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                  Office of the Press Secretary
                         (Houston, Texas)
For Immediate Release                       February 7, 1994     
                     REMARKS BY THE PRESIDENT
                       Hyatt Regency Hotel
                          Houston, Texas   

12:50 P.M. CST

THE PRESIDENT: Thank you very much. Secretary Bentsen, you said if I had been in any danger, I would have sent you to give this speech. You notice how quickly he got off the stage when it came my turn to talk? (Laughter.)

I want to thank all those who proceeded me -- Ken Lay for his kind remarks. He and I had an unusual and, for would-be golfers, a lifetime opportunity. We got to play golf with Jack Nicholas in Colorado last summer. Nicholas won. (Laughter.) It was good for both of our humility quotients.

I'm glad to see Mayor Lanier again. You know, I'll tell you a story about Mayor Lanier. He's the only person I know who actually turned down a personal tour of the Oval Office -- it's a true story. He was up there one night, he and Mrs. Lanier were there. We watched a movie, as I remember, in the White House movie theater, and I said, "Does anybody -- if you want to go see the office before you leave I'll take you over there." And it was about midnight, and he said, "I don't do tours at midnight." (Laughter.) And he went on to bed. (Laughter.) And I thought that was kind of common sense that carried him to the Mayorality, wasn't it? (Laughter.) People ought to be safe in Houston, I believe we ought to have more police officers and put them in the right places. And I didn't take it personally. (Laughter.) I'm going to invite him back in 1997. (Applause.) I thought it was great.

And let me say about Lloyd Bentsen that I believe he'll go down in the history books as one of the great Treasury Secretaries in this century, not only because of his iron will in steering through the biggest deficit reduction package in history last year, but because of the way he has worked with the private sector, with the federal reserve, with the other power centers in our country, and the influence that he's exerted overseas from Russia to China to Latin America.

It's a real source of comfort and reassurance to me to know that whenever I'm in a kind of a tough bind I can call him on the phone and ask him for his advice. Sometimes I call him on the phone and ask him for advice about problems that have nothing to do with the Treasury Department; and sometimes he smiles and he says, gosh, I'm glad I don't have to make that decision. (Laughter.) But most of the time he gives me good advice, and most of the time I follow it.

Let me also say, I know there are several members of Congress here today -- and I may miss some of them -- but I see in the audience Gene Green, Craig Washington, Mike Andrews and Jack Brooks. I don't know if I missed anybody else, but I think you all for being here. They have to listen to me talk all the time. It's remarkable that they have the forbearance to come all the way home and listen to it again.

We're a little bit late today because I spent a good part of the morning dealing with the crisis in Bosnia. And I am sorry we're a little bit late, but I do want to just tell you what has happened before I go into my remarks, just briefly.

As you know, there was an outrageous attack on innocent civilians in Sarajevo on Saturday. And our government is talking with our allies about what steps ought to be taken in response not only to this outrage, but to the possibility of future attacks on innocent civilians in the future. We're also talking about whether there's something more we can do to help the parties agree to solve the conflict. Until those folks get tired of killing each other over there, bad things will continue to happen. And sooner or later they're going to have to decide that it's in their interest to let their children grow up in a world free of war.

The United Nations Secretary General Boutros-Ghali has asked the North Atlantic Council to take the necessary decisions which would enable NATO's military forces to respond to requests for air strikes directed against artillery and mortar positions around the city of Sarajevo that can do the kind of horrible things you saw on Saturday. If the United Nations Mission there determines who is responsible for the attacks -- in other words, the Secretary General has now asked that authority be given to our commanders there on the ground to take appropriate action.

I very much welcome that request. I have hoped that that would be the case for some time. I have directed our representatives at NATO to support the Secretary General's request when it is discussed there in the next couple of days.

That is all I have to report at this time, except to say that once again, I hope very much that the horror of all these innocent people dying will sober all those who are responsible and lead to a renewed effort to get a peace agreement there.

Now, having said that, I'd like to go back a little bit to talking about what I hoped to come to Houston to discuss today, which is how our nation reconciles the need to bring the deficit down and be tough on the budget with our responsibilities to invest in the future and to work with you to grow the economy. If you take the position that Mayor Lanier took in 1991, you see a microcosm of what I think I should be trying to do as your President. He came here on a promise to put 655 more police officers on the street either by hiring new ones or working the present force overtime, and to deploy them in the appropriate places with the goal of lowering the crime rate and making the people here feel more secure.

Since that time, the crime rate has dropped 22 percent, murders are down by 27 percent, and he's given America its best reason to have Congress pass a crime bill this year. Thank you. (Applause.) Because we know that this is an issue without party, or a racial, or an economic label and did -- we know that the more vulnerable you are to other forces in society, the more vulnerable you also are to being a victim of crime.

So we're going to have a debate over the next couple of months, and these members of Congress here will be a part of it, about what that crime bill ought to be. But one thing we know is if you have more police on the street and they are properly trained and they're properly deployed and they know the neighbors and they know the kids, they will not only catch criminals quicker, they will actually deter crime, which is, after all, what we ought to be trying to do -- to reduce crime in the first place. Why? By taking a practical approach to a human problem and asking what is best for the people involved.

I want to thank the greater Houston Partnership for your leadership on the NAFTA battle. And I want to say some things about that that I think I'm entitled to say since I fought so hard for its ratification, some of which, not all of you may agree with. But to me, the way that battle took shape is the way this country ought to work.

And let me explain why. First of all, to pass it there was really a partnership required between government and people in private business and a not insignificant number of working people who knew it was in their personal interest for it to pass.

Secondly, to pass it there was a partnership between Democrats and Republicans. Something which, unfortunately, is all too rare in Washington, even though it's more common in Houston, I would imagine.

Thirdly, there was an honest debate about important issues. And even though I strongly disagreed with those who voted against it, there was a real core of legitimate concern. I thought the remedy, that is beating NAFTA, was the wrong remedy, but the core of concern was real. That is, that in a global economy, people who control the flow of money and technology and production may or may not have interests that are always identical to the working people who live where they are located.

So there were honest debates that led to the first environmental side agreement in the history of any trade agreement -- a good one. A labor standards agreement; a commitment that the Congress had to do more to retrain the American work force, dislocated not only by trade with our neighbors to the south, but generally dislocated by the changing of the economy. An agreement to establish a North American Development Bank to try to help finance new businesses and small businesses in places where they need to grow in order to participate in what we hope will be a vibrant and growing two-way trade not only with Mexico, but with all of our neighbors to the south.

So the debate was about real issues and produced, in my view, the right result -- the trade agreement that I believe so strongly in, and a lot of other things that point the way toward making sure that it benefits all the people of the country.

And, finally, I liked it because it was focused on the future. It required us all to imagine what we wanted Houston, Texas, and the United States to look like in the 21st century -- what things are inevitable that we need to -- these changes that are happening that we need to make our friends instead of our enemies. How could we shape the future?

Now, to me, that's what public life ought to be about. Whoever you vote for and whatever you say, people get together like this and they argue and talk about real issues and in spirit of partnership, thinking about the future, focusing on how it affects ordinary people. And I liked it a lot.

And the environment in which I operate now, as opposed to the one in which I operated when I was a Governor, there tends to be too little partnership and too much partisanship. There tends to be too little focus on the future and an absolute obsession about the past. There tends to be too little action and a world of talk.

Now, we have some big challenges as a country. Make no mistake about it, we have enormous strengths. A lot of things are going well in America. We have underlying strengths which are beginning to benefit us now that have always been there. But the way we continue to move into the future is to cherish our

strengths, but to honestly face our problems and our challenges.

Now, for the four years before I became President, for all kinds of reasons, we had the slowest economic growth in half a century and very low job growth. For the 12 years before I took office the national debt quadrupled in only 12 years -- after 200 years of history in which it was more or less constant, except during wartime when it went up. In those 12 years, the cost of health care exploded at two and three times, sometimes more the rate of inflation. And yet every year a smaller percentage of our people were covered with health insurance -- with consequences, I might add, that were dramatically, I thought, put forward by a very articulate letter to the editor in one of your newspapers today, by a local physician, which I commend to you.

For 20 years -- for 20 years -- since about 1974, after the last big energy crisis then and globalization of our financial system, the wages of most American hourly wage earners have been stagnant. It's not a partisan issue, this is something that's happened through 20 years. And for about 30 years, the American family unit has been under great stress, particularly in areas of economic distress, so that now millions and millions of young Americans are being born into families where there was never a marriage; in a community where the local community institutions that used to shore up kids in troubles -- the churches, the businesses and the other things -- are weaker than ever before; and where there is no business investment to give people economic hope; and where very often only the churches and a few nonprofit organizations are like the proverbial kid with their thumb in the dike holding back the deluge and when they -- often they come in contact with the rest of us when we catch them breaking the law and we're telling them not to do something, instead of earlier in their lives when we could have given them a chance to be a part of this partnership represented in this room today.

Now, those are the challenges we face, in a world that is changing very rapidly, where the economy is increasingly globalized.

I ran for this job because I wanted this country to roar into the 21st century still the greatest nation on Earth, with the kids in this country looking forward to the brightest future any generation of young Americans ever had; and because I believed that to do that we had to restore the economy, rebuild a sense of community in an increasingly diverse America -- look around this room -- and make the government work for ordinary people again. Make it make sense instead of having people so alienated from it.

Now, to do that, it seems to me that we have to stop focusing so much on yesterday's labels and focus more on tomorrow's goals. The issue isn't whether we go left or right, it's whether we can forward. And if we don't go forward, it doesn't matter whether we're stuck left or right.

Historically, if you look at the whole history of this country, we have done well because we had strong shared values and we were increasingly, when we needed to be, pragmatic and progressive at the same time. We were philosophically conservative in the sense that we never thought we ought to change our values, and operationally progressive in the sense that we were always ready to look at a changed set of circumstances and move into the breach. And I would argue to you that that's what we face today.

Our administration took office with a clear economic strategy that was first premised on getting the deficit down; to get lower interest rates, lower inflation, higher investments and more jobs.

Second, on increasing trade -- because it's perfectly obvious if you look at the stagnant employment situation in Europe, in Japan, or in the United States, that no great wealthy nation can grow wealthier and create jobs unless you have more customers for your goods and services. That's what NAFTA was about. That's what the GATT agreement was about. That's what meeting with the Asians leaders was about. That's what this hemospheric summit next year with all the leaders -- or this year -- with all the leaders of Latin America is about. That's what lifting billions of dollars of controls on exports of high technology goods, so that we can now sell them in the aftermath of the Cold War is about. We've got to have more customers for our goods and services.

Third, on trying to stake out an American position in the new technologies of the 21st century. That means maintaining the technologies we have to have to keep our defense the strongest in the world -- some of them being maintained by work being done in this state. It means as we downsize defense, having an aggressive defense conversion strategy so we can make the most of all the work that has been done and all we're already paid for, through the development of dual-use technologies. It means keeping our undisputed leadership in space, which is what the fight for the space station was all about. It means doing more in areas that are critically important where we have an undisputed lead like medical research -- something you know more about here in Houston than virtually any other place in the country.

It means building the information superhighway that the Vice President is so strongly advocating. It means making the environment a job creator instead of job loser. And it means having a sensible energy policy. The administration's oil and gas initiative was complimented recently by Dennis Hendricks, one of your distinguished leaders in this organization. And I thanked him before I came in for saying that it was a positive direction, nonintrusive but seeking to improve the environment in which we operate. That's the way we're trying to approach this.

The next thing we've got to do is to focus on specific things we can afford to do to help generate new business and small business. The Secretary of the Treasury and I were talking while Mayor Lanier was giving his speech. In our economic plan last year, one of the things that wasn't noticed is the huge increase in the expensing provision for small business, which made 90 percent of the small businesses in this country eligible for a tax cut on April the 15th if they invested more in their businesses; a new in small business capital gains tax that Venture Capital Association had asked for for years; and an extension of the research and development tax credit.

This last year, we had a record increase in venture capitalizations of small companies in this country. That's what's going to generate the jobs of the 21st century and keep us ahead. We have to continue to focus on it.

Finally, the economic strategy has a strong education and training component. And I'll talk a little more about that in a moment. But the first thing we had to do was to cut the deficit -- to reduce spending, to increase some taxes, to put the money in a rigorous system which would bring the deficit down over five years, and to reduce the size of the federal government.

Now, before this plan took effect last year, the 1995 deficit was projected to be $302 billion. Now, it's expected to be $176 billion -- a 40 percent reduction. That's why interest rates are down and inflation is low and investment is up. And if we keep doing it, we'll have three straight years in a row where the deficit has gone down for the first time since Harry Truman was President. I was stunned, by the way, when my

researchers gave me that. I made them go back and check three times. I said, that can't be true. It turns out it is.

Now, if you look what's happened, we've had millions of Americans refinance their homes and businesses. You've got core inflation at its lowest rate in 20 years. You've got longterm interest rates at historic lows. If we can keep this going, you will bring the economy back -- the private sector will. And it is the most important thing.

Last year, this country created almost 2 million new jobs -- 90 percent of them were in the private sector. For years we've had an enormous percentage of our jobs created primarily by state and local government. Last year 90 percent of the new jobs came in the private sector. This country is enjoying strong economic growth in spite of the continuing problems in Europe and Japan. And we can continue to do it if we have the discipline to keep the deficit coming down.

And I want to say something in defense of the people who voted for that economic program last year. Any member of the Congress will tell you that if that budget had not passed when it did, NAFTA would never have passed, because we would have spent all of August, all of September and all of October wallowing around in Washington, fighting with each other about the nickels and dimes around the edges of the budget instead of focusing on NAFTA. We were about 100 votes down when the NAFTA fight started. It would not have passed if the budget hadn't passed first. The two things went together, and if that would have happened, we'd never had the GATT agreement.

So it is very important, it seems to me, to recognize now that what we have to say is the thing worked, and we have to build on it.

Today, our second budget is being presented in Washington and the Budget Director Leon Panetta, will deliver it to Congress and talk about its details. I just want you to know what the second budget does. It continues to cut spending because these budget caps are very tight. It's the toughest budget on spending cuts the Congress has yet seen.

Listen to this: More than 60 percent of the major accounts in the federal budget are cut. That means more than 350 specific nondefense programs are being cut, and over 100 of them are being eliminated outright. It's been a long time since that's been done. If the Congress adopts it, it will keep the deficit coming down, it will keep interest rates down, it will send a clear signal to the Fed and to the rest of the world that we mean business and that the investment climate will continue.

These lower interest rates, if they can be maintained, will save over $20 billion in deficit in next year's budget alone, and over $150 billion in the next five years. Seven of the 14 major Cabinet departments are taking budget cuts; the federal bureaucracy is slashed by 118,000 under this plan. That puts us ahead of the goals set by the Vice President's Reinventing Government Task Force, which had us at a 100,000 this year. And, by the way, when we go through this thing in five years, we will have reduced federal government by attrition and management by 252,000, so that by 1998, the federal government will be smaller than it has been in over 30 years.

Why? Because if we don't do it, we can't keep the economy going in the right direction, and we won't have any money to spend on the things that 90 percent of you think we should spend more money on.

So most people read mysteries and not budgets. Most people think the budget is a mystery. (Laughter.) But I hope that you will encourage the members of your delegation, especially this year when we're not having this contentious fight

over the tax issue, to vote for this budget. Because if we don't do it, we cannot keep the economic recovery going. And if we do it, we can keep the recovery going.

We can also find the money we need to invest in some things that I think are important. If we didn't reduce spending, if we don't reduce spending in some of yesterday's programs, we won't have the money to spend on the crime bill. Those things cost money, too. That crime bill has 100,000 more police officers, has more money to help the states build penitentiary beds -- which you know a lot about in Texas -- has funds for boot camps for first-time nonviolent offenders, and funds for drug treatment so that a lot of these young people who get out don't come back.

If we don't do it, we won't have money for what's called the technology reinvestment project. Texas has gotten $25 million in it so far, to help develop dual uses, commercial uses for defense technology. If we don't do it, we can't do the information superhighway. If we don't do it, we'll have a very tough time holding on to the space station, because we have to slash other things to keep the space program going. If we don't do it, we won't be able to fully fund the highway program. And if we don't do it, I'm afraid some people will come back at defense, and I am unalterably opposed to cutting the defense budget any more. We have cut it a great deal and I don't believe we can responsibly cut it more. I mean, we're cutting it, but I don't want deeper cuts in it.

If we don't do it, we can't pay to redesign the unemployment system in the country. It's a big deal. A lot of you work a lot of people. This unemployment system that you're paying taxes into was designed for a time in the 1950s and '60s when the average person lost a job, was laid off, and eventually was called back to his or her old job. Now, most people who are laid off never get called back to their old job. The average person will change work seven or eight times in a lifetime, and the only cure for the fear of being unemployable is to be able to constantly learn new skills.

Therefore, we believe that the present crazy-quilt patch of 150 government training programs, and an unemployment system that is essentially passive until the benefits run out, is wrong. We think when people lose work they should immediately start training for the next job; and that your tax money shouldn't be squandered, essentially, paying people to live while they pursue a vain hope at a lower standard of living. And instead, we ought to have a reemployment system where people really can immediately and always be retraining if they lose the job they have. But we can't do it, if we don't cut the rest of the budget.

This budget provides for the beginning of a national apprenticeship program for kids that don't go to college. Most of the new jobs won't require a college education. But you've got a chance of doubling your income when you get out of high school if you just get two years of further training. Our school-to-work initiative makes a big start on that.

This budget will pay to implement the Goals 2000 program, which started back in 1989 when President Bush and the governors negotiated some national education goals, that I helped to draft then in my former life. This bill gives us a chance to achieve those goals by having national standards that are worldclass, and supporting local reforms of all kinds around the country. We can't fund this bill if we don't cut the rest of the budget.

This budget dramatically increases the Head Start program. A young lady said to me today, if we could start all these kids in Head Start we'd have fewer of them getting in

trouble later on. It dramatically increases Head Start. If we don't cut the budget, we can't increase Head Start.

So I say to all of you, I hope you will support this process. It is not easy to eliminate 100 government programs, because somebody likes them. It's not easy to cut 350 --somebody likes them. Henry Cisneros has done a brilliant job at HUD. His budget increases funding for homelessness in a way that actually gets people off of the homeless rolls permanently. His budget gives more housing vouchers to people who are eligible --to let them go out into the private sector and make their own decisions about where to live and let the markets work.

Do we cut some other programs? You be we do. Why? There's $8 billion in the HUD pipeline that should have been spent two or three years ago that can't be spent because of government red tape. So Secretary Cisneros says we've got a homeless problem in this country. We have people out there -- working people -- who are eligible for help. Give them the vouchers, get them out there, let the system work, and cut something else.

If you want us to follow some of these energy initiatives that we're doing through the national labs -- you've got one of your own -- Bill White's sitting over there, is the Deputy Director -- the Deputy Secretary of Energy. We've got to cut the rest of the budget if you want us to do the things that will enable us to explore the new technologies which may revive the energy sector in this country.

So I implore you to tell the folks that represent you, it's okay to cut to get the deficit down and to spend more where we need to spend it.

Now, let me just make this one final remark. You might say, well, that's fine you're going to really cut the deficit, but it's still going to be really big in 1998. And you would be right. And I want you to know here in Houston why that is. How can you cut defense, freeze domestic spending, hold Social Security within inflation, have revenues growing, and have the deficit going up? Answer -- there is only one answer now, especially if this budget passes -- there will only be one answer. The answer is: When I took office the Medicaid budget, health care for poor folks, was supposed to increase by an annual rate of between 16 and 11 percent a year over the next five years; and the Medicare budget, health care for the elderly, was going to increase by a rate of between 11 and 9 percent a year over the next five years. And if we do not reform our health care system, in 10 years we will be spending all your federal tax money, all your new federal tax money, on health care and nothing else. And we'll be spending it for the same health care, not for new health care.

Now, let me drive this home. We estimate the Medicare budget will go up, let's say, 10 percent this year, when the case load's going up and general inflation is 3.5 percent; that the Medicaid budget would go up 12 percent with the case load going up 2 percent and inflation where I said.

Now, the only thing I want to say about the health care debate today is this, because I know you have to go, but I want you to think about this. There is -- I had a doctor in my office Saturday, a Republican from another state who has mobilized hundreds and hundreds of doctors in a professional unit. He came in and said, "I am one of the few people in America who has actually read your bill. And I like it." But he said, "You see, I can understand what is going on out there." He said, "I read all this stuff -- people that are for you and the people that are against you -- and they're saying all this that doesn't have anything to do with what's going on out there in the real world."

So without going into the details, let me just ask you to focus on this: Every plan proposed by anybody is a private plan. It keeps health care providers private and keeps insurance private -- every one, including ours.

The issue then -- let's talk about this. Which plan would give more choice to consumers than the others? The answer is. ours would. But you don't have to -- you can check that out. Consumers are rapidly losing choice in the present system. Only about one in three workers today insured at work has any choice at all over who the medical provider is.

Which plan would do the most to keep some funding for the academic health centers -- the kind of centers that have made Houston the medical capital of the United States? Of the three major plans, ours is the only one that attempts to do anything for these academic health centers. Now, we have representatives here in the audience, they'll tell you we haven't done enough. We can fix that. That's peanuts in the context of the larger budget if that's a problem. But this is a big issue that never even gets raised.

Which plan would cover more primary and preventive services? You talk to anyone that runs a hospital and they'll tell you that we're -- all of us are paying too much for our health insurance because the people who don't have any coverage only get health care when they're too sick, it's too late, they show up in an emergency room and it costs out the wazoo, and then the hospital has to pass the cost along to someone else.

Can you achieve the real goals for the health care system and ever get the deficit under control -- two things at once -- if everybody doesn't have to assume some responsibility for providing health care for themselves and for employees? This is a tough question -- not free of difficulty. What about all the people who have part-time workers? What about small businesses? The problem is 70 percent of small businesses do provide health insurance for their employees and their rates are 35 to 40 percent higher than big business and government rates.

Anybody that's in a federal health care plan, let me tell you, folks, is getting a good deal now.

Now, again, I say this in the context of this budget so that you can remember that I said it four years from now. There will be no ultimate solution to the federal deficit until we reform the Medicare-Medicaid expenses and get them closer to the rate of inflation. That cannot be done, in my opinion -- having studied this for years as a governor who used to have to break our budget every year on it -- until there is some system by which all Americans have access to basic primary and preventive health care. But we have to do it in a way that preserves what is best about health care, which is the system of private providers that is a shining monument here in Houston. And to do it in a way that overall helps the American business economy, not hurts it.

Now, is it easy to do? No. If it was easy, somebody would have done it already. It's the most complicated thing in the world. How could it not be -- it's 14.5 percent of our Gross National Product. But we must address it if you wish to solve the federal government's budgetary problems. Otherwise, you mark my words, within a couple of years, you'll have to give up the space program and everything else just to pay more for the same health care. And we cannot do that.

So I look forward to this health care debate in the spirit of excitement. This is important. This is the way I felt about NAFTA. If we can just be honest with one another and focus on the future and work through this thing, this is going to be one of the most exhilarating experiences, this country ever went through, because we're facing up to our challenges.

But first we have to keep the deficit coming down, and we have to pass this budget. It ought not to be a partisan issue, and I need your help to do it.

Thank you, and bless you all. (Applause.)

END1:26 P.M. CST