Software Vault: The Gold Collection/Software Vault - The Gold Collection (American Databankers) (1993).ISO/cdr11/wh930513.zip/05-13A.TXT

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From @lex-luthor.ai.mit.edu:[e-mail]  Thu May 13 17:08:55 1993
Date: Thu, 13 May 1993 15:56-0400
From: The White House <[e-mail]>
To: [e-mail],
Subject: President's Remarks to Small Business Leaders  5.13.93

                           THE WHITE HOUSE

                    Office of the Press Secretary

______________________________________________________________
For Immediate Release                               May 11, 1993

                       REMARKS BY THE PRESIDENT
                      TO SMALL BUSINESS LEADERS

                              Room 450
                    Old Executive Office Building

10:50 A.M. EDT

         THE PRESIDENT:  Thank you very much.  Erskine's only
been here a day and he's already become one of us.  (Laughter.)  And
you just saw an illustration of Clinton's third law of politics:
Whenever possible, always be introduced by someone you've appointed
to high office.  (Laughter.)

         I want to introduce the people who are here with me
first, starting on my left.  Frank Newman, the Under Secretary of the
Treasury; and Roger Altman, the Deputy Secretary of the Treasury.
Laura Tyson, the chair of the Council of Economic Advisors.  You met
Erskine Bowles.  And next to Erskine is Andrew Cuomo, the Assistant
Secretary of the Department of Housing and Urban Development who,
among other things, is responsible for developing and implementing
our empowerment zone proposal for cities and small towns and rural
areas that are economically distressed and that need more free
enterprise.

         I'd like to thank all of you for coming, but I'd like to
also pay a special word of recognition to the smallest entrepreneurs
that are here.  These young people are from Theodore Roosevelt
Elementary School in Houston, Texas.  They are second graders.  And
shortly after I was inaugurated, in February sometime, they sent me
this book.  I got your book.  (Laughter.)  With all their letters,
telling me what I ought to be doing.  (Laughter and applause.)  "How
are you going to stop the violence and crime?  If you will,
completely stop it."  See, everybody wrote me a letter and there are
pictures.  "Can you keep companies from making guns so we won't have
crime?"  And it goes on and on.

         But the reason they're here is that they are really the
smallest entrepreneurs.  They sold 22,000 candy bars to raise the
money to come to Washington.  So I think they deserve a hand.
(Applause.)  Thank you.

         I want to thank you for taking your valuable time to
come here today so that we could talk about the shape of the small
business initiatives in the economic program, now well on its way to
moving through Congress.  So many of you are the best representatives
of American small business.  For instance, Nancy Alchuleta has led
the Mevatec Corporation in Huntsville, Alabama to compete and win in
the world marketplace with a new emphasis on high technology.

         William Gordon, the President of Applied Data Technology
is a high-tech company which has grown from seven employees in 1986
to over 100 today.  Paul Sam, President of Holly Metals, has grown
from a custom sheet metal company to the fabrication of metal parts
for Boeing, and a high-tech composite painting facility.

         These are the kinds of things that we need more of in
America.  As I said yesterday in giving out the Small Businessperson
of the Year Awards, the United States benefited greatly, particularly
in the last 10 to 12 years, from the fact that small business created
more jobs than were lost in the large business sector of this
economy.  It is a little-known fact to most Americans, but in every
year of the last dozen, the largest businesses in the country, the
Fortune 500 have reduced their employment in the United States by
somewhere in the neighborhood in the total of 200,000 jobs.  Even as
profits increased and productivity increased and stock values
increased, the technological advances of productivity led to an
actual reduction in the work force, not an increase.

         For all of the 1980s until the very end of the decade,
those reductions were far more than offset by the growing vibrancy of
an entrepreneurial economy in America.  Indeed, many of the small
businesses were contractors and customers and suppliers for the
larger businesses in the country.

         Then, about three years ago the small business job
engine began to slow down.  And there are any number of reasons why.
There was a domestic recession, there is a global recession.  The
credit crunch in parts of our country plainly contributed to it.  The
substantial increase in the cost of adding one more employee in terms
of Social Security, worker's comp, health care and other things has
certainly led to the use of more part-time employees, or asking the
existing work force to do more overtime.  And you may pay a little
more for overtime, but you save all the supplemental costs of hiring
the additional employee.

         Although things are perfectly rational choices, but what
they have meant for the United States is that we've had quite a
stagnant unemployment rate -- one that mirrors, I might add, every
other advanced country in the world.

         At seven percent, our unemployment rate is about the
same as Western Germany's, and still lower than all of Europe; higher
than Japan, which has, as you know, a very different sort of economic
system than we do.  But even there, they've had trouble now creating
new jobs, and many companies there are having some of the first
layoffs they've ever had.

         I say that to make the following point:  Larger
companies, just like the federal government, will have no choice but
to continue to try to improve productivity and use technology to do
more with fewer workers, to increase output per worker.  One of the
things I'm trying to do here that we're writing into the law, this
new budget proposal, is to reduce the size of the federal government
by attrition by at least 100,000 workers, by increasing productivity
and restructuring.  But that's what the national government should be
doing.

         But if these things are going to occur in our larger
organizations, then we have to find a way to preserve the vitality of
small business and to increase the capacity of small business to add
to the American work force.  If everybody in this country who wanted
a job had one, we wouldn't have half the problems that we wrestle
about all day up here every day.  And, frankly, you and people like
you all over America are the best prospect we have for getting that
done.  That's why we worked as hard as we could to try to create an
economic program that would benefit small business.

         Our policy first begins with deficit reduction.  The
deficit reduction package that the government has put forward and
that the House of Representatives is in the process of coming to
grips with now clearly has had a major impact in driving interest
rates down over the long run.  Since November there has been a
dramatic reduction in interest rates, home mortgage is at a 20 year
low, many other interest rates at historic lows.  The business
analysts estimate that if we can keep these rates down for several
more months the impact will be about $100 billion released into this
economy, principally through refinancing of home mortgages and
business loans and other refinancing as well as the direct benefit of
the lower costs of borrowing.  That's why I always say the best
stimulus program that we can give to this economy just to stimulate
growth is to keep these interest, and to keep driving them down and
to keep driving the deficit down.

         Yesterday, in an attempt to build up a sense of real
confidence that the administration means business and that the
Congress will mean business if they pass this program, I propose that
we put all the taxes raised and the budget reductions into a deficit
reduction trust fund so that, number one, no tax increase without
budget cuts; number two, no tax increase for anything but reducing
the deficit.  And putting that in a trust fund, I think, will hammer
home the determination that we have to bring the deficit down and to
try to keep the interest rates down.

         The second thing I think we have to do is to recognize
that there are some initiatives which need to be taken to try to
improve the access to capital for small business.  One of the first
things this administration made an aggressive effort to do was to
deal with the credit crunch that I heard about all over America, but
especially in certain parts of the United States.   We're trying to
make it easier for small businesses to apply for and to obtain loans
when they are appropriate and needed to expand and create new jobs.

         In March, I announced this plan to ease the credit
crunch by reducing some excessively restrictive regulations imposed
in reaction to the Savings and Loan debacle.  Our plans strikes a
better balance, I think, so that we can have both safety and credit
availability.  Banks have more leeway now to make character loans
based on the reputation of the borrower.  We also have moved to ease
the paperwork burdens because it shouldn't be as burdensome to get a
$25,000 loan as it is to get a $25-million one, and it certainly is,
in a large measure, because of direct federal rules and regulations.

         We have the Treasury and all the financial agencies of
the federal government working on this.  We now have an SBA Director
who understands it all too well since before he became SBA Director
his job was to help other people start new businesses, which is what
he did very successfully.

         We also know and we're not naive enough to think that
just because we announced the policy in March the practice changed in
every community bank and every community in this country; we know
that hasn't happened.  And I have made an offer and I make it again
here today of requesting the small business community to tell us --to
tell the Small Business Administrator where the plan for easing the
credit crunch is working and where it isn't, and what we can do to
work through that.  The Treasury Department can only do so much until
it knows where the backlog and the problems are.  So we invite your
participation to make the policy we announced in March real in your
community as soon as can possibly do that.

         The second thing that we have done since we've been here
is to try to canvas the small business community about what kind of
tax incentive would best serve to help small businesses engage in job
creation.  Yesterday, the House Ways and Means Subcommittee voted to
increase from $10,000 to $25,000 the maximum amount of new
investments that a small business can deduct as expenses every year.
This means that when you invest so that your company can grow you can
immediately write off $25,000 worth of that investment.  If that
becomes law, it will be directly because of the input of the small
business community to this administration as well as to the Congress.
         When I ran for president in 1992, virtually all the
small businesspeople I met talked to be about how those which were
family-owned businesses and commitments of a lifetime would not have
much immediate benefit from the capital gains tax, and they asked for
some sort of investment credit.  That's why I recommended the
permanent small business investment tax credit as compared with a
capital gains option.  After we got here, the small business
organization said that, as a practical matter, we would get more
buying for the buck and it would be easier for more small businesses
if we simply just increased the expensing provisions to $25,000.
That change is directly the result of the input of the small business
community in this country.  I hope it becomes law and I hope you will
do everything you can to see that it does become law.  (Applause.)

         Now, there is a capital gains provision left in this
bill which I think is very helpful.  It provides a big exclusion from
capital gains taxation to help small businesses get started and to
invest in completely new projects.  That was one put forward by the
American Venture Capital Association and sponsored in the previous
Congress, among others, by the senior Senator from my state, Dale
Bumpers, who's the chairman of the Small Business Committee.  I think
that should stay in the law; we're working hard to make sure that it
does.  I think it now has virtually unanimous support.

         Finally, we have decided we should try to offer some
very special opportunities in a network of empowerment zones and
enterprise communities all across America.  In the empowerment zones,
we're offering small businesses an employment and training credit of
25 percent of the first $20,000 in wages for employees who live and
work in the zones, a targeted jobs tax credit of 40 percent on $6,000
of the first year of wages for these workers, and an increase in the
ability to deduct appreciable property.

         All these things are our effort to help communities that
are willing to help themselves by developing a long-term strategy to
grow through private sector and private-public cooperation.  To do
that, to attract capital in businesses, I am convinced -- and I think
that you are all convinced -- that with the size of the deficit we
have, there is not enough money in America to have a publicly-funded
revitalization of America's most distressed communities.

         But wherever in America there are people who are
underutilized, there is a market opportunity.  Because when people
are working up to the fullest of their capacity, then they have money
to spend and they create jobs for others.  So when I look at all
these places in America which for too long have been without
businesses on their streetcorners or in their small towns, or in
their hamlets, I see enormous opportunity.  I see in people whose
potential is not fulfilled the opportunity to make free enterprise
work again.

         We all know there are certain considerable barriers to
dealing with that.  I'm trying to make some of the high crime areas
much more attractive by simply lowering the crime rate.  We know we
can do that through community policing.  And I've asked the United
States Congress to give us some money to put more police on the
street in these communities to help make them safer and lower the
crime rate.  We know that works; there is clear evidence of that.

         In New York City alone, after the comprehensive
community policing program, established by the man who is now our
Drug Czar, Lee Brown, for the first time in 36 years the crime rate
actually went down in seven major areas.  So we know these things can
be done.

         We know we have responsibilities to make these areas
more attractive.  But if this empowerment concept can pass, then it
will be more attractive for you and people like you all across
America to take that extra risk to go into places where there is an
enormous prospect of return if a whole lot of people with no income
all of a sudden wind up having income and can be customers as well as
employees.  And I hope all of you will support the empowerment zones.
         We've talked and talked and talked about our cities and
our drying up rural communities for years, Democrats and Republicans,
they wring their hands every year and nothing ever happens.  I say,
let's try this, let's see if it works.  Let's see if we can have a
public-private partnership that works.  If it doesn't work, we'll try
something else.  But the one thing that we know doesn't work is more
words.  We've had more words for years.  We've had wars of words from
people across political and party and regional lines, and that hasn't
worked; and that's not ever going to work.  So I hope we can try this
and see once and for all whether the government can create an
environment which makes it more attractive for free enterprise to
flourish in areas where it hasn't.

         Finally, let me say again, I appreciate the burdens
under which you labor.  I recognize that some of you, perhaps most of
you in this room, would pay higher personal tax rates under the
program I have proposed.  I hope you will support it anyway, because
if we do it right, most Americans will save more in long-term lower
interest rates than they'll pay in higher taxes, the country will be
much better off if we can pass the expensing provisions, the capital
gains provisions, the enterprise zone provisions.  If we can make our
plan to ease the credit crunch work, then small business in the '90s
can once again resume its proper role in America as the true engine
of our job growth, and there will be more people like you with
rewarding stories to tell.

         And, perhaps more important of all, when these kids grow
up, they'll have a chance to be just as entrepreneurial as they have
been in getting themselves here today.

         Thank you very much.  (Applause.)

                                    END11:07 A.M. EDT