Remarks and a Question-and-Answer Session at Los Angeles Valley College in Van Nuys, California

The President. Thank you very much. I'm delighted to see all of you here, and I'm glad to have the chance to come. I've had a great time touring some of the facilities and seeing some of the programs that are offered here at this college and meeting some of your fellow students. Everybody here is a student, right?

Audience members. Yes!

The President. Everybody back there? I'm glad to see your president, your chancellor who are here, and Mayor Bradley I see back there. Thank you for coming. And I see we have a number of Members of Congress back there. If you've got anything to ask your Congressman, we've got four or five options back there. Will the Members of Congress stand up? Walter and Xavier and Tony Beilenson, Congressmen, it's good to see you all.

I see several State officials back there—the secretary of state, the State comptroller, the insurance commissioner, Michael Woo, Councilman Michael Woo, my friend, a candidate for mayor. Good for you. Good luck.

That "woo" is interesting, isn't it? Makes a good cheer. I like it.

I want to say to all of you, first of all, I am delighted to be back in California; glad to be back in Los Angeles and to Van Nuys and [applause]. Yesterday I was in New Mexico, and I was at Los Alamos, and I said Los Angeles. They all hooted. So I promised them when I got here I'd say I was glad to be in Los Alamos. So there, I did it. [Laughter]

I came here for a very specific purpose today, and that is to try to illustrate what the economic efforts that our administration is making will do for you and how your efforts—can we fix this—

[At this point, a microphone malfunction interrupted the President's remarks.]

—in the work we're doing to try to turn the California economy around. And I thought that there was really no better place to come than to a college like this where all the people here have already, by definition, taken responsibility for your own fixture and made a real commitment to do what it takes to be competitive, to develop the skills you need to get a good job, to keep good jobs, and to learn new skills continuously.

I met a very impressive man inside who has got a full-time job, as many of you do, who has been coming back here on his own just to continue to hone his skills, because he says, "What I do requires me to change over and over and over again. So I will always be able to have a good job." And, this is funny, when I was talking to Dan Palmer, who introduced me, he told me that before he was married and began to have children, he was a musician. And he realized that that's not a very solid basis for having job security. I thought about being a musician, too, and I wasn't as good as he was. And I knew I had no job security. So I got into another line of work where I have no job security. [Laughter] But, anyway, I understand very much that sort of motivation which I imagine got a lot of you in here.

What I wanted to do was to basically just talk a little bit about our national economic efforts and how it affects California and how what you're doing here is essential if we're ever going to turn the economy of the State and Nation around.

First, when I took office, I found, as you know, a Government with an enormous budget deficit. That is, we were running in the red every year, over $300 billion. Our debt had gone as a nation from $1 trillion to $4 trillion. It's hard to even imagine that kind of money in just 12 years. We were a country for 200 years, we ran up $1 trillion worth of debt. Then in 12, we ran up $3 trillion more.

Why? Because we cut taxes and increased spending. And it was fun for a while. It helped California a lot: cut taxes, people had more money in their pocket; increased spending, mostly in defense; put a lot of people to work in plants out here; put a lot of people to work on and around the bases out here.

In the end, it all catches up to you, and you've seen the last few years what happened: the cold war was over; we began to reduce defense; we had no real plan for dealing with it. And what's happened to your tax money is, the deficit keeps going up even though defense has gone down because of the cost of health care, something that won't surprise any of you.

So what I have tried to do is to come up with a plan that would bring our deficit down, give us control of our budget and your future, get interest rates down so people can refinance their homes and their businesses—and I bet you there are people in this audience today who have refinanced their home loans since last November and saved a lot of money doing it, because we're determined to bring interest rates down—and at the same time, while cutting a lot of spending and raising some taxes, almost, all of which—well at least well over 70 percent of it comes from people with incomes above $100,000. And we tried to give a tax cut to people with families with incomes under $30,000 so they wouldn't have to pay a tax increase.

But while doing that, there are some things which we should spend some more money on, and I want to talk about them. We ought to spend some more money on having more programs like this. Why? Because you can have the best economic policies in the world, and if the people don't have the training they need to do the jobs in a global economy, good economic policies don't put people to work.

I'll give you another example: There are also, in this tax bill that I have asked the Congress to pass, there are also big incentives for small businesses and big businesses to reinvest their money to put Americans to work and special programs to induce people to invest in communities that are particularly depressed, more sweeping than anything anybody's ever offered.

Why? Because the Government can't put everybody to work. Most people work in the private sector, and that's as it should be. So we have to find ways to give people special incentives to reinvest their money.

Let's take, for example, a business. If a business goes out and refinances its business loan and gets a lower interest rate, what do you want them to do with the money? Open another business, right? Or expand the business they're doing and hire more people so we can get unemployment down.

So those are the kinds of things we're trying to do. The budget I've asked the Congress to pass has over 200 specific budget cuts. It's got some really tough things in it. We freezed Federal employee pay. We reduced the size of the Federal work force by 150,000 over the next 5 years by attrition, just by not hiring people as vacancies occur. We cut everything from agriculture subsidies to Medicare. We cut a lot of things, starting with the White House staff and the administrative cost of the Federal Government.

We raised the money that I talked about. But we have some targeted increases in investment. So while we're going to bring the deficit down dramatic, ally, we're going to try to get some money for more funds for dislocated workers, more funds for communities that are hurt by base closings or plants being closed because of defense cutbacks, more funds for things like the Red Line Transit System here, where our administration announced over $1 billion in funding to put people back to work and also to have some more stops in the community.

And the thing I want to say to you is that, if we're going to compete, if you're going to be able to have a good job and we're going to turn this community and this area around, we have to have the discipline to cut the things out we don't need to spend money on, to raise some money in order to bring the deficit down, because that means low interest rates, and that's good for the economy. But we also have to invest in people and technology and jobs. We've got to do that.

You know, I got amused when I was on the way in here, people holding up signs, standing together. One of them said, "Don't spend any more money." And another one said, "Close the border to illegal aliens." In the jobs program I presented to Congress, one of the things we had was enough money to hire a lot more border patrol people. You can't have it both ways. If you're going to hire people, you've got to have the money to hire them. And we're going to have to make these kinds of tough decisions.

So I wanted to come here because, all of you know this. If you didn't know this, you wouldn't be here. You have this figured out. I mean, maybe not just like I said it, but you've figured it out. The average 18-year-old going into the work force now is going to change work eight times in a lifetime. Eight times. And whether you can get and keep a job now depends as much on what you can learn tomorrow as it does on what you know today. And that's not going to change. The world will get smaller and smaller and smaller, more and more of our economy will depend upon our ability to compete with people around the world. We'll have to trade more. We'll have to sell more to other countries. We'll have to be able to change constantly over and over and over again. And you really are on the cutting edge of that change.

So I wanted to come here to try to illustrate that and to ask you as citizens to support my economic program, to support our efforts to bring the deficit down, to cut spending, to ask wealthy people to pay their fair share, to give people incentives for new jobs, and to invest more in education, training, and technology.

I also want to tell you before I open the floor to questions, I want to introduce one more person. When I was running for President out here—

Audience members. No new taxes!

The President. We tried it their way for 12 years. Look what it got us. You know what the "no new taxes" crowd did for 12 years? They cut taxes on the rich, raised taxes on the middle class, ran the country in a ditch. They had it their way for 12 years. It sounds great, all this talk. They had their chance.

Audience members. You broke your promise!

The President. They had their chance. I broke my promise—you know what else they don't say? Their crowd, what did they do after the election? Oh, after the election they said, "Oh, by the way, "—the previous administration-"Oh, by the way, the deficit is going to be $50 billion a year bigger every year than we told you. But go ahead and do everything you said you were going to do before. Sorry we didn't tell you that."

Audience members. You broke your promise!

The President. What did they say, guys? So the free lunch crowd has had their chance. And I'm telling you there is no free lunch crowd. And so we'll just have to decide whether we're going to take a different course. I want you to have a chance to do that.

The other thing I want to tell you is, we can't turn this country's economy around unless we lift California up. And so I asked the Secretary of Commerce Ron Brown to head a team in my administration to develop a specific strategy to try to make sure we were doing everything we could do to help to turn this economy around. He has now made, just since I've been President, in 4 months, seven trips to California, meeting with people, working with people, trying to develop a strategy for what our partnership should be. And he came with me today, so I want to introduce him. Ron, stand up, please. He's spending more time here than in Washington.

We're going to work hard, but you've got to do your part, too. And one of the messages that I hope will come out of this event today is that thousands of people in southern California will see you. They will see you and they will think, "I've got to do my part, too. I've got to do something. I have to do something to change what I'm doing. I have to do something to lift up my circumstances." Because I'm telling you, there is nothing the President, nothing the mayor, nothing the Governor, nothing anybody can do for you that you're not prepared to do for yourself. This has got to be a partnership and a two-way street.

Thank you very much.

Who's got a question or a comment?

Q. Hi. First off, I thought you look mighty handsome in that.

The President. I don't know about that, but it's a handsome cap. Thank you.

Voter Registration

Q. I'm a 29-year-old returning student. And I didn't know if you knew, but we are the number one voter registration campus in southern California, LAVC is. I wanted to know, will you support an amendment to your motor voter bill which will allow students to register to vote at the same time they register for classes when they come here to school?

The President. The answer to that is, I support that concept, but it's too late to amend that bill, because we had to fight like crazy just to get it through. You know, it was filibustered once by the minority in the Senate. And finally, we got an agreement and passed the bill, the motor voter bill, after it was passed last year and then vetoed. So it's a great improvement over the present law, the motor voter bill, and so I think that it's unrealistic to think we can amend it.

Now, what I think—as a matter of fact, I want to get it up and sign it before anybody decides to do anything else with it. But what I think you should do, since California has such an incredible array of community colleges and other institutions of higher education, is to try to get a State bill through requiring that to be done here. I mean, that's what I think you should do. I'll bet you could get a lot of help.

And also, I think that the local registrar of voters would probably be happy to do it. And if they're reluctant, then you ought to pursue trying to get a State law passed.

Home Ownership

Q. Mr. President, I still believe in having the American dream. And one of those dreams is to have an education. Another one is to own a home. And I want to know, what do you have in your economic policy that would help me buy a home?

The President. The most important thing that I could do to help you buy a home is to keep the cost of buying a home low. And the best way to do that is to keep interest rates down. Home mortgage rates have been at 20-year lows, 20-year lows. And I want you to understand why. I hope we can keep them down there.

First, interest rates dropped for a long time because of the recession, but they still were pretty high. Then, after the election, I said we were going to bring this deficit down, and I gave a specific outline of how I was going to do it. The rates started dropping rather dramatically.

Last year, a poll was done which said that only 47 percent of the American people under the age of 35 thought they had a real good chance to own their own home. This year, a poll was done that said 74 percent of the people thought they had a chance to own their own home. The only thing that's changed is that the cost of financing a home has gone way down. So the central premise of what we're trying to do in bringing this deficit down is to lower interest rates, lower home mortgage rates, lower credit card rates, lower business rates, lower the car payment rates so that we can help make these things more affordable to average citizens. In other words, doing the right thing for all Americans will help individual Americans more than any specific program I could have on home-buying.

Now, let me say one other thing. I have also supported having the Federal Government give States the right to issue tax-exempt bonds to provide for lower interest financing for middle class families and for working families with modest means. And again, one of the things that I have tried to do in my program, if it passes, is to make sure that we make that permanent so that every State in America will be able to continue to do what I did vigorously in my State, which is to make available more low-income, low-interest financing to people to buy homes.

Taxes

Q. Mr. President, there are many different claims on how much your economic plan will actually increase middle-income taxes. Can you tell us in very simple, nonpolitical language how much more money middle-income people, those making less than $60,000, will pay in new taxes?

The President. Yes, I'll be glad to. First of all, there is one tax in this program that falls on middle-income people. And that's the so-called Btu tax. It's an energy tax based on, basically, the heat content of various sources of energy.

The purpose of the tax, aside from raising money, is to encourage utilities and industries to shift to the most fuel-efficient and environmentally sensitive forms of energy so that we can do more energy conservation and do more fuel shifting. And we've made some changes in it to try to make sure it works in a more practical way.

But because you consume energy, eventually those things will find their way down to you. That is, some of it will be in the fuel you buy; some of it will be in products you buy that themselves use fuel; a little bit of it would be in anything that's brought to a store by a truck. In other words, ultimately, all people pay these things.

Now, here's how the pricing works. The average family of four, next year will pay virtually nothing. I mean, literally virtually nothing, $1 a month or less. The next year after that, it will be probably about $6 a month. This is $60,000 a year and less. The next year it will be, and the year after that and from then on, it will be someplace between $14 and $17 per month, maximum for a family of four. If you're single, it's much less.

Now, if your income is under $60,000, but is also under $30,000, and especially if you have children, there is a good chance that you will not pay any more money, net, because another provision of this tax bill does something that I personally think is very important; I've wanted to do it for a long time. It increases the earned-income tax credit, which is already in the Tax Code, to the point that we'll be able to say to anybody who works 40 hours a week and has a child in the house, if you do this, you will not be in poverty. In other words, even if we have to give you a tax credit, we're going to lift you out of poverty. We're going to reward work instead of welfare. We're going to say that you'll be out of poverty.

Now again, I want to be very specific. The higher you go toward $30,000, the more likely you are to pay a little bit. But if you have children, you can make maximum use of the earned-income tax credit so that if you've got, let's say, a family of four with an income of $29,000, you will pay nothing or next to nothing on the energy tax, because while you pay it, you'll get an offset on your income tax.

So the lion's share of this, what I told you, $1 a month, $6, $7 a month, up to a maximum of $14 to $17 a month, 3 years, 4 years, 5 years from now, will be paid by people with incomes between $30,000 and really all the way up to about $100,000 a year. Then, it's at that point, when you get to the upper 6 percent of income earners, that the income tax increases trigger in.

So that's what it does.

Illegal Immigration

Q. Mr. President, as Republican filibusters torpedoed your original jobs bill, thereby leaving countless of unemployed and underemployed Americans less hopeful than they were in January, and as the dichotomy between costs and quality in health care and the education system widens, I would like to know what this administration will do to stem the unconscionable flood of illegal aliens that pours virtually unchecked into this country, and that erodes the quality of life for those Americans in the lower economic brackets and must eventually threaten the American middle class?

The President. I'd like to answer the question you asked, and also then make a reference to the other issues you raised on the jobs and the health care issue. The first thing I want to do is to hire a strong, sensible, practical person to be head of the Immigration and Naturalization Service. I have asked the Attorney General, Janet Reno, whom I think has really done a good job, to put a very high priority on selecting a nominee who will be compassionate but also hard-headed. I mean, I think you want somebody who is compassionate, but hard-headed, who is realistic about what we're up against and what we're facing. I think she will make a recommendation to me this week, and we'll resolve that. That's the first thing.

The second thing I think we have to do is to make a better effort to enforce the law that we have. If we've got a law on the books, we ought to try to enforce it, even if it's difficult to enforce. One of the things that was in the jobs program that you referred to that was killed by the filibuster was funds for more border guards to enforce the law. A lot of people don't know that, but that was in there.

So I think we have to find ways to get the resources necessary to do as much as we can to enforce the law that exists. There is a limit to how much any economy can have. You've got the California economy very depressed now. This is a State made by immigrants. It's very important to recognize that. Los Angeles County has people from 150 different racial and ethnic groups. We also will continue to have people who are exiles really from political oppression, and under our law they get a different set of treatment. But I think we have to really roll our sleeves up and do this.

In the meantime, there's something else I think we ought to say. Whatever we do on immigration is a national decision that has uneven impacts. You would admit that, right? It hurts California and Texas and Florida and New York and, to a lesser extent, a handful of other States more financially than it does the rest of the country. But it's a national policy. Or if there's a lack of a policy, it's a national policy. One of the things that has really bothered me, especially as we've seen all these educational cutbacks in California with your economy down after the defense cuts and the other problems, is that the Federal Government has essentially been willing to let you in California eat the cost of the Federal policy. So another thing we have done in spite of all the budget cutting we've done, there are funds in this budget to substantially increase funding to California to deal with the cost of immigration, thereby freeing up other funds in California to be spent on education or jobs or whatever else you all want to do here. I think we need to do more of that.

Now, I don't want to mislead you. There is not as much money here in the budget as a lot of people asked for from California. But there's a whole lot more; I mean, several hundred million dollars more than was previously given. And I just think it is imperative that we have to provide—if the Federal Government is going to have a policy, or lack of it, then the Federal Government ought to pay for the policy, or lack of it, so that the States can be free to spend their money on educating and training and finding jobs for the people who live within the State. That's what I think. So we're going to move toward that.

If I might just make one other comment on what you said earlier. I'm going to try to come back with various pieces of this jobs initiative. I hope we can still get some more money for summer jobs, because we've got the best summer jobs program this country has ever organized. We've worked in partnership with the private sector. We're going to require 90 hours of educational work for people who have summer jobs, hoping that we can actually help people to get full-time continuing jobs and to continue their education, something that's never been done with a Federal summer jobs program before. So we're going to try to get some more.

I also believe very strongly that we need to make a down payment now on the efforts that I'm making to put 100,000 more police officers on the streets so we can have more community-based policing, which means the best of both worlds if you've got the fight kind of community policing. It means less crime, tougher law enforcement, and less abuse of authority because you have people working the neighborhoods, knowing their friends and neighbors, and less pressure.

So we're going to start with that and then try to move back toward these other issues.

Financial Aid for Education

Q. Mr. President, I transferred to a State university from here at Valley. I had to drop out of school this semester because I can't afford to go, and I don't qualify for financial aid. And there are other students that are in my situation. We really want to go back to school. We can't afford the fees. What are you going to do to help us, please tell us. [Applause]

The President. I have introduced into the Congress a bill that I do believe will pass with both Republican and Democratic support—two bills—designed to deal with your problem. And let me just talk a little bit about it because you could tell by the clapping that you're not the only person in your fix.

The college dropout rate is 2 1/2 times the high school dropout rate. And an awful lot of people quit because they can't afford to stay. Now, in California this previously was not as big a problem because so many of the institutions were free. But you've got all these economic problems now; that can't be the case anymore. And even if you don't have big tuition you have expensive other—other expenses are significant.

So here are the things we're trying to do. First of all, I've asked the Congress to adopt a national service program which would permit young people to earn up to $5,000 a year in credit either before, during, or after college to pay off loans for college expenses by doing important work in the community. It can be done before, during, or after college. Like after college, if someone agreed to be a teacher, for example, or a police officer in an underserved community, they could get $5,000 a year credit for that to pay off their loans. So that's, in effect, a scholarship program in return for national service.

In addition to that, I've asked the Congress to totally reform the present student loan program. The present student loan program costs $4 billion a year: $3 billion in unpaid debts and $1 billion in fees to banks and to other people who handle the money for the student loan program. It is amazing the money that's in the student loan program. And there is also no incentive for them to collect on people who won't repay, because the Government guarantees 90 percent of it. So if you borrow $20,000 from a bank and you don't repay it, the Government will give them $18,000, and it will cost them $2,000 to go to court and get it, fight? So it's not a good system.

What I recommend is that we shift to a system of direct loans by a protected financial entity to be created by the Government to give you lower interest loans, to give you the money you need, and to give it to you on terms that won't frighten you. And here's what I mean-and people would be eligible without regard to their income, and here's how it would work:

If you borrowed the money, you would not have to pay it back until you actually go to work. Then, you would be able to decide how you want to pay it back among two choices: You could pay it back on a regular loan repayment schedule, based on how much you borrowed, or if that was too tough and that scares a lot of people, you could pay it back as a percentage of your income so that you would never be required to pay more than a modest percentage of your income. So there would never be an incentive not to take the loan out, because it would always be an affordable percentage of your income.

The catch is that we can't afford to lose $3 billion a year. So you'd have to pay it back at tax time. So you couldn't beat the bill, but you would always be able to afford to pay it back, and no one would expect you to pay it back unless you were actually working. This will dramatically change the economics of college financing.

Initiatives To Assist the Private Sector

Q. Hi, Mr. President. How are you doing?

The President. I'm fine.

Q. Okay. My question to you, sir, we have a plant in Van Nuys, the GM plant. I notice a lot of businesses such as that went out of State. What can the Government do to motivate big business to invest in the community college as well as State college and major universities?

The President. That's good. Well, I think first of all, most big businesses will invest more in the education of their employees than ever before because it's in their interest to do so. And I think what I should be doing is trying to figure out ways to give businesses incentives to reinvest in America and in putting Americans to work, and also, if possible, to try to make sure that every State has a chance to keep the manufacturing base.

Now, that affects California in two ways; let me just mention them. In the program that I have asked Congress to adopt, in addition to the tax increases, which you were good enough to ask about—and I'm really glad you gave me a chance just to lay it out because it's not near as bad as everybody thinks it is, is it—there is also a lot of incentives for businesses to reinvest. Small businesses today can expense or write off $10,000 of expenditures every year on their taxes. We've proposed to take that to $25,000. That's a good incentive for the small businesses to hire maybe one more employee. And most new jobs are created by small businesses. So this is a good thing to do.

Another thing we do is to let larger businesses who make investments in new equipment and modernize write that off more quickly in this Tax Code, which is an incentive to invest more.

The third thing that's real important to California is, at least I have read—you know, you had an economic summit out here not very long ago, and I read that a lot of business people believe that it's harder to keep manufacturing jobs in California because of the costs of the workmen's compensation system. More than half of that—and I'll say a plug for your insurance commissioner, Mr. Garamendi is the first person who ever talked to me about this—more than half the cost of workers' comp comes from health care costs. And in the work that my wife, the First Lady, is doing with the health care commission, one of the things we're trying to come up with is a national system to take the health care portion of workers' comp cost and fold it into a national health system so you lift that burden off of the businesses separately and so no State ever has an advantage over any other State just because of the health care cost of workers' comp. That will also be a huge boost to California and the manufacturing economy of California if we can get it done.

I'll take one more.

Yes, ma'am? I wish I could stay here all day, but I've got to go shake hands with them because they feel deprived. And you. Thanks.

Education

Q. Mr. President, I would like to ask about education. The level of education is declining, the on-campus crime is increasing, and the education budget is decreasing. The percentage of Government expenditure used for education in the United States is 3 to 4 percent. In Japan, it's 7 percent. The California education budget is 85 percent of U.S. average, and it's one-third of New Jersey. So I would like to know what actions are you going to take to solve these kinds of problems.

The President. Well, let me try to reframe a little of what I've said before because I think you've hit it. It would surprise most people to know that while the Government's deficit was going up and the debt was going up in the last 12 years, we were actually reducing the effort the National Government is making to support education and a lot of other initiatives, because all the money was going first to defense and then to health care costs.

What I am attempting to do with my budget and will continue to work on it every year I'm President, is to, every year, to slowly move our spending priorities back toward education, training, and technology.

In this budget, for example, we give more funds to institutions like this for worker training programs. We give much more money for Head Start for preschool kids. We do a lot of things to try to, in other words, let the Federal Government play a bigger role. But another real problem you've got, let me say, in the United States as opposed to Japan where you've got three levels of government that often operate more or less independently, the lion's share of the budget for education always comes at the State and local level.

So then, the other thing I can do is to help alleviate the burdens of the State government. Why is State government spending less on education in California, more on uncompensated care for undocumented people coming into the country, more on exploding health care costs, often mandated by the National Government?

So if I can persuade the Congress, and if we can be wise and good enough to work out a health care program that's good for America, that brings costs in line with inflation, and then if we can compensate the States better for their costs that aren't their fault, like dealing with the immigration issues, then that will free up in California millions and millions and millions of dollars which the State could then turn around and put back into education. So we can help directly some, and we can help indirectly a lot. And I'm trying to do both those things.

Thank you. You were great. I wish I could stay longer.