THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY
LAURA TYSON, CHAIR, NATIONAL ECONOMIC COUNCIL,
AND JOHN EMERSON, DEPUTY ASSISTANT TO THE PRESIDENT
AND DEPUTY DIRECTOR OF INTERGOVERNMENTAL AFFAIRS
The Briefing Room
2:02 P.M. EDT
MR. MCCURRY: Good afternoon, everybody. Yesterday, I did get a good question, and was not prepared to answer it because we're well prepared to answer it now, on the Pacific Rim Economic Conference that will be held in Portland on Tuesday. And I've asked Dr. Laura Tyson, who, of course, is Assistant to the President for Economic Policy and head of the National Economic Council; and John Emerson, who's Deputy Assistant to the President for Intergovernmental Affairs, who has been our lead organizers of these series of regional economic fora, to come and talk a little bit about the President's objectives as he goes into the session in Portland, knowing that several of you are writing for weekend coverage on that. And then we will be back to our regular order of business.
Dr. Tyson and Mr. Emerson, thank you for being with us.
DR. TYSON: Well, as you know, the President has planned several regional economic conferences around the nation to talk to small business leaders, CEO, working people, economic experts, about regional economic conditions, about the effects of administration policies on regional economic conditions, about what's working and what's not working.
These are meant to be discussions, learning and listening experiences, where basically the people living in the region and experts on the region engage with the President and the Vice President on what's happening there and help us assess what's working and what's not working. We've had a conference already in Atlanta, Georgia. And next week we'll be having the second one in Portland, Oregon.
Now, in entering this conference, we've thought a lot about the economic issues in the Pacific Rim. I think it's first important to start out with the observation the Pacific Rim, like the rest of the economy, has improved significantly during this administration. The Pacific Rim -- Alaska, Washington, Oregon, California and Hawaii -- have seen growth of about -- almost 400,000 private sector jobs during the administration. That's two and a half times as many jobs as during the previous four years.
California alone has added nearly 200,000 jobs since the President's plan was passed, the economic plan of 1993 -- in August of 1993. The unemployment rate has dropped almost two percentage points, from 9 percent to 7.3 percent. And every Pacific Rim state, every single one of the states, I mentioned is projected to grow faster than the national average between the end of 1994 and the end of 1996.
So the performance in this area of the country has been good and it continues to look good. But this area of the country is still in a period of transition. While conditions have improved, there are still strains on this part of the world. Unemployment remains higher than the national average -- 7.3 percent as I mentioned there versus 5.7 percent in the nation. The region is diversifying in important ways away from its historical reliance on natural resources and defense-related industries to a new economy that depends more on international trade, on high technology and on services.
We'll be discussing a lot of the transitional challenges and opportunities that are associated with this diversification of the economic base. The region obviously is poised to capture enormous benefits from the booming markets of the Pacific Rim nations and Asia, and is attracting a steady stream of employers seeking both new international markets and also a high quality of life for their employees. And being from the region, I can attest to the high quality of life for their employees out there.
The conference will allow the President and the Vice President to talk again about the challenges and opportunities that come from adaptation to a changing regional and a changing global economy.
Finally, in this conference, as in the last, we will put special emphasis on education. That really is consistent with the administration's overall interpretation of what's going on in the new technological economy and the new global economy in which we function. But there's a key relationship between raising incomes and increasing skill and educational achievement, and that raises the issue for families how to make sure that themselves and their children have access to the education and training opportunities that will get them improving prosperity in the future.
Finally, just let me note that at a time of discussion in Washington on budgetary priorities, when words like rescission and resolutions and baselines fill the news, it is important, I think, to think about how budgetary priorities in the Nation's Capital affect different regions of the country. So we will be focusing very much on issues of budget priorities and how they affect the ability of Americans in this region of the country to deal with the challenges and opportunities of the new economy in which we live.
Now let me turn it over to John to give you some specifics on conference layout.
MR. EMERSON: Thanks, Laura.
Essentially, this conference will be similar in structure to the one we held in Atlanta, although what we've done is reduce the number of panels from four to three, and reduced the number of panelists who will actually be sitting around the table in order to, hopefully, generate a better exchange of ideas and in a more lively discussion.
There will be about, my guess is between 175 to 200 participants drawn from the five states that Laura mentioned. These are working people, people who run their own businesses, and some representatives of community organizations, labor and environmental groups, which are obviously -- have particular interests in this region.
The first panel discussion will focus on the regional economy and will really zero in on both the opportunities and challenges created by the change and diversification that has been occurring in the economies in the Pacific Rim. There will be some discussion about defense conversion in that panel, new trend lines in manufacturing and services, and also some of the transitions that are occurring in the area of natural resources.
The second panel will be strains on working families with a special focus on education. And, as in Atlanta, that panel will feature a number of working people from the area talking about the challenges they face in their lives in terms of trying to educate their kids; in terms of leaving one job because of downsizing and having to get retrained and move into another area of employment; in terms of the quality time they get to spend with their children, particularly their younger children; and some of those kinds of things.
And, then finally, the third panel will focus on what in many respects I think is -- two of the real pillars of the growing economy in that region, and that's trade in export -- growth in exports, and also high in advanced technologies. So the third panel will pretty much focus on those two aspects of the economy in the Pacific Rim region.
What we'll be doing is, before the President gets there, because we're having fewer panels and of a smaller size, we're going to have break-out sessions with each of the Cabinet level and sub-Cabinet level administration officials who are going to be there with groups of participants between 10 and 15 to talk about specific subject matters. And then what occurs in the break-outs will then be reflected in the course of the panel of discussion.
We think it's going to be a pretty good program. Once again the theme of these five conferences is making the economy work better for working people. And I think, finally, the conferences may also provide an opportunity to, during the course of the discussion, to dramatize some of the choices that need to be made during the current budget debate.
Q If I could follow up on exactly that, John, and I have a question for you, Laura. The last session administration officials came out saying they were even surprised that there had been so much agreement with presidential economic policies that it was something of an echo chamber. What have you done to try to get more drama, to get more people involved, or possibly people who disagree with the President?
And then, Dr. Tyson, I wanted to ask you if there is anything that came out of Atlanta that you can draw a line from to the President's latest budget -- any new thinking that came out of that that he has adopted that we're seeing results from?
MR. EMERSON: Well, with respect to the first question, I think part of the problem with Atlanta was we had between 24 and 26 people around the table and an hour and a half for each session. And essentially everybody just kind of gave a speech, and it really didn't lead to kind of a good interchange. In reducing the number of panelists and try to really focus the discussion, hopefully we'll accomplish some of that objective. I will tell that when you're talking about defense conversion, when you're talking about some of these natural resource issues, these are not necessarily issues where there's uniform agreement. And I think that just by virtue of that, when you're talking about some of the expert issues, just by virtue of that, you're going to see some interesting discussion.
And then, finally, again as with Atlanta, I think we've drawn from a broad cross-section of people -- there are folks there who have been supporters of the President. There are folks there who have not been supporters of the President or, in fact, have been supporters of Republican candidates. And, presumably they will speak their mind.
But let's not forget that I think many -- particularly when you're talking about the leaders of business, many people do applaud the economic record of this administration. If that happens, even from people who are not necessarily political supporters of the President, that could be well expected.
DR. TYSON: On the issue of the effect on the budget, I think we have tried to say all along, and we continue to say, that these are not conferences whose primary or even major goal is to have immediate effect on the policy decision-making of the administration. That being said, one of the -- a couple of themes that resonated really in the Atlanta conference I would anticipate would also resonate in the Pacific Rim. But that really depends upon what the individual participants say.
Those themes -- I remember clearly, the regional economist who opened the session in Atlanta, who had written both critical things about the administration's policies and support of things about the administration policies in a series of editorials. He emphasized very much to the region a couple of things, which are obviously of core to the way we have put together our budget. He emphasized very much the issue in the South of education and training levels. And there was a lot of talk about what state governments were doing and what the federal government could do. He also emphasized very much the growing inequality in the region. And I think both of those issues, both training and education and inequality and what that might mean in terms of government programs certainly fit very much with our approach on tax policy, our approach on education and training policy, our approach on welfare reform, our approach on health care reform, all of which are in the budget.
So, in that sense, I would say the discussion in Atlanta was confirming of directions that we were already tending to go in. Because I believe that the structural problem of health care, the structural problem of income inequality, the structural problem of the tensions between skill and training levels that we currently have and the demands of technology and global competition -- because I think those are major problems confronting the national economy and the regional economies, we're likely to hear about those things again. And they will, in that sense, confirm our budgetary priorities.
Q You said the goal is not to have an immediate effect on policy. What is the concrete goal of having this or any other conferences that you're going to have? Are you quantifying the information that you get from it? Where does it all end up and what does it do?
MR. EMERSON: Well, one thing we're going to do with these break-out sessions is we're going to have someone assigned to each of them to ultimately do a report of some of the ideas that come from that and feed it back.
But the other thing is there's this great debate raging in Washington now about our priorities in terms of the budget, about the proper role of government, particularly in terms of the economy and sustaining economic growth. And I think it's a valuable thing to actually take that debate, move it out of Washington and move it directly into different regions of the country where the people who are impacted by what we're doing back here can have a chance to comment on it. And I think that, in and of itself, is of value apart from simply what comes back here and gets spun around and turned into some kind of policy.
Q Dr. Tyson, it's not directly related to the conference, but it is related to the question of what the conference is about, and that's U.S.-Asian trade. Could you comment on the trade figures for April that were released today and what that might have -- what impact that might have on the discussions that are about to resume with the Japanese that are taking place on the eve of this conference?
DR. TYSON: Well, I'd start out by saying is it's important to keep any one month's number in perspective. So clearly, the April trade report was worse than expected in the sense that market analysts had expected a slight improvement in the deficit; instead we got a deterioration of the deficit. That deterioration I don't think would -- there's no single explanation for that and there's not a regional explanation for that, there's not a particular product explanation for that. So I don't think that there would be any -- there's no effect here on our trade position with Japan in terms of we're very clear on and remain clear on our trade position with Japan in terms of the things that we want to resolve in the auto industry and in terms of the deadline, June 28th. And the negotiators are there right now. This kind of one month's trade number simply would have no effect on our --
Q It wouldn't reinforce Mr. Kantor's unwillingness to bend on this issue?
DR. TYSON: We have a strong, unanimous position in the administration that we need successful resolution in the three areas under discussion in the trade negotiations on autos with Japan. That was stated by the President clearly in Halifax. This number is itself a number -- if you look at the trade deficit with Japan, it actually decreased in April. But for the first four months of 1995, it's about $1.1 billion above the same period in 1994.
Clearly, any student of U.S.-Japan trade knows that there is a large bilateral trade imbalance and knows that there are important access barriers to the Japanese market. This is about the longer-term issue in trying to deal with access barriers in what is a critical market in both countries and an important source of the bilateral trade imbalance.
Q You've talked about your concerns about the Republican budget's effect on the macroeconomy. Is there any evidence in your view that even the prospect of these budgets as they percolate through Congress is having an inhibiting effect on the economy?
DR. TYSON: Let me be clear what I've said about that. What I've said about that is that deficit reduction moving towards balance always entails some downside risk. The risk need never materialize, and that all depends upon how financial markets respond and how large the amount of deficit reduction is in any given year and the other things going on in the world that might affect whether or not the U.S. economy is slowing or in a period of expansion.
I don't think there's any -- the explanations -- if you looked at our forecast for this year, two years ago, or one year ago, if you looked at private sector forecasts, they all predicted a slowing of the U.S. economy in 1995. And those predictions were made before any certainty of where we would be in the discussion about balancing the budget. So I don't think there's any link between current economic conditions and discussions about the need to balance the budget over the long run.
The discussion of contractionary risk is -- it's always there, but we believe if you do the process somewhat more gradually and avoid the very painful and deep cuts and get to balance over 10 years, that that risk is moderated and that the financial markets will be able to give back enough to the economy so that the risk will, in fact, never materialize.
Q Many Pacific Northwest companies enjoy good trade relations with Pacific Rim countries, including Japan. Will the President temper his tough trade talk for fear of alienating them -- enjoyed good trade relations with them.
DR. TYSON: I'm sorry, temper his tough trade talk with who --
Q Will he use the occasion to advance U.S. automakers' cause?
DR. TYSON: Use the Pacific --
Q The Portland summit.
DR. TYSON: Look, there are negotiations going on right now, and let's wait until the negotiations are over. But let me emphasize that if the negotiations do not lead to progress, the President's position in Halifax could not be more clear. It was that we will stick with the June 28 deadline for the imposition of sanctions unless we have a successful resolution of the trade conflict with Japan in the three areas under discussion. So let's not say anything more about it right now since negotiations are going on, but if those negotiations do not lead to a successful resolution, then I'm sure the President will reiterate that position on appropriate occasions.
Q The question I wanted to ask was about the Fed beige book. It looks like we might be slipping into a recession. We've got CBO figures that say 2.4 percent growth; we've got administration figures that say 2.5 percent growth. If both those figures are wrong, what does that do to balancing the budget and the discussion about balancing the budget?
DR. TYSON: The issue about growth over a seven- or 10-year period is an issue of the longer-term. I think that we have and the CBO both, sometime later this summer come -- usually revise their economic forecasts. Since the growth rates of 2.5, or these 59 economists who said 2.6, or other economists who say 2.4, that's a kind of long-term sustainable growth rate concept -- what the economy is capable of doing over the long-term. It is possible that quarter to quarter it does not do that. And so I don't think you should -- there's no reason to conclude that the longer-term forecasts would be much affected, if at all, by a quarter or two of slower growth.
Q But if you were wrong, that would sort of skew all the assumptions we are making for a balanced budget.
DR. TYSON: Not necessarily, because you also have to look into the other parts of the economic forecast. So that, for example, revising a growth forecast downward would probably also entail revisions in other parts of the forecast, like interest rates, so that you actually have to -- and since the deficit line itself comes out of the entire economic forecast, you shouldn't conclude that just because of slowing growth that would change the deficit outlook very much, because you'd have to look at the entire change forecast.
Now, we haven't done that yet, and neither has the CBO. We don't anticipate that as far as this sort of long path of deficit reduction is concerned, any changes in the near-term forecast would have very much effect at all on the balancing the budget over a longer period of time.
Thank you very much.
END 2:23 P.M. EDT