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CLINTON: Nothing is the matter with it. I agree. I think we have to have investment as opposed to consumption-based strategy. In the '80s we tripled the deficits of the government and our public investment went down, largely because we had big increases in defense and insufficient revenues. We exploded the deficit, and we refused to control health-care costs. And we didn't have a government that was oriented toward investment.
I agree we have got to have a manufacturing base. I agree that we ought to have an investment tax credit that extends to all manufacturers without regard to size -- and I am not sure it should be temporary if it's properly structured. I fully agree that we need a venture-capital tax credit. The issue -- it may be a difference of emphasis, and it may be a whole difference of direction -- is what mechanisms work best. I agree that you can't be a great country if you don't produce.
We need to have a system that focuses on continuous education and retraining and small-business development strategies for people who lose their jobs because of productivity. I wish we could go back up to 22% to 25% of GNP coming from manufacturing. We are losing entirely too many manufacturing jobs because we have no strategy to deal with the productivity problems and the competition problems.
The issue is, What do you do besides provide more venture capital? And the difference between Paul and me is that I favor more targeted incentives. And even if you give lower rates in long-term capital gains held in stock traded on the New York Stock Exchange, you may be rewarding people moving jobs offshore anyway. I prefer almost every one of the same targeted tax exemptions that Paul does, but I think what happens if you have another across-the-board cut in the capital-gains tax ((which Tsongas advocates)) is that you will be spending money that you ought to be spending on people. The stock market continued to rise in the '80s without regard to whether there was or wasn't a capital-gains tax. So that is really a difference between us.
TSONGAS: In the last analysis, the future of America is determined in Japan and Germany as well as by what we do here. To go back to the '60s, the percentage of the work force in manufacturing, in all three countries, was around 30%. And now in the U.S. we are down to the 17-18% area. And the argument is, That's inevitable, because of the productivity gains.
Well, it's not true in Germany and Japan. The difference between the U.S. and Germany and Japan is you have in the U.S. productivity gains and corporate death notices. But what they have that we don't is corporate birth notices. So in their case, they didn't go from the 30s down to 17; they stayed pretty much at the same level, because they regenerated. As old companies began to have problems, new companies came along.
CLINTON: I agree with that, but let's look at why . . .
TSONGAS: Let me just continue.
CLINTON: I'm sorry.