We should commit ourselves to a
transitional plan for converting from a
defense to a domestic economy in a way that creates more high-wage
jobs, and doesn't destroy our most
successful high-wage industrial base, and with it the careers of
many thousands of our best scientists,
engineers, and workers.
We must do all these things, and something more. The economic
challenges we confront today
are not just a matter of statistics and numbers. Behind them are
real human beings and real human
suffering. I have seen the pain in the faces of unemployed workers
in New Hampshire, policemen in
New York and Texas, computer company executives in California,
middle-class people everywhere.
They're all showing the same pain and worry I hear in the voices of
my own people in Arkansas,
including men and women I grew up with who played by the rules and
now see their dreams for the
future slipping away.
That's why we're offering a new radical approach to economics.
Economics as if people were
really important. If we offer these hard-working families no hope
for the future, no solutions to their
problems, no relief for their pain, then fear and insecurity will
grow, and the politics of hate and
division will spread. If we do not act to bring this country
together in common cause to build a better
future, David Duke and his kind will be able to divide and destroy
our nation. Our streets will get
meaner, our families will be devastated, and our very social fabric
-- our goodness and tolerance and
decency as a people -- will be torn apart.
The politics of division which the Republicans have parlayed
into the Presidency will turn on
even them. George Bush has forgotten the warning of our greatest
Republican President, Abraham
Lincoln: A house divided cannot stand. Lincoln gave his life for
the American community. The
Republicans have squandered his legacy.
I want to be a President who will unite this country. This
morning, here at Georgetown, the
Robert Kennedy Human Rights Awards ceremony was held. Twenty-five
years ago, when I was
President of my class here, Robert Kennedy accepted our invitation
to come to Georgetown to give a
speech. In that same year, he gave a very different description of
what American politics should be all
about. And I would like to read that to you today, and ask you how
long it's been since you heard an
American President say and believe these things:
Each time a man stands up for an ideal or acts to improve
the lot of others or
strikes out against injustice, he sends forth a tiny ripple of
hope, and crossing each other
from a million different centers of energy and daring, those
ripples build a current that
can sweep down the mightiest walls of oppression and
resistance.
That is the spirit I seek to bring to the Presidency. The
spirit of renewal of America. I believe
with all my heart that the very future of our country is on the
line. That is why these are not just
economic proposals. They are the way to save the very soul of our
nation.
This is not just a campaign. This is a crusade to restore the
forgotten middle class, give
economic power back to ordinary people, and recapture the American
Dream. It is a crusade not just
for economic renewal, but for social and spiritual renewal as well.
It is a crusade to build a new
economic order of empowerment and opportunity that will preserve
our social order and make it possible
for our country once again to make the American Dream live at home
and to be strong enough to
triumph abroad.