Q. Would each of you state briefly your prescription for fixing the American economy?
GOVERNOR CLINTON: The country is in the grip of two economic crises. The one that most people are preoccupied with is the three-year slowdown, the slowest three years of any presidency since before World War II, coming at the end of a decade of productivity decline. The result is the loss of a lot of our economic leadership, the collapse of a number of our high-wage jobs and the concomitant disintegration of a lot of the important parts of our society: more children living in poverty, more people working below the poverty line. Everybody concedes that somewhere between 40% and 60% of the people lost economic ground over the past 10 to 12 years. Maybe as much as 80% of the electorate had no real net gains. So we are suffering from slow growth. There is also wildly unfair distribution of the pain.
A central failing is that we were the only major economy in the world that had no national economic strategy. That is one thing Senator Tsongas and I agree on. We didn't have an automobile strategy, a strategy for maintaining a high wage base, a strategy for revitalizing our cities. We didn't have an overall strategy because Presidents Reagan and Bush believed that the Federal Government would mess up anything it got into, and that the main thing to do was to keep taxes low, especially on upper-income people and corporations, and basically to let the market take its course.
That course does not work. We need a national economic strategy as well as a human-development strategy that recognizes we are living in a world in which what people earn depends largely on what they can learn and whether their economies are organized for change.
So the three central ideas in my economic policy are:
One, emphasize education and training, not just of our children but also of our adults.
Two, give new incentives to the private sector to invest in this economy. The 1986 Tax Reform Act took too many of them away. I have enumerated them: an investment tax credit that is broader for small or medium-size businesses but gives heavy industry at least machinery credits in ways that will cost in the ball park of $5 billion a year; and the new business tax credit recommended by the Venture Capital Association.
Three, think a lot about organizing to make change our friend instead of our enemy. The most depressing problem in America today is the fact that we are reducing the defense budget with no conversion plan. The one area where we had an industrial policy in the '80s was in defense. We targeted specific investments. We had an agency to convert ideas from the lab to the marketplace. We put all kinds of technicians, scientists, engineers and factory workers to work and put servicemen and -women in the implementation stage, and now we are just laying them off with no conversion plan. If it were me, I would be organizing a strategy to maintain and develop a high-growth, high-wage base so we can adapt to change instead of being punished by it.
SENATOR TSONGAS: You just took the first four pages out of my plan.
CLINTON: We agree on our general approach.