Remarks at the American Electronics Association Luncheon

Mitchell, thank you. After listening to him, I'm glad it was the other guy from Massachusetts that I ran against a couple of years ago. [Laughter] But really, thank you for that warm welcome, and I'm delighted to be here and, of course, delighted to see Dick Iverson and so many familiar faces out here. Many of you came a long way to be here, and so I won't ask you to sit through a long speech. The punishment should fit the crime. [Laughter] Jim Baker stole my favorite story -- you remember about the kid who went to church with his grandfather, and he said, "Granddad, what are all the flags along the side of the church for?" And the grandfather said, "Well, that's for those who died in service." The kid said, "Oh, really? The 9 a.m. service, or the 11 a.m. service?" [Laughter] Wasn't this Duke Ellington Band great? Listen, thank you. The choir -- just fantastic. Thank you.

And it is an honor -- really, I mean it -- and pleasure to be here back with this association. And you are the leaders of a vital range of our most innovative and interrelated industries, from semiconductors, microprocessors, and circuit boards to PC's and mainframes, supercomputers, telecommunications, and defense electronics. But at every stage of that impressive technological food chain, yours are the people and the products that really keep this country competitive. I'd add a special tip of the hat to President Gary Tooker of Motorola, winner of last year's Malcolm Baldrige Quality Award. It's a prestigious award and sets a great example for the rest of this country. So, congratulations. Where is he? I can't see with the light. Gary, congratulations to you.

But for almost 50 years now, your industries have been at the center of a remarkable revolution in the way work is done, the way ideas are managed, even the way time and the vast reaches of space are understood. And along the way, you've also become the Nation's largest manufacturing employer, creating jobs for over two and a half million Americans, modernizing services and industries of every kind, assuring our national security, and providing a vital export market.

As technologies, economies, and geopolitics change almost weekly, your industries stand at a threshold of tremendous opportunity. Our first priority is to encourage productivity gains, savings, long-term investment in high-tech industries, by lowering the cost of capital. And we believe that one of the most crucial Federal priorities is to encourage planning for the long term because for too long, where investment is concerned, the Federal Government has been more of a hindrance than a help. And so, we intend to work with you closely, constantly, and consistently to see that American electronics and technologies regain and retain a permanent position in world markets.

Last month we sent to Congress our Savings and Economic Growth Act, which includes an innovative family savings plan to stimulate capital formation, new incentives for IRA's to help first-time home buyers, and a business-building, job-creating, revenue-enhancing cut in the capital gains tax. Without it, every business in America, of every size, is at a competitive disadvantage abroad. Now, let me read you, lest you have forgotten, a list of the maximum long-term capital gains tax rates for some of America's competitors: Japan, about 5 percent; South Korea, zero; Taiwan, zero; West Germany, zero; Singapore, zero; Hong Kong, zero. And the list goes on. And why some American politicians don't understand the importance of this capital gains differential, I do not know. It's pure politics. And so, we're going to fight hard, with your continued support, for that crucial tax cut.

Along with encouraging investment, we've proposed a budget that will bring the deficit down below those Gramm-Rudman-Hollings targets without raising taxes. And we're committed to unprecedented support for R&D, research and development efforts. We believe that the R&D tax credit should be made permanent. And our budget includes a record-breaking $70 billion in Federal direct investment for research and development.

Our budget also devotes unprecedented resources to space, education, the fight against drugs, environmental initiatives, and other crucial investments in our own future. Such investments over the years have ensured that this country has retained its leadership in terms of the basic research and fundamental discoveries underlying your industry. This administration is also committed to working with you in the critical precompetitive development stage where the basic discoveries are converted into generic technologies that support both our economic competitiveness and our national security. Here again we can help to level the international playing field on which you compete.

But we understand, as you do, that no investment is more important than our human resources. So, together with the Nation's Governors, we have set ambitious national goals for America's students. As one incentive, we've proposed a new National Science Scholars program. We have also requested a 70-percent increase for the Eisenhower Math and Sciences Educational Program and a $100 million increase in the National Science Foundation education budget. By the year 2000, our kids can be first in the world in science and math achievement; and with enough involvement and leadership from groups like this, they will be first.

Your industries face some unique challenges. The marketplace is tough enough without undue constraints and unfair restrictions. So, we've pledged to make sure that trade is fair and free by judiciously but firmly implementing the 1988 Trade Act. We're moving forward with Japan through the Structural Impediments Initiative and by working to develop a more productive relationship overall. Just last weekend, as Mitch referred to, I met with Prime Minister Kaifu and specifically discussed satellites, telecommunications, supercomputers, forest products, and yes, semiconductors. I hope, I fervently hope, that on the basis of our talks Japan will be moving toward early resolution of these problem areas. We agreed that we must both do our very best to make these SII talks a success. We've presented ideas for removing structural impediments in Japan, and they have presented ideas to us about our own structural impediments. We remember, therefore, that it is a two-way street.

Our task must be to make the American economy even stronger and even more competitive. But we're also committed to strengthening and expanding the multilateral trading system through the Uruguay round. I just can't tell you how important a successful conclusion of that round is for American business, for business all around the world. We've proposed far-reaching reforms of the global trading system, working to bring a wide range of new trade areas under the GATT. These crucial negotiations will help us create a more equitable, more efficient trade climate, worldwide.

I've made it a priority to review and modernize our export controls to provide vital help to the emerging democracies without compromising national security. Given the pace of political change, rapid advances in technology, and the competitive position of American industry, we must ensure that export controls are effective or eliminated. I am happy to report this week we have a team at COCOM in Paris negotiating the modernization of export controls on computers. These controls have been an important part of our security for decades, and I know our allies want to work with us to ensure their relevance in the 1990's.

To provide a further competitive edge for American firms, we will support legislation to reduce the antitrust uncertainty that may discourage joint production ventures. Under such a proposal, the courts would weigh, on a case-by-case basis, the competitive benefits as well as costs of joint production ventures. In addition, joint production ventures announced to the Government would be liable only for actual damages in private antitrust suits. Such an initiative would build on the competitive strength of American business by allowing firms to pool their skills, build new production facilities, and share investment risks.

One risk you all face -- and it's not just business -- citizens working in associations and volunteer organizations, in schools, everyplace -- one risk that you all face at an intolerable level is liability. In your case, I'm talking about product liability. And the Council on Competitiveness, ably chaired by Vice President Quayle, has already begun a concentrated effort to significantly reform our cumbersome and expensive product liability system. It's about time that we made ourselves more competitive by getting rid of those lawsuits and claims that are purely frivolous and patently unfair.

And so, today I'm going to give the Competitiveness Council another challenge: to find ways that American industry can better translate new ideas and technologies into marketable products. So many of the world's most advanced technologies, from robotics to the VCR, were first developed here. And yet, so many of those concepts were ultimately brought to the marketplace by our competitors. We can do better. And I am determined that we will do better.

Today I've outlined some of what we're doing to level the playing field. But it will be leaders like you right here in this room that have to take the ball and run with it. You represent the vital core of America's competitive potential, with over 3,500 of the most dynamic, technologically advanced, forward-thinking companies in the country. Your ideas are important to us. And your success is absolutely crucial to America's future. So, let me encourage you to work together, and with us, on a long-term program to meet the competitive challenge of a new century.

It's a great pleasure to have been here with you. Thank you very much, and God bless you all. And thank you, again, to the Duke Ellington choir.