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President Clinton Addresses The Detroit Economic Club

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Office of the Press Secretary
(Detroit, Michigan)

For Immediate Release January 8, 1999


Cobo Conference Center
Detroit, Michigan

12:48 P.M. EST

THE PRESIDENT: Thank you. Ladies and gentlemen, eventhough the Mayor's promised warm welcome to Detroit turned out tobe a bit of false advertising today, I am delighted to be back.I've had a wonderful time. The Auto Show made me feel like a kidagain -- I wanted to leave with ten of the cars myself. But Iwas embarrassed to say, you know, I haven't bought a car in sixyears so I had to go around and ask what every one of them cost.(Laughter.)

I liked the concept cars. I liked the orientationtowards the future. It was a wonderful thing. And we have somepeople here associated with the Auto Show and I'd really like tothank them for making me and the congressional delegation and ourguests feel so welcome today.

I want to thank the Mayor for letting me be hisstand-in. We've been friends a long time. Mayor Archer'sfriendship is one of many thousands of things I owe to my wife.They were friends in bar association work -- I knew Dennis Archerwhen he was just a mild-mannered judge with no politicalopinions. (Laughter.)

I'd also like to thank your Attorney General, JenniferGranholm, for being here; my good friend, Ed McNamara, to myleft. Thank you, Jennifer. (Applause.) Thank you, Mr.McNamara, for being my friend. And City Council President GilHill, Frank Garrison, President of the Michigan AFL-CIO. And Iwant to thank my good friend, Governor and former Ambassador toCanada, Jim Blanchard. I think he was the best Americanambassador we ever had to Canada, and you can be very proud ofwhat he did there. (Applause.)

He also brought me here the first time -- maybe therewere this many people when I spoke in August of '92, but I don'tremember it. This is the longest head table I've ever seen.(Laughter.) I got up at 6:00 a.m. this morning; I didn't do mynormal workout. It doesn't matter -- I ran all the way down --(laughter.)

I'd also like to thank the unusually large delegationfrom Congress who came with me today. And I'd like to ask themto stand and be recognized: Congressman John Dingle and Debbie;John Conyers is here with his son; David Bonior; Sandy Levin andMrs. Levin; Jim Barsha; Bart Stupak and Mrs. Stupak; CarolynKirkpatrick and Debbie Stablenow. They're all here and I thankthem for coming with me from Washington. (Applause.)

Here in Detroit nearly a century ago, as all of youknow better than me, Henry Ford set history in motion with thevery first assembly line. He built not only a Model T, but a newmodel for the way America would do business for quite a longwhile. He said he was looking for leaders and thinkers andworkers with "an infinite capacity to not know what can't bedone." People like that came together in Detroit and all acrossAmerica. They forged America's transition from farm to factory.Detroit led the way and America led the world.

Today, as Mayor Archer just documented, Detroit isstill leading the way and America continues to lead the world.Indeed, we gather today at a time of an American economicrenaissance. Our budget is balanced for the first time in ageneration. We are now entering a second year in an era ofsurpluses. (Applause.) This week I announced that oureconomists project we will close out the year and the centurywith a surplus of no less than $76 billion, the largest in thehistory of the United States for the second year in a row.(Applause.)

Today, we received the December unemployment figures.Unemployment was 4.3 percent, the lowest monthly rate sinceFebruary of 1970. For the year, it was 4.5 percent, the lowestannual rate since 1969. It's the lowest peacetime rate ofunemployment since 1957. There were 378,000 new jobs last month,for a total of 17.7 million. The welfare rolls are the lowestthey've been as a percentage of our population in 29 years. Homeownership is the highest in history, and in the last six years, 7million Americans have bought new homes and another 18 millionhave refinanced them at lower interest rates.

We also know now with this last month that thispeacetime expansion is the longest economic expansion inpeacetime in the history of the United States. (Applause.) Andequally important to me, this one is different from the ones ofthe last several years. It is inclusive, not exclusive. We haveseen, for example, the highest real wage growth in over twodecades -- growing at twice the rate of inflation; the lowestAfrican American and Hispanic unemployment rate ever recordedsince we began keeping such statistics in 1972. (Applause.) Andaverage family income up after inflation by $3,500. This is arising tide that is lifting all boats.

Closer to home, for amy of you, we learned that thisweek was also quite a remarkable year for U.S. automakers -- 15.5million cars and light trucks sold last year, the most in 12years. Ford had its best year since 1978. The sales of theformer Chrysler Corporation -- I met with the Diemer people againtoday, and again I asked them to sell me a Mercedes at the priceof a Chrysler. And I'm working on making that deal for allAmericans, I want you to know. (Laughter.)

But, anyway, we're excited about this merger, and theirbrands hit a record high -- 2.5 million vehicles. GM ended theyear on a strong note with great momentum for 1999.

Now, let me compare just for a moment how far we havecome these last six years. The last time I spoke here -- andGovernor Blanchard brought me as a nervous candidate forPresident in August of 1992 -- it seemed America had lost its wayin the strong headwinds of economic change. In August of 1992, Isaid we had a choice to make -- whether to create a high-growth,smart-work, high-wage economy, or to continue to drift into alow-growth, hard-work, low-wage future.

In August of 1992, the unemployment rate for thisentire area was almost 9 percent, the same for the state as awhole. In August of 1992, Michigan had lost more than 60,000jobs in the previous two years; businesses were folding;residents were losing jobs and hope; crime and poverty werehitting record levels.

The new world of high technology and great globalcompetition threatened to bypass America's heartland. Foreigncompetitors actually described America as another great power ina state of inevitable decline. On our own best-seller list,there was a remarkable book that asked a question with its title-- America: What Went Wrong?

Well, three months after I was here, in my inauguraladdress I said that I believed there was nothing wrong withAmerica that cannot be fixed by what is right with America. Andtoday we can, thankfully, ask the question : America, whatwent right?

The answer is a lot of things. In fact, most thingsare going right for our country. Our real recovery began when wereturned to a principle as old as our republic -- "We, thepeople." We have pursued a vision of 21st century America withopportunity for all, responsibility from all, a community of allAmericans. We have married old ideals to new ideas, to fit ournew economy and our new society. We have moved beyond the falsechoices of using government to hold back the tides of change orleaving people to sink or swim all alone.

We believe the role of government is to empower people,to ride the tides of change to greater heights. We believe in agovernment for the Information Age that is progressive, creative,flexible and, yes, smaller. You might be interested to know thatthe government that you have today has more than 300,000 fewerpeople than it did when I last came here to speak in August of1992. Indeed, it's the smallest federal government since JohnGlenn first orbited the Earth.

For example, under the Vice President's leadership,we've cut more than 16,000 pages of federal regulations;streamlined or simplified 31,000 more; committed to work withthose who bear the burden, as well as those who receive thebenefit, of future regulations in drafting them. In areas fromworkplace safety to the partnership for new generation vehicleswith your automakers -- which I'll discuss more in a moment -- toclimate change, we are working with business to use technology,research and market incentives to meet national goals.

Some have called this political philosophy "the thirdway." It has modernized progressive political parties andbrought them to power throughout the industrial world. Here inAmerica it has led us, I believe, to a new consensus, making thevital center once again a source of energy, action and progress.That, I believe, is the only way for any advanced industrialnation to thrive in the new global economy.

Our new economic strategy was rooted in a few basicideas -- first, in fiscal discipline. In an era of worldwidecapital markets, nations purchase prosperity by saving andinvesting and being prudent, not by running big deficits. So wecut the deficit, balanced the budget, sent interest rates down,helping people to buy new homes, helping more entrepreneurs tostart new businesses.

Also, the reduction of the deficit and the ultimatebalancing of the budget has freed up more than $1 trillion incapital for private sector investment. Unlike past expansionswhere government bought more and spent more to drive the economy,during this expansion government spending as a share of theeconomy has actually fallen. And over 90 percent of those 17.7million new jobs are private sector jobs.

The second part of our strategy has been to invest inour people. In 1992, we had two deficits -- one in the budget,but another in our investment in our people and our future. Ahigh-tech economy that places even greater demands on skills mustput people first, as the Mayor said. Therefore, even as we cutspending and eliminated hundreds of programs to balance thebudget, we nearly doubled our annual investment in education andtraining. Even as we closed the budget gap, we have expanded theearned income tax credit for 15 million low-income workingfamilies, giving them hope and lifting over 2 million workingpeople out of poverty.

Even as we cut government spending, we have raisedinvestments in our welfare-to-work jobs initiative, and invested$24 billion in a children's health initiative to bring healthinsurance to 5 million young people who do not have it.

Third, building a new American economy has meant makingthe world economy work for us. Until last year, when we had allthe turmoil and trouble around the world, fully one-third of thestrong economic growth we had enjoyed in the '90s came fromexpanded trade. For every country engaged in trade, for everymarket open to our products, the base of customers for Americangoods and services expands.

That is why it matters to all Americans that we havenegotiated 270 trade agreements in the last six years. Not allof them have met all of our hopes, and a lot of them have beenlimited by the economic problems faced in particular countries.I think those here associated with the auto industry know howhard we have worked on the auto trade agreement with Japan. Wewill never make the kind of progress we intend to make thereuntil the economy begins to recover, which brings me to a point Iwill return to in a moment.

Nonetheless, if you look at our approach -- fiscaldiscipline, investment in people, expanded trade -- it hasenabled the United States, the businesses and the people workinghere, to create a truly new, global, high-tech economy. Morethan 7 million Americans today work in technology-relatedindustries, earning two-thirds more than average worker salaries.Technology has not just built the computer industry, it hastransformed existing industries -- from high-tech research anddevelopment, in real estate, in construction and, as I saw today,to transportation.

A lot of these cars now that I saw today have morecomputer power in them than Neil Armstrong had to steer Apollo 11to the moon. It's an interesting time in which we live and weshould feel fortunate to be here.

The question for all of us today and the thing I wantyou to think about is, okay, we feel good -- and Dennis reeledoff the statistics and you clapped and I was pleased.(Laughter.) And I like it even better knowing that there arereal families now that have work and a stronger future for theirchildren and safer streets for them to live on. But the questionfor us today is the question you have to face every day you getup, whether it's a good day or a bad day: What are you going todo today? And what do you intend to do tomorrow? What are wegoing to do with this prosperity? We can rest on our laurels orpress ahead.

In a sentence, here's how I assess our presentcondition. America is working again, it's working. Not just theeconomy -- the crime rate is the lowest in 25 years. A lot ofour social problems are receding. It's working again. That isthe good news. But no serious analyst of our condition couldseriously say that we have met the long-term challenges that ourpeople face in the 21st century. And there will never be abetter time to meet them than a time when we have a surplus inour budget and a strong surfeit of confidence in ourselves andour ability to meet the challenges ahead.

So I say this is the time to press on with the bigchallenges of the 21st century. Not just to have America work,but to know that it's going to be working for decades ahead.What are those challenges? They are many, but I will mentionjust three I'd like to ask you to think about in the context ofthe mission of the Economic Club.

First, we must maintain our prosperity and spread itsbenefits to people and places that have not yet felt it. And wemust deal with the challenges of the global economy, for withouta successful global economy, our ability to continue to grow andprosper will be dramatically limited.

Second, we must deal with the challenges of the old andthe young in America. We have to face the fact that the babyboomers are about to retire and when they do, there will only beabout two people working for every one person drawing SocialSecurity; that more and more we are living longer -- the averagelife expectancy in America today is over 76 years. In 20 or 30years it will be well over 80 years. That will impose great newchallenges to meet in long-term care. And we must face the factthat we have a challenge of the young, because more and more andmore, our children tend to have higher poverty rates than ourseniors; and more and more, our children come from very diversepopulations in race, in religion, in culture, in income, incondition. And, yet, every one of them needs to have aworld-class education and a world-class opportunity to make themost of his or her life.

And, third, we have to grow the economy while meetingthe challenges of global responsibility, including globalenvironmental challenges. And if we are ever forced to reallychoose between one or the other, then our children andgrandchildren will be the losers.

So let's deal with these things briefly. In theeconomic arena I think we have to do the following things.First, in the next year and beyond we must maintain our hard-wonfiscal discipline, keeping our budget balanced, saying that notax cuts or spending programs, no matter how attractive, can putour prosperity at risk by driving us back into deficits.(Applause.)

Second, since all respected prognoses tells us that weare, in fact, entering an era of sustained surpluses, we shoulduse this as an opportunity to address the challenges of an agingnation. As I said, soon the number of elderly Americans willdouble. This represents a seismic demographic shift for theUnited States.

I am grateful that last year the Congress agreed withme to set aside the surplus until we save Social Security. Nowit is time to actually save Social Security for the 21st century,and to strengthen and secure Medicare for many more years.Medicare is a great legacy of Congressman Dingell's father. Itis a great program. A lot of people depend upon it. It needssome support. And there will be some money involved.

We have the ability now to deal with the challenges ofthe aging population. And, as you know , I also proposed a fewdays ago a tax credit to help people pay for long-term care. Ifwe can save Social Security for the 21st century, if we canstrengthen and secure Medicare for the 21st century, if we canhelp families to deal with the challenges of long-term care, wewill have gone a long way not only to make sure that the olderyears of people will be more secure, but to alleviate one of theprincipal worries that people of my generation have, which isthat our retirement, because we're such a big group, will be socostly that it will undermine our children's standard of livingand their ability to raise our grandchildren. None of us wantthat and we have to take this surplus and this opportunity anddeal with these challenges. And we ought to do it right now,this year, with no excuses. (Applause.)

Now, thirdly, we must do more to continue to close theinvestment gap for our young people and our people in theirworking years. For more and more, the income gap in America is askill gap. We've made dramatic progress in opening the doors ofcollege to all Americans, in hooking our classrooms up to theInternet, in raising standards in our schools and promoting moreschool choice and charter schools, in putting 100,000 newteachers in our schools to deal with the growing studentpopulation -- which we began to do last year and we must continuethis year.

In my upcoming State of the Union address I willpropose further reforms and improvements in our public schools,and I will also advance a new training agenda to give theAmerican people the assurance that they will be able to get theskills they need for a lifetime of competition in the globaleconomy.

Fourth, at this time of turmoil in the internationaleconomy, we must do more to make the world economy work for allour people and, indeed, ordinary citizens throughout the world.I want to press forward with open trade; I have always believedin it. It would be a terrible mistake at this time of economicfragility for so many of our friends and neighbors and democraticallies, for the United States to build walls of protectionismthat could set off similar responses around the world and lead usinto a sustained global recession. That would be a mistake.

On the other hand, if we expect the American people tosupport open trade, we must be prepared to bring the full forceof our trade laws to bear upon any and all unfair tradepractices. (Applause.)

Just yesterday I addressed such a practice when I senta comprehensive action plan to Congress outlining our response tothe dramatic increase in steel imports into the United States --especially in the area of hot-rolled steel, where the prices arebelow what anyone believes the reasonable cost of production isanyplace in the world.

Let me be clear: I am especially concerned about thedramatic surge of steel imports from Japan. But there areproblems elsewhere, too. If these imports do not soon return totheir pre-financial crisis levels, my administration is willingto initiate forceful action, under our Section 201 surgeprotection laws and under our anti-dumping laws. An open, fair,rule-based system is essential to American prosperity. I cannotgo to the Congress and ask for expanded trading authority, for anAfrica trade initiative, for a trade initiative for our neighborsin the Caribbean, unless the American people know that whateverthe rules are, we intend to play by the rules and we expectothers to play by the rules, as well. (Applause.)

I would also tell you that this question of whetherordinary working people are benefitted by expanded trade is aneven more deep question in other countries than it is in theUnited States. I went all the way to Switzerland a few monthsago on the 50th anniversary of the World Trade Organization, toargue for changes in the world trading system for the 21stcentury -- changes that will make sure that the competition neverbecomes a race to the bottom; changes in labor protection,consumer protection, environmental protection.

We should support more free trade and we should supportmore input from and consideration of those sectors. We should beleveling up, not leveling down. Strengthening the foundations oftrade also means we have to stabilize the architecture ofinternational finance. Now, I'd like to just talk about this fora moment.

All of you know in the last year how the globalfinancial crisis has hurt our farmers, our ranchers, ourmanufacturers. You've seen it in the steel industry. One of theproblems we have with the import of steel from Russia is that thecurrency value has collapsed as the money has flown the country.One of the problems that they had in a lot of the Asian countries-- from Indonesia to Korea to Thailand to other countries thathave been troubled -- is that money flees the country. Moneymoves across the globe in volumes and at speed far greater thanever before. And it has created a situation which permitsenormous increased investment almost overnight, but also cantrigger a collapse. All these financial mechanisms -- thederivatives and hedge funds and all that -- very often haveinvestments that are guaranteed by only 10 percent margins -- farlower margins than people can buy stock, for example.

And the real danger has been, as you have seen all thishappen, is, number one, that a problem in one country can spreadto another and a problem in one region can spread to anotherregion. And then if all of our trading partners are affected,then we are affected because there aren't any markets for ourproducts anymore. Now, we can't have a global trading systemunless people can move money around in a hurry and at greatvolumes. No one wants to interfere with that.

So the question is, how can we do that and still avoidrunning the risk of having these huge boom/bust cycles in theworld economy of the kind that caused domestic depression in theUnited States and elsewhere in the last '20s and throughout the'30s. And we are working very hard with other countries to cometo grips with this, to try and find a way to facilitate it.

But to give you some idea of the magnitude of theproblem, every day about $1.5 trillion crosses national bordersin currency transactions -- far, far, far -- a multiple timesmore than the daily value of trade and goods and services anddaily investments. So the trick is that we've been strugglingwith the Europeans, struggling with the Asians, struggling withpeople on every continent who understand this.

How can we modernize the financial architecture, whichwas created 50 years ago, to facilitate trade and investment sothat it also supports this global economy and the movement ofmoney in ways that never could have been imagined? I think we'remaking progress, but I expect it to be a major focus of myinternational efforts this year. And I hope, even though it's afairly obscure process, it will be clear enough to everyone thatwe will have support for the United States leading the way.

Let me say, finally, we have to do more to renew ourgreatest untapped markets so that we can continue growth withoutinflation. They are not around the world, they are in ourunder-invested, urban and rural areas here at home. (Applause.)

You heard Mayor Archer say that the unemployment ratein Detroit proper had gone from 16 to 6 percent. I hope theempowerment zone had something to do with that. We have doneeverything we could across a whole range of policies to help ourcities and our rural areas to attract more investment andopportunity. My budget in the next few weeks, which I'll submitto the Congress, will include more initiatives to have moreopportunities.

Next week, at the Wall Street Project in New York,convened by the people who run the Stock Exchange, majorcompanies and Reverend Jackson, I will talk about how we can domore to bring growth to emerging markets here at home.

And, lastly, let me just say a brief word about theenvironment. Last May here at the Economic Club, the VicePresident spoke and asserted that we believe we can achieveeconomic growth along with cleaner air and cleaner water andmeeting the challenge of global climate change. That is, afterall, the idea behind the partnership for the next generationvehicle, which we started six years ago with those of you in theauto industry here, developing cleaner, more fuel efficient carsand hoping to make American car companies even more competitivein the global economy.

I was pleased to see some of the fruits of thatpartnership along with the fruits of other governmental-fundedinvestment at the Auto Show today. And I'm looking forward toseeing the concept cars from each of the companies in a year orso.

Now, let me say these are some of the big challenges.You may not wake up every day worried about the global financialmarkets. You may not wake up every day worried about the SocialSecurity system. And if you're anywhere near drawing it, I hopeyou don't, because it's fine for the next few years. But it hasbeen a generation since we have had the combination of economicand social circumstances which give us the emotional andfinancial space to think about the future. And this country ischanging in dramatic ways. I didn't talk about the challenges ofimmigration today and our obligations to children and to our newcitizens. There are lots of things that we didn't have time totalk about. The main idea I want to leave you with is that thetemptation to rest on our laurels and relax because times aregood must be resisted.

Every business here subject to competition knows thatgood times today can become bad times tomorrow if you don't stayahead of curve. The same is true for a nation. We will neverhave, in all probability, in the lifetime of the people in thisroom, a better opportunity to take the long view, to imagine howour children will live when they're our age, to imagine how ourgrandchildren will live when they are our age. These are thechallenges we should be dealing with today. And as we deal withthem, because they will inspire further confidence and furtherinvestment, they will strengthen the American economy and theAmerican society in the near term, as well.

Henry Ford said, "Coming together is a beginning.Keeping together is progress. Working together is a success."That is the question for us. Will we rest on our laurels, becomediverted in our energies, or keep working together? If we worktogether there are no limits to 21st century America. And that'swhat we owe our children -- no limits.

Thank you and God bless you. (Applause.)

Q Mr. President, we work until 1:30 p.m., and withthat in mind, we have some questions that have come from theaudience. They are a series of questions, but I'll boil themdown on this issue: What are your thoughts about trade andfinance after the launch of the Euro, and what effect will theEuro dollar have on the United States economy?

THE PRESIDENT: I have supported the economic andpolitical integration of Europe for a very long time now. As itproceeds and as people begin to see Europe as a single entity, wewill all come to understand that they have more people in theaggregate and a bigger economy in the aggregate than we do.There may come a time in the future when, instead of the dollarbeing the accepted standard of international currency, it will bethe dollar and the Euro. No one really knows.

But I believe that anything that facilitates growth andopportunity for our friends in Europe has to be good for us, aslong as they don't build walls around the European community.That is, if Europe continues to be a more open tradingenvironment, if this gives them the confidence and security totake down even more barriers -- because our economy is still moreopen than Europe -- this will be a very good thing.

We need to support their success. We should hope thatthis will lead to a more rapidly rising standard of living in theEuropean countries that don't have such a high standard ofliving. We should hope that this brings them great newopportunities. And we should believe and have enough confidencethat if they'll keep their doors open, that we'll get more thanour fair share of opportunities.

We should also hope that it will bring more politicalself-confidence and that we will be able to work with them evenmore rapidly and more comprehensively in dealing with otherchallenges, like the challenges we face in Kosovo, or the one wefaced a few years ago in Bosnia that we're still working on.

So on balance, I have to say I think this is a goodthing and I think it's an inevitable thing. And I don't think itwould be worth a moment's attention by anyone to rue the day ithappened. They are the masters of their own fate; they are goingin this direction. I think, on balance, it's positive, and weneed to figure out how to make it a good thing for America and agood thing for the world.

Q Mr. President, you touched on this in yourremarks, but perhaps you could amplify. The question is:Dumping of steel by foreign producers is hurting American steelindustry severely. What is the administration going to do aboutdumping of steel in the American market?

THE PRESIDENT: Well, first of all, let me say thereare -- in my judgment, this steel dumping problem -- I have to becareful about this -- the Secretary of Commerce is examining thedumping facts and that's a term of legal art, so I shouldn't becharacterizing it before he has made his actual factualdetermination. I know of no place in the world, however, wheresteel can be produced at the price that it's been sold in theUnited States in recent months, over the last year, by Japan andRussia and, to a lesser extent, by Korea and others.

The Secretary -- the first thing that we're doing isthat the Secretary of Commerce, Bill Daley, under the law, isresponding to the American steel companies who have asked for ananti-dumping determination against Japan, Russia, and Brazil.And he is looking into that and he will make findings. And if hefinds that the legal definition is triggered, then he will beable to impose offsetting duties.

The second thing is what I said in my speech. I wentto Tokyo not very long ago, you may remember, after -- I went toKorea and to Japan, along toward the end of last year. And Ihave made it very clear that while I am very sympathetic withJapan's economic problems and I want to do everything I can tosupport the government there in getting out of them, bankruptingthe American steel industry -- that went through so much tobecome competitive through the 1980s and has already given up ahuge percentage of its employee base in modernizing -- is not myidea of the way to achieve it. And quite simply, we expect thoseexports from Japan in the hot-rolled steel area to return topre-crisis levels. And if they don't and don't do it soon, thenwe are prepared to go forward with this anti-surge section 201action I mentioned, as well as to look at anti-dumping action andother steel products.

I should tell you that the preliminary indications arethat the exports have dropped quite a lot in the last month sincethat message was made clear and unambiguous. But I think that'simportant. I offered, yesterday, a tax change in the law on afive-year basis only, to increase the loss carry-forward capacityof our steel companies, because this is unprecedented -- at leastin the six years I've been President, I've never seen anythinglike this happen to one sector of our economy so quickly withsuch obvious consequences.

We are also negotiating with the Russians to return topre-crisis levels there and deal with the problem. Again, I'mvery sympathetic, the Russians need to earn all the money theycan. They've had all kinds of people taking money out of theireconomy. And we want a democratic Russia to stay democratic andfree and open. But we took last year roughly 20 times thehot-rolled steel from Japan, Russia and other countries thatEurope did, and their market is 30 percent bigger than ours. SoI hope none of you will think that I've gone stark-ravingprotectionist by simply trying to enforce our laws and keep afair system here.

Q Mr. President, you recently proposed boosting thedefense by about $100 billion over the next six fiscal years.What is it that you hope to accomplish? And another question wasasked, among several, what is the policy that you haveimplemented to attempt to keep so many key military men and womenfrom leaving their positions?

THE PRESIDENT: From leaving their positions?

Q Aging out or --

THE PRESIDENT: Well, first of all, the military budgetpeeked in the late '80s and has been going down either inabsolute terms or relative to inflation ever since, until acouple of years ago when we stabilized it. We have dramaticallyreduced the size of our armed forces. We have dramaticallyreduced the civilian work force supporting those armed forces.

But we now have downsized our force almost to, I think,the point where we shouldn't go lower. We can't go any lower andmaintain our present military strategy -- which, among otherthings, calls upon us to be able to fight in two separateregional conflicts at roughly the same time, and enables us tofulfill our responsibility from Bosnia -- where we're keeping thepeace and have saved Lord knows how many lives -- to CentralAmerica, where today and for the last several weeks, ever sinceHurricane Mitch, the worst hurricane in well over a century,devastated Central America -- you've had several thousand of yourfellow Americans in uniform who have been down there workingevery day to help rebuild it. And we have people on the seas,people in foreign countries, all over the world, on everycontinent.

I visited in Africa, when Hillary and I went to Africathis year I visited the young Americans that are part of theAfrica Crisis Response Initiative, training African soldiers todeal with civil wars and other problems there. We areeverywhere.

And what's happening is, as we've downsized themilitary, the following problems have arisen, and you should allbe aware of them. Number one, the deployments overseas arelasting longer and the breaks between them are shorter. Numbertwo, we haven't had the money to replace and repair our equipmentas rapidly as we should. Number three, married people in themilitary who have families and children and who need to live inmilitary housing have not seen any significant improvements intheir military housing.

Number four, we have not done as much as we could havedone, and as much I think we'll have to do in the years ahead, inmodernizing the weapons that we have. And as you saw in therecent military action in Iraq, where we did a terrific amount ofdamage to the military infrastructure and the weapons of massdestruction infrastructure, while causing the deaths, theunintended deaths of far, far, fewer civilians than were losteven in the Gulf War a few years ago -- the technological edgethe United States has is very important.

Finally, in certain critical areas, we just can't keepup with recruitment. We have a lot of pilots leaving because theairlines are doing very well and they can get jobs making a lotof money working for the airline companies. And I don't blamethem, but it would bother you if you knew I needed the AmericanAir Force and there weren't enough people to go fly the planes.

So when I say we're going to spend $100 billion over 10years, you should know that some of that money is coming out ofsavings the Defense Department has achieved. And wheninformation is lower than we thought, when fuel costs are lowerthan we thought, normally they'd have to give up that money --we're just letting them have money that they were budgeted foranyway. Some of that money will be new money. But we have toraise pay, we have to improve living conditions, we have to makesure that people are on safe equipment.

You know, not a single one of those planes that flew inIraq came down, not a single bolt came loose, because people thatyou will never see worked like crazy, maintaining those planes intip-top shape condition. They should -- no American pilot, noman or woman that flies those airplanes should ever have to worryabout getting into an airplane, worrying about whether it's beenproperly maintained, whether the equipment was there and all ofthese things.

So that's what this is all about. And we are going toinvest some more money in modernized equipment. I hope you willsupport this. I know everybody would like to see more moneyspent everywhere else, but they deserve it. (Applause.)

Q Mr. President, we are out of time, but as apresiding officer I always attempt to try to reach to our youngpeople who have tried to ask -- and they do ask some veryinteresting and challenging questions. I close with these twocombined, one written by a person who is age 13; and the other bythe age 12.

Mr. President, are there horses and a horse barn at theWhite House? If so, could you please send me a picture? And whois the most interesting person you have met during yourpresidency?

THE PRESIDENT: There are no horses or horse barns inthe White House. There is a place where Socks and Buddy sleep.However, the President can ride horses either in Rock Creek Parkor up at Camp David, and the National Park Service keeps horses,wonderful horses, which my family and I sometimes ride, and if wehave friends come spend the weekend with us, we can ride. So wedo have access to horses, but they're not right there on thepremises.

It's very difficult to answer who is the mostinteresting person I've met since I've been President because Imeet all different kinds of people. For example, some of youknow I love music very much, and one of the big perks about beingPresident is that if you ask somebody to come perform, they'llpretty well do it. (Laughter.) So it's been a real kick, youknow. (Laughter.)

And I've met a lot of very fascinating people in publiclife. But among the most interesting people I've met are thePresident of China, who is a fascinating man; Boris Yeltsin, whois a fascinating man. Remember, he got up on a tank alone whenthey tried to take democracy back in Russia and he said to allthe soldiers all around him in the threat to take democracy away,you may do this, but you'll have to kill me first. And he wasstanding on that tank all by himself.

The late Prime Minister of Israel, Yitzak Rabin, whowas assassinated by one of his own citizens for working for peacewith the Arabs, after he'd spent a lifetime protecting the peopleof Israel in uniform.

But I think among the politicians, the politicalleaders I've met, I could mention many more, but I think the mostinteresting one I've met, for me, for a particular reason, isNelson Mandela, the President of South Africa. (Applause.) AndI say that for this reason -- to the young people -- you shouldthink about this the next time something bad happens to you andyou get discouraged.

Bad things happen to kids, you know -- people they likedon't like them; gang members try to push them around, maybethreaten them, maybe even hurt them; they make grades that theydon't think are as good as they ought to be. You know.Disappointments happen in life.

Nelson Mandela was in prison for 27 years because ofhis political beliefs. And we talked once about it. And hewalked out of there with enough mental and emotional strength totake all the support that he had generated by becoming the symbolof South African freedom and to win in a landslide the first freeelection they had had in 350 years, and to do it in a way thatbrought people together across racial and political lines insteadof driving them apart.

When I went to South Africa, Nelson Mandela, forexample, arranged for me to have lunch with legislative leaders.And one of them was the leader of the most militant right-wing,white party there who had once threatened to restart a civil warif Nelson Mandela got elected President. And Mandela sat downand talked to him and convinced him he ought to be part of thepolitical system. And then when I came to South Africa, insteadof having me eat lunch with all of his allies, he had me sit downand eat lunch with this fellow.

I have a minister friend who ran into President Mandelaat the airport in Johannesburg and he came up to a little fiveyear old white girl, and he asked the young girl if she knew whohe was, and the young girl said, yes, you're President Mandela,you're my President. And he looked at this little child now,after all his life, and he said, yes, young lady; and he said, ifyou study hard in school and you learn a lot about things you,too, could grow up to be President of South Africa.

Hillary and Chelsea and I have all become friends ofPresident Mandela, but also fascinated by how he survived 27years in prison. There was over a decade in which he didn't havea bed in his cell. A dozen years of breaking rocks, anexperience which cost him seeing his children grow up --ultimately cost him his marriage and subjected him to all sortsof physical and emotional abuse. And he walked out of prison,got elected President, invited his jailers to his inauguration.

So I asked him one day, I said, how did you do this? Isaid, how did you go without hating them? And he said, well, youknow, I did hate them for a long time, about 12 years. And hesaid, one day I was out there breaking rocks in prison and Ithought, look what they've taken away from me. They've taken thebest years of my life. I can't see my kids grow up. Theybrutalized me. They can take everything -- they can takeeverything from me, but my mind and my heart. Now, those thingsI will have to give to them. I don't think I will give themaway. You think about that. I don't think I will give themaway.

The morning Nelson Mandela got out of prison, it was anearly Sunday morning in America, in the Central Time Zone. And Igot my daughter up and I took her down to the kitchen and turnedthe television on and sat her up on the counter -- she was alittle girl -- and I said, I want you to watch this, this is oneof the most important things you'll ever see. And some of youremember when Mandela took that last long walk to freedom, whenhe was coming out of the prison.

So I asked him, I said, now, when you took that lastwalk, tell me the truth, didn't you hate them again? He said,yes, I started to. And he said, I was also scared because Ihadn't been free in a long time; I was actually scared. And Iwas filled with anger. And then I thought to myself, when Ibecome free, I want to be free. If I still hate them, I won't befree. They've had enough of my time. I'm not giving them anymore, not another day. (Applause.)

This is a very long answer to a child's question, butit's an important answer. That's why he's the most interestingperson I've met -- because I don't know another human being thatsuffered so much for so long and came out so much stronger andricher and deeper than he went into his period of suffering.

And so I ask the children here and the parents here tothink about it when times get tough. And I ask America to thinkabout it when we have all these racial and religious andpolitical divisions that we think are so big -- we spend all ofour time trying to solve the problems in Northern Ireland, theMiddle East and other places in the world. None of the people --practically none of the people that are involved in any of thisstuff around the world, and nobody here in America has ever beenthrough anything -- anything -- like what he went through.

And so when we call for a spirit of reconciliation andunity and community and mutual respect in America, we ought tothink about Nelson Mandela. If it was good for him, it wouldsure be good for us.

Thank you and bless you all. (Applause.)

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What's New - January 1999

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