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I would like to see the Congress and the President present a budget to the American people every year that was divided in three ways: what we spend on the past, that's the deficit, cleaning up the savings and loan mess and all that; what we spend on current consumption, including good things, the parks and all of that; what we are investing in the future, infrastructure, education, research and development, environmental technology, economic development. O.K.? Then look at the deficit, and basically you wind up with three deficits.
The budget agreement that was signed dealt with only one of our deficits, basically the permanent deficit, what you might call the one that was written into the Tax Act of '81, where we are taking in too little money and spending too much. In addition to that, there is the financial-institutions deficit -- the savings and loan mess -- and there is the recession deficit. Now, you can't solve all three of them with the same approaches. You have got to have a strategy for growing the economy, and you have got to have a strategy for dealing with the permanent deficit.
On the permanent deficit, the most important things that you can do are to, one, reduce defense in a sensible way and, two, get control of health-care costs. Those are the elements that are choking us.
Q. What about Social Security? The Senator answered that question. You didn't.
CLINTON: The way to do it is to make upper-income people pay in proportion to their ability to pay, so if you had upper-income people with a lot of income on Social Security, and you raised the tax rates, they would pay more.
TSONGAS: I would raise the tax on the wealthy, and it's not only a matter of fairness, which I think is a real issue, but I have to give the wealthy in this country a real incentive to invest in America. I have to set up a pain- gain, risk-reward relationship, where the wealthy in this country understand that if they invest in America, they are going to do very well. If they consume and don't invest in America, they are going to get hurt.
Let me raise one other issue. Every instinct in corporate America today is short-term -- shareholder dividends as opposed to long-term research and development, capital investment, that kind of thing. If you don't change that mind-set, all of these other things that you are talking about are not going to be as effective as they must be.
CLINTON: I spent most of my political capital as a Governor trying to raise money for improved education. I spent most of my time with businesspeople, with little bitty companies and with Wal-Mart, which is one of the most successful companies in the world. The best companies know exactly what we are supposed to do. They put their customers first; their interest is in quality management. They are always trying to restructure themselves. They want help in education and training, and they want targeted incentives to make it more profitable to be investing in this country than in other countries.
That's why I think the whole laundry list of business incentives I have laid out, including the investment tax credit, are far better for this economy than a capital-gains cut focused on the securities market, which will benefit investors who will invest anyway.