Remarks and a Question-and-Answer Session With Silicon Graphics Employees in Mountain View, California

The President. First of all, I want to thank you all for the introduction to your wonderful company. I want to thank Ed and Ken. We saw them last night with a number of other of the executives from Silicon Valley, people, many of them with whom I've worked for a good length of time, many of whom the Vice President's known for a long time in connection with his work on supercomputing and other issues.

We came here today for two reasons, and since mostly we just want to listen to you, I'll try to state this briefly. One reason was to pick this setting to announce the implementation of the technology policy we talked about in the campaign, as an expression of what we think the National Government's role is in creating a partnership with the private sector to generate more of these kinds of companies, more technological advances to keep the United States always on the cutting edge of change and to try to make sure we'll be able to create a lot of good new jobs for the future.

The second reason—can I put that down? We're not ready yet for this. The second reason I wanted to come here is, I think the Government ought to work like you do. And before that can ever happen we have to be able to get the people, the Congress, and the press, who have to interpret all this to the people, to imagine what we're talking about.

I have, for example, the first State government in the country that started a total quality management program in all the departments of government, trying to figure out how we could reinvent the government. And I basically believe my job as President is to try to adjust America in good ways so that we can win in the 21st century, so that we can make change our friend and not our enemy.

Ed said that you plan your new products knowing they'll be obsolete within 12 to 18 months, and you want to be able to replace them. We live in an era of constant change. And America's biggest problem, if you look at it through that lens, is that for too many people change is an enemy, not a friend. I mean, one reason you're all so happy is you found a way to make change your friend, right? Diversity is a strength, not a source of division, right? Change is a way to make money, not throw people out of work, right?

If you decentralize and push decisions made down to the lowest possible level, you enable every employee to live up to the fullest of their ability. By giving them a 6-week break every 4 years, you don't force them to make these sharp divisions between your work life and your private life. It's sort of a seamless web. These are things we need to learn in America and we need to incorporate even into more traditional workplaces.

So I'd like to start—we'll talk about the technology policy later, and the Vice President, who had done so much work, will talk a lot about the details at the end of this meeting. But I just want to start by telling you that one of our missions—in order to make this whole thing work we're going to have to make the Government work differently.

Example: We cut the White House staff by 25 percent to set a standard for cutting inessential spending in the Government. But the work load of the White House is way up. We're getting all-time record telephone calls and letters coming in, and we have to serve our customers, too. Our customers are the people that put us there, and if they have to wait 3 months for an answer to a letter, that's not service.

But when we took office, I walked into the Oval Office—it's supposed to be the nerve center of the United States—and we found Jimmy Carter's telephone system. [Laughter] All right. No speaker phone, no conference calls, but anybody in the office could punch the lighted button and listen to the President talk, so that I could have the conference call I didn't want but not the one I did. [Laughter]

Then we went down into the basement where we found Lyndon Johnson's switchboard- [laughter] —true story—where there were four operators working from early morning till late at night. Literally, when a phone would come and they'd say, "I want to talk to the Vice President's office," they would pick up a little cord and push it into a little hole. [Laughter] That's today, right?

We found procedures that were so bureaucratic and cumbersome for procurement that Einstein couldn't figure them out. And all the offices were organized in little closed boxes, just the opposite of what you see.

In our campaign, however, we ran an organization in the Presidential campaign that was very much like this. Most decisions were made in a great big room in morning meetings that we had our senior staff in, but any 20-year-old volunteer who bad a good idea could walk right in and say, "Here's my idea." Some of them were very good, and we incorporated them.

And we had a man named Ellis Mottur who helped us to put together our technology policy. He was one of our senior citizens; he was in his fifties. And he said, "I've been writing about high-performance work organizations all my life. And this is the first one I've ever worked in, and it has no organizational chart. I can't figure out what it looks like on paper, but it works."

The Vice President was making fun of me when we were getting ready for the speech I gave Wednesday night to the Congress; it was like making sausage. People were running in and out saying, "Put this in, and take this out." [Laughter] But it worked. You know, it worked.

So I want to hear from you, but I want you to know that we have hired a person at the Office of Management and Budget who has done a lot of work in creating new businesses and turning businesses around, to run the management part of that. We're trying to review all these indictments that have been issued over the last several years about the way the Federal Government is rim. But I want you to know that I think a major part of my mission is to literally change the way the National Government works, spends your tax dollars, so that we can invest more and consume less and look toward the future. And that literally will require rethinking everything about the way the Government operates.

The Government operates so much to keep bad things from happening that there's very little energy left in some places to make good things happen. If you spend all your time trying to make sure nothing bad happens, there's very little time and money and human energy left to make good things happen. We're going to try to pare away a lot of that bureaucracy and speed up the decision-making process and modernize it. And I know a lot of you can help. Technology is a part of that, but so is organization and empowerment, which is something you've taught us again today. And I thank you very much.

We want to do a question and answer now, and then the Vice President is going to talk in more detail about our technology policy later. But that's what we and Ed agreed to do. He's my boss today; I'm doing what be — [laughter]. So I wonder if any of you have a question you want to ask us or a comment you want to make. Yes, go ahead.

Export Control Policy

Q. Now that Silicon Graphics has entered the supercomputer arena, supercomputers are subject to very stringent and costly export controls. Is part of your agenda to review the export control system, and can industry count on export regulations that will keep pace with technology advances in our changing world?

The Vice President. Let me start off on that. As you may know, the President appointed as the Deputy Secretary of Commerce John Rollwagen, who was the CEO at Cray. And he and Ron Brown, the Secretary of Commerce, have been reviewing a lot of procedures for stimulating U.S. exports around the world. And we're going to be a very export-oriented administration. However, we are also going to keep a close eye on the legitimate concerns that have in the past limited the free export of some technologies that can make a dramatic difference in the ability of a Qadhafi or a Saddam Hussein to develop nuclear weapons or ICBM's.

Now, in some cases in the past, these legitimate concerns have been interpreted and implemented in a way that has frustrated American business unnecessarily. There are, for example, some software packages that are available off the shelf in stores here that are nevertheless prohibited from being exported. And sometimes that's a little bit unrealistic. On the other hand, there are some in business who are understandably so anxious to find new customers that they will not necessarily pay as much attention as they should to what the customer might use this new capacity for. And that's a legitimate role for Government, to say, hold on, the world will be a much more dangerous place if we have 15 or 20 nuclear powers instead of 5 or 6, and if they have ICBM's and so forth.

So it's a balance that has to be struck very carefully. And we're going to have a tough nonproliferation strategy while we promote more exports.

The President. If I might just add to that, the short answer to your question, of course, is yes, we're going to review this. And let me give you one example: Ken told me last night at dinner, he said, "If we export substantially the same product to the same person, if we have to get one permit to do it, we'll have to get a permit every time we want to do the same thing, over and over again. They always give it to us, but we have to wait 6 months, and it puts us behind the competitive arc." Now, that's something that ought to be changed, and we'll try to change that.

We also know that some of our export controls, rules and regulations, are a function of the realities of the cold war which aren't there anymore. But what the Vice President was trying to say, and he said so well—I just want to reemphasize—our biggest security problem in the future may well be the proliferation of nuclear and nonnuclear, like biological and chemical, weapons of mass destruction to small, by our standards, countries with militant governments who may not care what the damage to their own people could be. So that's something we have to watch very closely.

But apart from that, we want to move this much more quickly, and we'll try to slash a lot of the time delays where we ought to be doing these things.

Scientific Visualization

Q. Mr. President, Mr. Vice President, you've seen scientific visualization in practice here. As a company we're also very interested in ongoing research in high-performance computing and scientific visualization. Can we expect to see a change in the national scientific agenda that includes scientific visualization? Right now I don't see the scientific visualization as being represented, for example, on the FCCSET committee.

The Vice President. It is a good question. One of the people who flew out here with us for this event and for the release of the technology policy in just a few minutes is Dr. Jack Gibbons, who is in the back of the room, the President's science adviser and head of the Office of Science and Technology Policy. And he will be in charge of the FCCSET process. That's an acronym that—what does it stand for, Jack—the Federal Coordinating Council on Science and Engin—what is it?

Jack Gibbons. Federal Coordinating Council for Science, Engineering, and Technology.

The Vice President. Right. And visualization will play a key role in the deliberations of the FCCSET.

We were actually, believe it or not, talking about this a little bit with Dr. Gibbons on the way over here. I had hearings one time where a scientist used sort of technical terms that he then explained. It made an impression on me. He said, "If you tried to describe the human mind in terms applicable to a computer, you'd say we have a low bit rate but high resolution." Meaning—this is one of the few audiences I can use that line with. [Laughter]

But he went on to explain what that means. When we try to absorb information bit by bit, we don't have a huge capacity to do it. That's why the telephone company, after extensive studies, decided that seven numbers were the most that we could keep in short-term memory. And then they added three more. [Laughter] But if we can see lots of information portrayed visually in a pattern or mosaic, where each bit of data relates to all of the others, we can instantly absorb a lot of information. We can all recognize the Milky Way, for example, even though there are trillions of points of light, stars, and so forth.

And so the idea of incorporating visualization as a key component of this strategy is one that we recognize as very important, and we're going to pursue it.

The President. Let me just add one thing to that. First of all, I told the crowd last night that the Vice President was the only person ever to hold national office in America who knew what the gestalt of the gigabit is. [Laughter] But anyway—and now we're going to get some very funny articles out of this. They're going to make time of us for being policy wonks. [Laughter]

Let me say something to sort of take this one step further. This whole visualization movement that you have been a part of in your line of work is going to merge in a very short time with the whole business in traditional education theory called applied academics. We're now finding, with just sort of basic computer work in the elementary schools of our country, dramatic differences in learning curves among people who can see the work they're doing as opposed to people who are supposed to read it. And we're now finding that the IQ's of young people who might take a vocational track in school may not be all that different from kids that would stay in a traditional academic track and wind up at Stanford, but their learning patterns are dramatically different. And there are some people—this is a huge new discovery, basically, that's coming into the whole business of traditional educational theory.

So someday what you're doing here will revolutionize the basic teaching in our schools, starting at kindergarten and going forward, so that the world of work and the world of education will begin to be merged backwards all the way to the beginning. And it's going to be, I think, the most important thing we've ever done and very important for proving that in a diverse population all people can reach very high levels of achievement.

Ed McCracken. The President and Vice President have also come here today to present a new national technology policy for the country. Do you want to—

The President. We'll answer some more questions. I'm going to forego my time and just let him announce the policy, so we can hear some more questions. Got to give the man equal time, I know. [Laughter]

Economic Program

Q. I'd just like to say, I didn't vote for you; I wish I had. [Laughter]

The President. I hope you feel that way 4 years from now. [Laughter]

Q. Well, that's actually why I'm standing up. I really see a possibility in what you stand for, and I really think this is why you were elected, that you say you stand for change. You said that during your campaign. I think the company believed that. They're counting on you—I'm nervous—and I just want to say we're really, as a country, behind you. I think that's why the statistics are saying that we're willing to have our taxes increased; we're willing to have cuts, because you say you're really going to do it this time and decrease the deficit. I hope to God that you do. We need it not just for this present time, but by your actually fulfilling on this it will make a major change in how we feel about Government; that when Government says they're going to make a difference and they really come through, it will make a huge impact for the future. And I'm really personally behind you all the way. I wish I'd voted for you.

The President. Thank you. I really appreciate that. Let me make one comment in response, if I might. I think it's important, and you can help others understand this, to understand why we have to reduce the deficit, which is something that is normally not done when unemployment is high. And unemployment is still too high. Even though we're in an economic recovery, most of our recovery is due to higher productivity from firms that, in turn, this time are not hiring new people for all kinds of reasons.

And we have to reduce the deficit for two reasons: Number one, we're already spending 15 percent of your tax money just to pay interest on past debt. If we don't change present patterns, we'll be over 20 cents by the year 2000. That's money we should be spending on education and technology in the future.

Number two, the more money we take out of the pool of funds for borrowing, the more expensive it is for companies like this and other companies that have to go into the markets and borrow to borrow. Just since the election, since we made it clear we were going to try to bring the deficit down, long-term interest rates have dropped seven-tenths of one percent. That is a huge savings for everybody that is going to borrow money or that has a variable interest rate on a loan, whether it's a home mortgage or a business loan or a car loan or whatever. That's important.

The second thing we're trying to do that I know you will also appreciate is to shift the balance of the money we do spend more away from consumption toward investment, investments in education, technology, environmental cleanup, and converting from a defense to a domestic economy. One of the bizarre things that happened to us in the eighties is that we increased the deficit first through defense expenses and then through exploding health care costs and increasing interest payments. But we reduced our investments in the future and the things that make us richer.

So those are the changes we're trying to effect. Let me just make one other point. I will not support raising anybody's taxes unless budget cuts also pass.

Foreign Trade

Q. One of the things that Silicon Graphics has been really successful in is selling into the international markets. Approximately 50 percent of our revenues come internationally, including a substantial market in Japan. What types of programs does your administration plan to help the high-growth companies of the nineties sell to the international markets?

The President. Two things. First of all, we intend to try to open new markets and new markets in our region. That is, to keep America growing, I believe high-growth companies are going to have to sell south of the border more. And to do that we have to negotiate trade agreements that will help to raise incomes in those countries even as we are growing. That's why I support, with some extra agreements, the NAFTA agreement and why I hope we can have an agreement with Chile and hope we can have an agreement with other countries like Argentina that are making a serious effort to build market economies: because we want to build new markets for all of you.

With Japan, I think what we have to do is to try to continue to help more companies figure out how to do business there and keep pushing them to open their markets. I don't want to close American markets to Japanese products, but it is the only nation with which we have a persistent and unchanging structural deficit. The product deficit with Japan is not $43 billion, which is our overall trade deficit, it is actually about $60 billion in product, in manufactured production. So we've got a lot of problems we have to work out there.

With Europe, we sometimes are in surplus; we're sometimes in deficit. But it's a floating thing, so it's more or less in balance. With developing nations like Taiwan and Korea, those countries had big surpluses with us, but as they became richer they brought them down, so that we're more or less in balance. We have our biggest trade relationship with Canada, and we're more or less in balance.

So we have to work on this Japanese issue while trying to help more of you get involved. Let me make one final comment on that. I think we should devote more Government resources to helping small and medium-size companies figure out how to trade, because that's what the Germans do with such great success and why they're one of the great exporters of the world. They don't waste a lot of money on the real big companies that have already figured it out, but they have extra efforts for small and medium-size companies to get them to think global from the beginning of their endeavors. And I think we're going to have to do more of that.

The Environment

Q. In addition to concerns about the economy, Silicon Graphics employees are also concerned about the environment. Your economic plan does a great job of promoting R&D investment. Are there any elements that are specifically targeted to promote the application of Silicon Graphics technology to environmental-friendly initiatives such as the electric car or the mag-lev train?

The President. I think I should let the Vice President answer that since it's his consuming passion. And if I do it, his book sales will go up again. [Laughter]

We devoted a lot of time and attention to that for two reasons. One is the environment needs it. Secondly, we think it's wonderful economics, because I believe that all these environmental opportunities that are out there for us represent a major chunk of what people who used to be involved in defense technologies could be doing in the future if we're going to maintain a high wage base in America.

So I'd like for the Vice President to talk a little about the specifics that we're working on.

The Vice President. That goal is integrated into the technology plan as one of our key objectives. The Japanese and the Germans are now openly saying that the biggest new market in the history of world business is the market for the new products, technologies, and processes that foster economic progress without environmental destruction.

Some have compared the drive for environmental efficiency to the movement for quality control and the quality revolution in the sixties and seventies. At that time, you know, many companies in the United States felt that the existing level of product quality was more or less ordained by the forces of supply and demand and it couldn't be improved without taking it out of the bottom line. But the Japanese, taking us innovations from Dr. Deming and others, began to introduce a new theory of product quality and simultaneously improved quality, profits, wages, and productivity.

The environmental challenge now presents us with the same opportunity. By introducing new attention to environmental efficiency at every step along the way, we can simultaneously reduce the impact of all our processes on the environment, improve environmental efficiency, and improve productivity at the same time. We need to set clear, specific goals in the technology policy, in the economic plan.

And you know, both the stimulus package and the investment package focus a great deal on environmental cleanup and environmental innovation. And whereas we've talked a lot about roads and bridges in the past, and they're a big part of this plan also, we're putting relatively more emphasis as well on water lines and sewer lines and water treatment plants and renovating the facilities in the national parks and cleaning up trails, taking kids from inner cities and putting them to work cleaning up trails in national parks, for example, as part of the summer jobs program.

So you'll find when you look at both the technology plan and the economic plan an enormous emphasis on the environment.

The President. Go ahead, sir. They say we have to quit in a minute. I'll take one more question after this.

The Economy

Q. Mr. President, Mr. Vice President, the news stories and articles that the public has access to regarding the budget and the economy are very often confusing and contradictory. I might explain it in the same terms that you used: The information is delivered low bit rate, but the problem is huge and requires the highres view. So my question is: I wonder if you're using Lyndon Johnson's computer to analyze the budget and the economy, or whether or not you might be open to using some of the things you've seen here to get the bigger picture and also communicate that to us?

The President. Thank you. There are two things I'd like to respond to on that, and I'd like to invite you to help. [Laughter] I'd like to invite you to help, and I'd like to invite you to help on two grounds: One is the simple ground of helping to decide which visual images best capture the reality of where we are and where we're going.

Senator Moynihan and I went to Franklin Roosevelt's home in Hyde Park, New York, just a couple of days ago. You may have seen the press on it. And on the way back he said to me that the challenges that we face are different from those that Roosevelt faced but just as profound. Unemployment was higher and America was more devastated when he took office, he said, but everybody knew what the problem was. Therefore, he bad a lot of leeway working with the Congress in the beginning to work toward a solution. Now, he said, we are facing severe challenges to a century of economic leadership, and it's not clear to every American exactly what the dimensions of the problem are. The capacity you have to help me help the American people conceptualize this is quite significant: showing the trends in the deficit, showing the trends in the investment, showing how the money is spent now and bow we propose to spend it.

The second big problem we have you can see if you look at the front page of USA Today today, which shows a traditional analysis, yesterday's analysis—of the business section—of the economic program. It basically says, "Oh, it will bring unemployment down a little and it will increase economic growth a little if we do this, but not all that much." Now, why is that? That's because traditional economic analysis says that the only way the Government can ever help the economy grow is by spending more money and taxing less. In other words, traditional Keynesian economies: Run a bigger deficit. But we can't do that. The deficit's already so big, I can't run the risk to the long-term stability of this country by going in and doing that.

This analysis doesn't really make a distinction between investment and consumption, doesn't take any account of what we might do with a technology policy or a trade policy to make the economy grow faster, has no way of factoring in what other good things could happen in the private market if you brought long-term interest rates down through the deficit. So you could also help us to reconceptualize this. A lot of the models that dominate policy-making are yesterday's models, too.

I'll give you just one example. The Japanese had a deficit about as big as ours, and they were increasing spending at 19 percent a year, government spending, back in the early seventies when the oil prices went way up and they were more energy-dependent than we were on foreign oil. And they just decided they had to change it, but they couldn't stop investing. So they had a budget which drew a big distinction, a literal distinction, legal distinction, between investment and consumption, and they embarked on a 10 or 11 year effort to bring the budget into balance. And during that time they increased investment and lowered unemployment and increased growth through the right kind of spending and investment.

And I want to lead in, if I might, and ask the Vice President before we go to give you some of the specifics of this technology policy, by making one more pitch to you about this whole economic plan. This plan has 150 specific budget cuts. And I'm welcome to more. I told the Republican leadership if they had more budget cuts that didn't compromise our economy, if they helped us, I would be glad to embrace them. I'm not hung up about that. But I did pretty good in 4 weeks to find 150, and I'll try to find some more on my own.

It also has the revenue increases that you know about. It also bas some spending increases, and there will be debate about that. There will be people who say, "Well, just don't spend this new money. Don't immunize all the kids. Don't fully fund Head Start. Don't pay for this technology policy. Don't invest in all these environmental cleanup things, and that way you won't have to raise taxes so much."

The problem is, if you look at the historic spending trends, we are too low on investment and too high on the deficit, and both are problems. And secondly, we've got to have some of these economic cooperations in order to move the economy forward.

So I want you to listen to what the Vice President says in that context. Because what you will hear is, we don't need to do what we think we should do in this area. If we don't, I think we'll be out of competition. People like you will do fine because you've got a good company here, but the country as a whole will fall behind. And you can help on both those points.

So would you proceed?