� February 10, 2000
� National Economy
� Q. I guess I wanted to ask you, given the way that the economy is.
going--given that there's been so much growth, and it's been so
successful-how much credit do you think that you and your
administration can realistically take, compared to the other factors
that people talk about? There's been some discussion, I'm sure you
know, recently, with people crediting everything, going back to
President Reagan. And I'm just curious on that topic, what your
views are?
� The President. Well, I think, first of all, if you look at the
difference in the expansions of the eighties and the nineties, we
had athe one in the eighties was funded by an oldfashioned explosion
of deficit spending. But it built in a structural deficit, which
guaranteed profound long-term problems for the economy, very high
interest rates, and very slow job growth.
� There was a lot of commentary in '91 and '92 about how, even though
nominally a recovery had begun, I think some of the writers called
it a "triple dip" phenomenon, that we kept sliding back and sliding
back.
� So I think the main thing we did was to cut interest rates by
getting rid of the deficit. And I think that if you go back and read
allI remember what a boost in the bond market there was when we
just-when Lloyd Bentsen announced our economic program in December
of '92. So I think our main contribution in the short run was to
make it absolutely clear that we would have a consistent,
disciplined fiscal approach that would cut and then eventually
eliminate the deficit. And I think that played a major role in the
investment boom. And it cut interest rates, which also put more
money in consumers' pockets, which helped fuel the consumer side of
this recovery.
� But I think that -the consistent policies of the Government that go
back to the previous administrations, that reflected the second leg
of our ap roach, which also deserves credit, which is keeping the
markets open. You've had three administrations here in a row
committed-in the eighties and the ninetiescommitted to open trade.
And I think that that's been very good, because that's kept
inflation down and spurred continuing competitiveness. And I do
believe the previous administrations deserve credit for that.
� Then I don't-you know, the lion's share of the credit belongs to
the people in the private economy: the people who restructured in
the eighties; the workers who got better training and understood the
global economy and didn't press for what would have been
inflationary increases in pay and benefits, that aligned them more
with the real profitability of their firms; and then finally what, I
think, only in the last couple of years has come to be fully
appreciated is the enormous contribution of the technology
revolutions, which are centered, still, in the high-tech
sector-they're 8 percent of our employment, but they've been 30
percent of our growth-but also are rifling through every other
sector of the economy in a way that has added to productivity that
is only now being measured. If you noticed, the last couple days we
had a new estimate of productivity growth. My sense is that all
along, the economists underestimated-understandably, based on past
experience-the productivity contribution of technology and the
ability of a combination of fiscal discipline, open markets, and
productivity increases, to prolong the growth in a way that would
generate large numbers of jobs and begin to broaden the benefits of
the recovery. That was another real problem for-we had 20 years
where income inequality continued to increase, because of the way
the recovery was structured. So I think you have to look at the
whole piece.
� And then I think now, we're beginning to get the benefits of the
third part of our economic strategy, which was to continue to make
the requisite public investments, which have, I think, made a
significant contribution in education, in training, and we've got
college going up by 10 percent now, over when I took office. We've
made real, contin
� I took office. We/ve made real, continuing investments in science
and technology, which I think are pivotal to the long-term health of
the economy and the continuation of this productivity increase.
� So I think that we've made a contribution, but the lion's share of
the credit-as always, since it's a private economy; we had the
highest percentage of private-sector jobs in this economic boom, I
think, of any one since we've been keeping such statistics.
� Q. To follow up on this, Mr. President, I notice that in your last
interview with a group here about the economy a week ago or so, you
were very generous with credit. There are some people, in fact, who
are saying, this is one long boom. We're in the 17th year of an
expansion. What do you think of that account of what's going on with
the economy?
� The President. Well, we could say that, basically, we've been in a
30-year boom and gone back to '61, or a 40-year boom, but for the
oil price problems, which led to all the inflation. I mean, you can
argue this flat or round. There is a fundamental health in the
American free enterprise system, which has prospered in the global
economy. And in that sense, the people who set up the system at the
end of World War 11 deserve a lot of this credit. I don't think you
can disaggregate all this.
� I think the fundamental mistake that was made in the eighties was
basically abandoning arithmetic. I think that we got out of that
recession, and we had-you remember-we had impossible conditions in
the seventies, with recession and high inflation at the same time,
caused by a set of economic circumstances that were not of our own
making, at least certainly mostly not of our own making.
� So the idea of stimulating the economy in the early years-of the
Reagan years was, even though it was masked in anti-Government
rhetoric, was basically traditional Keynesian economics. But the
problem is, when we had a recovery, because it was sold as a, you
know, "tax cuts are good; Government's bad" package, we wound up
with a structural deficit that couldn't be overcome without a series
of highly difficult and controversial decisions that were embodied
in the Budget Act of '93, which required both tax increases and
spending restraint. And the people who shouldered the burden of that
paid a considerable political price in the elections of '94, but I
think there's no question that it enabled us to have a balanced,
longterm, stable, not only statistical recovery but finally
job-growth recovery that was more broadly shared. It seems to me
that was the problem with the eighties philosophy, that we wound up
with a structural deficit that was totally unsustainable. And I
think it basically grew out of the ideological wrapping of what was
done in 1981.
� Q. just one last question along those lines. Sometimes when I
listen to you recently, in the talks that you give, I get the sense
that you're trying to assure or encourage that your administration
get sufficient credit for the boom that's going on now, whether for
historians, whether in the next election. And I'm wondering if you
have any sense of that.
� The President. No, I don't have any sense of that. What I say is
what I believe to be true, and I've tried to-with you, I've tried
to, as I said in the State of the Union, as always the major credit
for anything good that happens in this country belongs to the
American people and the people and what they do in their private
lives.
� I think Government plays a pivotal role, and I do not-let me flip
it around. If you go-forget about what I might say. Look at what
Alan Greenspan has said; look at what all the commentators have
said, going back to the '92, '93, '94 period. I do not believe that
we would have had a recovery this robust, with this many jobs-I
don't think we'd be anywhere close to that-if we hadn't taken
serious, aggressive, and immediate action to get rid of the deficit
and to bring interest rates down and to free up investment and at
the same time, by getting interest rates down, to put more money
into the pockets of people. They had lower home mortgage, car
payments, college loan payments, credit card interest payments,
which enabled the consumer side of this boom to continue.
� I also don't believe that there would have been anything like the
amount of business investment borrowing or consumer borrowing, if-I
don't think that would have been sustainable, in this environment,
unless the Government had not only eliminated the deficit but gone
into surplus and begun to offset private debt with public savings.
� So I simply think that's a fact. But I don't-but my view of this is
different. I don't think anybody can claim sole credit. And I'm not
so interested in that. I think what's happened is, America is
following a balanced policy now. And if America stays on that course
when I'm not President anymore, I think we'll meet with success. And
then we'll have to be flexible, you know, if intervening events
cause a recession, well, there will be cause for adjustment in
policy.
� But if we had adjustment in policy, it might work.
� I mean, if we had continued with these deficits, then the next time
we had a recession, deficit spending wouldn't have been an option to
help get the country out of a recession. So to me, the American
people should look at this in terms of-I think I did my job. But I
think the rest of the-I think Alan Greenspan did his job. I think
the people in the high-tech sector were terrific. I think the people
who restructured all of American industry and business to increase
their efficiency and productivity were great. And I think the
working people of this country deserve a lot of credit for
understanding that they can only get wage and benefit increases that
were rear and-if they got out of line with economic growth, then
that could contribute to inflation as well.
� So I think we've had a remarkable balance here, where the American
people, all of us in our own way, essentially have done what we were
supposed to do. And there's more than enough credit to go around.
� Technology Revolution
� Q. Mr. President, can you talk just a little bit-you talked about
the high-tech sector and how important that is to the economy. Can
you talk about the Internet for a second and how important it is to
the ongoing boom? And also, can you tell us how worried you are
about what's happened over the last 3 days with these attacks on
websites? If this is a growing part of the economy, should we be
concerned that it's so vulnerable to attack? And is there anything
the Government ought to be doing about it, beyond what the FBI is
already doing?
� The President. Well, let me give you a brief answer to the first
question you asked, because I think we could talk for hours about
that. Quite apart from the technology revolution, I don't think we
have any way of measuring the contributions that the Internet is
making and will continue to make, not only to the overall growth of
the American economy but to the range of individual opportunities
open to people.
� You may have heard me say this in some of my talks, but I was
amazed-I was out in northern California a few weeks ago with a bunch
of people who work with eBay. And they were telling me, now, that
there are over 20,000 Americans who actually make a living on eBay,
not working for eBay but on eBay buying and selling, trading-and
that they have enough information on their user base to know that a
significant number of these people were once on welfare. And they
figure out a way to stay home, take care of their kids, and
literally make a living buying and selling on eBay.
� Now, that's all I know about that. I don't have any more facts.
It's an interesting story you might want to follow up on, but the
point is that this is just one example of, I think, a virtually
unlimited number of new economic opportunities which will be open. I
also think-it will shrink distance in a way that will make it
possible for more profitable investments to be made in areas that
are now still kind of left behind in this economy.
� And I-you know, we've tried to do an analysis of all the areas in
America which have had slow job growth or which still have higher
unemployment. And we developed this new markets initiative and
proposed more empowerment zones and things of that kind. But the-if
we can bridge the digital divide and literally make the Internet
accessible to lower income people and to places that are not fully
participating in this economy, I think the potential is staggering.
� Now, to the second question, yes, I'm concerned about the latest
hacking incidents. But I think that, you know, we've gotten all this
incredible benefit out of a system that is fundamentally open. And
as you know, I've worked hard to keep it unencumbered, to try to
make sure that Internet commerce is not unduly burdened by
regulation or taxation. And if you have an open system likethis,
you're going to have to have continuous guarding against intrusion.
And people go where the money is. It's like Willie Sutton, you know?
I mean, the money's in information and in knowledge about
transactions and opportunities.
� And so my view of this is that this-our renewed vigilance to try to
deal with cyberhacking, or even cyberterrorism, is part of the cost
of doing business in the modem world. We've been working hard on
this for 2 years. We've proposed, I think, $2 billion in this budget
to deal with it. We've got this, you know, this proposal for a
cyber-academy to train young people to try to work to help us
prevent illegal intrusions into the Internet and into important
databases.
� And we have this FBI center, as you know, and-I think it's in
Pennsylvania, near Pittsburgh-that's looking into these latest
incidents. But I'm going to bring in some people next week from the
private sector and from our Government team, to talk about what if
anything else we can do about this.
� Q. Because of the incidents that just happened?
� The President. What?
� Q. You're going to bring them in because of these events that just
happened?
� The President. Yes, Yes. As a result-you know, we have a continuing
ongoing consultation with them. We've had extensive conversations
leading up to the proposals that we've already made and the work
we've done for the last 2 years.
� But I don't-I wouldn't-I think it's important that we not overreact
to this. I mean, we don't want to shut off this incredible resource,
which I think will be a source of great wealth and, I think, will
have all kinds of social benefits, not only in the United States but
around the world. And we just have to recognize that it's like any
other new institution that's a source of ideas, information, and
wealth.
� I mean, people used to-it's harder to rob a bank than it used to
be, and we figured out how to make it harder. And we'll figure
out-we'll continue to figure out to secure the Internet without
shutting it down or closing off options. But the American people, in
my view, should look at this as an inevitable negative development
in what is an overall very positive trend. And there's probably no
silver bullet to deal with it, but we'll keep working at it until we
can prove our capacity to protect the people who are participating
in it.
� Q. But doesn't this set some limits on the growth of the new
economy, the Internet economy? I mean, there was this poor soul who
was described in the Post today--he sat there on E-TRADE and watched
his stock drop 6 percent while he couldn't get online. I mean, if
some 14-year-old kid-and we don't know who has done this, but if
some 14-year-old kid with a PC can screw up the system that badly,
doesn't that effectively limit how much people are going to trust it
and how much people are going to use it?
� The Presidnet.. Unless we can solve it. But unless we can figure
out how to solve the problem-but my instinct is that there are
people just as clever or more clever who will be interested in
making the thing work for society as a whole as there are those that
want to gum UP the works.
� The fact that a 14-year-old did it, I don't think, should be
surprising to anyone. I mean, all the rest of us-you know, you get
to thinking by the time you're 35, you're too old to break new
ground in this area. But it's troubling, but I don't-again, I would
say that if you look throughout history, every new positive
development contains within it the seeds of its own vulnerability,
and then people, either for pure mischievousness or because they're
trying to do something really wrong and reach some illicit benefit
try to interfere with it.
� So I don't think what you're seeing today is sort of anything new
in terms of human nature or people trying to put their ingenuity to
work for destructive purposes. And we just have to keep working
until we find ways to thwart it. Because I think fundamentally, this
has been an extraordinarily positive development for our country and
for the world.
� Biotechnology and the Human Genome Project
� Q. Mr. President, can I take you from the new economy to what you
may call the new-- new- economy, biotech and the human genome. As
you know and as you've said in the State of the Union, we're within
months of having a first draft of the entire human genetic code. As
I'm sure you also know, there is some argument about how we can best
put it to use: Whether we should have very broad access to it by
scientists and so on, or whether we get products, new treatments,
and so on, faster, if it's more narrowly constrained, or access to
parts of it, substantial parts of it, are more narrowly constrained;
should the public, and especially the research community have ready
access to the underlying human code, the genome itself?
� The President. Yes.
� Q. You know that there are people who say that we should allow
extensive, broad patenting of it, not just to use, but have a
compositional matter portion where people actually---Companies,
biotech companiesbiotech companies, the drug companies actually
control the underlying sequence, and that's the best route to get
products out fast, get new treatments. What do you think of that
argument?
� The President. I basically agree with the guidance that the Patent
Office has now announced, that they believe that the broad
information, the basic sequencing of the genome should be made
public and should be made publicly available to scientists and
researchers, to all people in private sector businesses and
� Q. Why do you think the Patent Office is-do you think the Patent
Office is saying that, and why do you think the Patent Office is
saying that? Because there are many people, Dr. Collins, for
example, who you were with 2 days ago who say that's not what the
Patent Office is doing?
� The President. Let me anwser your question first of all, and then-I
think the patenting should be for specific discoveries and
developments that have a clear and definable benfit, because you
don't want to take those things, you don't want to-I think we would
be making an error not to give people who develop such things the
benefits of them, and you would, then, discourage private investment
and research in that area.
� Now, I think some-I believe-and I think that's the position that
Dr. Collins believes that we should have. Now, the Patent Office has
been criticized for not following that, for having a policy that was
too broad if you will, but they have-my understanding is that
they've announced new guidance and that this is the policy they're
going to try to follow prospectively into the future, and it's the
one I think they should follow. And I understand there is a debate
about this.
� But I think most scientists and researchers believe the basic
information ought to be as broadly shared as possible. And then when
people develop something that has specific use and commercial
benefit and the kind of thing that has to be done and should
properly be done in the private sector, then that ought to be
patentable.
� Q. Because, for example, Dr. Collins, who you were with a couple of
days ago, and Dr. Lander talked with you and to you about this at
the millennial evening last fall, have concern about this, I wonder,
would you sketch what you think-in a little more detail-what you
think ought to be publicly available and how you can assure that
that is publicly available even when we have a very aggressive, very
innovative private sector that is filing patents like mad?
� The President. The thing that I'm concerned about, obviously, the
thing that I'm concerned about is the capacity of the Patent Office
to make the judgments and to make them at a timely fashion and to
draw the lines in the right way. And you know, I certainly don't
feel, for example, that I have the level of knowledge to know how to
split the hairs there. And I think what we've got to do is to make
absolutely sure if we've got the right policy. Then we have to make
sure that the Patent Office has the capacity to implement the
policy, not only in the right way but in a timely way.
� The worst thing would be to have these things all bogged down for
years and years and years. And I think that's one of the things
we're going to have to assess this year to really try to make sure
that we have the capacity to make the right judgments and to make
them in a timely fashion.
� National Economy
� Q. If I could take the discussion back to a little bit of a more
broad approach, things are going so well now economically speaking,
and you regularly recite figures that are very impressive, I'm
wondering if there is any particular thing or set of things that you
regard as possible threat on the horizon that we need to look out
for, that we need to be paying attention to. There's been some
discussion of high oil prices, for example, and they've talked about
the trade deficit.
� What would you see as the things we need to be watching?
� The President. The thing that bothers me about the high oil prices,
primarily, is the disproportionate effect it has on people who are
excessively relying on oil. We still have, mostly in the
mid-Atlantic and New England-we still have too many people who still
rely on home heating oil. They're the ones that have really been
hurt.
� The country's overall reliance on oil is much less than it was 25
years ago when we had the big oil price problem. And we're on the
verge of real, new breakthroughs in fuel efficiency. Our ability to
build our buildings with far less energy use per square foot is
dramatically increasing, both residences and office buildings. There
are all kinds of advances in factory efficiency now.
� So the real problem I have with the oil prices is the very
old-fashioned problem of re people that are just too dependent on
home heating oil, and it's a real, serious problem.
� But I don't think that will sink the overall economy or threaten
it. I think it's far more likely that we have to be vigilant about
the size of our trade deficit and the amount of American obligations
held by people in other countries, combined with a very high level
of debt in this country.
� One of the reasons-right now, we're in good shape on that, because
the debt-to-- wealth ratio of Americans looks very, very good
indeed, even though the per capita debt is high. I also think the
individual savings rate is somewhat understated because I don't
think we calculate the impact of homeownership as well as we should,
and we have the highest homeownership in history.
� But for me, that's another argument for our economic strategy.
That's why we ought to be trying to-not trying to, we ought to be
actually paying down the debt and be very disciplined about it and
say that we're on a track to eliminate the publicly held debt over
the next 13 years. I understand there's a lot of problems with
people who think that would be bad for the bond market and interest
rate settings and all that. That's an arcane decision we could have
on another day.
� But I think basically, one of the reasons that I have been so
adamant about paying this debt down is that it tends to stabilize a
system that requires if you're having a lot of business expansion,
requires a lot of business borrowing for new investment, and where
you have a lot of personal borrowing from people who feel the
security to do it, because they have more assets, but the value of
the assets is dependent in part on the overall stability of the
economy, the confidence of the American people, and the confidence
of investors around the world.
� I don't think we made a mistake to leave our markets open, for
example, during the Asian financial crisis, even though it exploded
our trade deficit, because I think it helped the Asians to recover
more quickly, and it helped to stabilize the global economy. But if
you ask me the only things that I'm concerned about, I'm concerned
about those things. And I think the way to deal with them is to do
what we're doing, which is to keep paying the debt down, so that the
overall fiscal health of the American economy, when you look at
public and private debt, against assets and wealth and growth
potential, continues to be robust and strong and the confidence
remains high.
� Japan's Economic Situation
� Q. Speaking of the trade deficit, Japan looks like it's sliding
back into recession. I know that this Government has been jawboning
the Japanese for years now to try to get them to change policies.
How worrisome is it that after all their effort, they're going
backwards at this point in terms of our trade deficit?
� The President. I think that-let's just talk about Japan a minute.
First of all, it's a very difficult case, because you've got this
country of people who work very hard, who are very well educated,
and who have an enormous technological base. My heart goes out to
them, because they have tried to takethey've taken interest rates
down virtually to zero and are virtually paying people to borrow
money. And then the savings habits of the Japanese are so great-and
for that and other reasons they've had difficulty making that
strategy work.
� Then they've got a Government deficit now-they've tried deficit
spending, and the deficit is a higher percentage of GDP than ours
was when I became President. So I think that somehow what they have
to do is to unlock the creative potential and the confidence of
their people at the same time, which will be politically difficult
because it will require them, I think, to keep going to, in effect,
deregulate, open up, and make more competitive their economy. I
think that somehow they've got to tap the energies of all these
young people, like all these young people in America are creating
all these Internet companies and doing all the things they're doing
there.
� They're an immensely gifted people, and they work like crazy, and
they have everything they need I think to succeed. And they're
highly efficient in their energy use. They've got a lot of things
going for them. I just think that it must be so difficult for them
because the traditional stimulus hasn't worked, traditional bringing
interest rates down hasn't worked, because of the nature of the
present economy. So I think they're just going to have to keep
pushing to unlock the sort of spirit of entrepreneurialism and
creativity and confidence in their economy. And meanwhile, we'll
just keep working with them and do the best we can,
� Yes, I'm concerned about it, but I just have to believe that sooner
or later-and hopefully, it will be sooner rather than later--
they'll come back, because they just have so many assets, they have
so much talent.
� Q. Does it frustrate you at all that they refuse to change some of
the structural pohcies that we have tried to get them to change over
the years?
� The President. Yes, but it just takes time. I mean, look at how
long the rest of the world beat up on us before we finally had thein
the eighties-look how long the rest of the world hit on us before we
finally did something about our deficit. For all of the talk about
the globalization of the world's economies, nations are still
governed by their people, their own institutions; they deal with
their own impediments as well as their own promise. And I think
they'll get there.
� I think the Prime Minister of Japan is an able man and a man who
has shown some political courage already in making some changes, and
I think what we have to do is keep pulling for them and do our best
to share what we believe will work. And we all need a little
humility because they-you know what works in one decade is not
always great in the next decade. And all these countries had to-they
worked on us for a long time before-you know, telling us we had to
so something about the deficit.
� But I just hope that they will-I wish that they had the confidence
in themselves right now that I have in them. I wish that they
believed that they could make this sort of leap into the 21st
century economy and still be able to maintain their social fabric.
And I think eventually they'll do it because I don't think they want
to fail. I think they want to succeed. And you can't blame them for
playing out these two tried and true strains of economic recovery,
on the deficit spending and on the low interest rates, before
getting to-because that was easier to do than to deal with the
underlying structural issues. And I think eventually they'll do
that.
� I mean, look at the pain that was caused in America in the 1980's
when all the industries had to be restructured and all the the whole
economy was topsy-turvy, and there was a lot of difficulty there for
people. And countries don't willingly absorb that kind of short-term
pain, even though they know the long-term gain is out there.
� So I just think that-but I think they'll get to it. They'll have
to. And I think they will, and I think we just need to stick with
them, keep encouraging them, keep supporting the right kind of
change.
� Q. Thank you very much.
� The President. It's an interesting time to be alive, gentlemen.
Don't you think?
