Bill Clinton photo

Press Briefing by Assistant to the President for Science and Technology Policy Dr. John Gibbons and Deputy Assistant to the President for Economic Policy Bowman Cutter

February 23, 1993

Room 479

Old Executive Office Building

2:15 P.M. EST

DR. GIBBONS: Good afternoon. I'm delighted to be here with my associates, and I brought along basically the crowd that were most directly responsible for the preparation of this document.

I presume all of you have copies of the document that we're talking about. If you don't, raise a hand. Very good. Now, how many have read it thoroughly? (Laughter.) Two, three -- very good. By the time you leave here we hope that we will be educated by your questions and that you may be either illuminated or sufficiently confused by our answers.

We are pleased to talk about this plan today, and I'd like to walk you through it very quickly and then ask Bo to add his comments. And then we can go to Q&A.

You understand that this is part of the broader economic plan of the President to address not just the near-term needs that we have in -- getting our economy rolling more explicitly, but also a long-term, fouryear outlook in which investment, in a sense, substitutes for a password known as consumption as we try to build not only our economy now, but as we build a basis for a long-term resilient and competitive economy.

My associates from the OSTP that were involved in this work are Skip Johns, who's a designated Associate Director for Technology; Henry Kelly, who also came from OTA with me to this job. Dr. Kelly is an expert in so many things, but I don't want to talk about it right now. And Mike Nelson who worked with us, who is in transit between working for the Vice President and joining the OSTP staff. I'll leave it to Bo Cutter to introduce his people.

One of the innovations in this plan is, I think, that it explicitly recognizes a crucial role that the federal government plays in working with the private sector to develop technologies in key areas in the modern world. It explicitly recognizes that technology policy needs to be an integral part of any successful program to achieve solid economic growth, job creation; and that other policies -- tax policy, regulatory and trade -- have a profound influence in the incentives for businesses to innovate technology to be transformed from ideas into goods and services.

It is an evolving process. You'll probably have a number of questions we won't be able to answer today, but it will also help define the questions we need to find the answers to most quickly; in particular, trying to get the exact numbers of federal dollars that will either be moved from one place to another or new monies to go in. But we will answer as best we can your questions in that regard.

It does represent, I believe, a fairly major departure from programs of the past within the federal government in that we have mission-oriented R&D programs designed to fulfill missions -- for instance, our national defense; and spin-outs, serendipitous though they might be, were seen as a way in which these were then translated as to market or civilian economy, ideas and activities. Now there's a much more purposeful length beyond the specific mission needs of the agencies and a new attention to relevance to the opportunities for private sector needs that are associated with the federal public investments.

It represents a step in setting new priorities in federal technology development and to focus them on areas that are critical for today's businesses; that is, in information and communication, flexible manufacturing, resource efficient technologies, development of human resources -- all underpinned, I want to add, strongly -- all underpinned by a major and sustained commitment to basic research as the well-spring of new knowledge, which in turn helps drive the technology system.

Another key feature of this plan is that it does entail public goals, such as protecting the environment and creating jobs, which as you know, while we're on economic recovery now, we're not recovering the jobs. So the attention to these social factors are deeply imbedded in the program we have to promote innovation and growth in the economy.

We see three basic themes: One, and you'll see this in the report -- one is long-term economic growth that can create good jobs and protect the environment. You see, these are overriding social goals that also are lined up with private economic goals. A second is that much as in biblical terms, physician heal thyself, we focus on a government that can be more productive, more user-friendly by its constituents, namely the people, and much more -- greater stewardship in the way it uses the public resources in the sense it's reinventing government. And finally we want to underscore again that while we're focused on technology here and projects, this presumes world leadership in basic science, mathematics and engineering. So we're not trying to ignore that. And we aren't talking about taking resources from that, but rather giving great attention to an area rather underattended in recent years, namely the role of the public sector, the government, in assisting the transformation of science into things that provide us our jobs -- economy.

Now, there are some basic strategies. And these are the three I mentioned to you. We can go into these in greater detail as we go along, but I think I will skip them for now in the interest of providing more time for us. There are a number of details in each of these three strategic areas that we can talk about. And finally we touch on six specific new initiatives that you'll find on page 26 in the main document.

So with that, I want to thank you for coming this afternoon. I will turn the podium over to Bo for his remarks, and then we will devise a way of responding to your questions. Either Bo or I or one of our associates will be happy to respond.

MR. CUTTER: Good afternoon. Let me first introduce my colleagues -- Dorothy Robyn at the end and Tom Kalil, both of whom with Jack and the Vice President's associates contributed significantly to this technology policy.

I'm going to try to drive home one simple point, which is that there's a policy here, and it embodies a specific view, broad as it may be, about the economy and what's required in this economy given the changing nature of the global economy.

So what I'm going to do is talk a little bit about the global economy, talk a little bit about what are some of the aspects of this policy and therefore, in that case, simply repeat and underline points Jack has already made, talk more generally about what we've tried to do and then conclude.

There are some characteristics about the global economy for anyone who's worked in it that really strike you over time. The first is how extraordinarily competitive it's become in the course of the last few years. And in the decade of the '80s, these trends really began to develop. And the impact of this goes far beyond that percentage of our economy that directly participates globally. And that has risen substantially in the last, over the last 15 years. It affects everybody that makes a product or sells a service.

And if you wanted to kind of underline what are some of the more business-oriented effects of the nature this competition has, I think there are three. The first is that the changing nature of the global economy has made speed of response an extremely important strategic barrier, the degree to which a company can turn itself around, can develop a new product, can deliver a product, can source, become extraordinarily important strategically.

The second point is that product lifecycles have become extremely short. Time after time in the period in the last 12 years in which I managed and ran a major consulting firm, we ran into major companies whose planning cycles were longer than the product lifecycles of their products. And you had to start bringing those down.

And finally is the growing importance of the --. All of those three things have a common thread, which is the increasing importance of technology at the kind of core of the economy. Every study that's every been done when we're trying to explain what has really driven productivity in the economy, keeps coming back to really two things. Actually, I think they are linked -- three things: education, investment and technology. With education and investment being in some respects the instruments through which technology gets actually transmitted to the workplace. So technology involves a strong link to growth and to productivity.

What we're trying to do in this policy is make three kinds of --. The first is to move to a more cooperative relationship with industry in which that set of -- in which cooperation and joint ventures are presumed from the outset. The second is to move more strongly in the direction of application and implementation. And the third is to try to maintain a link to the American worker.

If you go beyond those points and ask what have we tried to do, I'd like to underline some points that we've tried to do. The first is shift the composition of the federal budget more toward investment. I pulled out a couple of numbers for this presentation. If you look at what has happened to long-term investment in the budget, in the late '70s it was -- in the federal budget it was approximately 3 percent of GNP. It's dropped by a third in 10 years, down to about 2 percent of GNP. If you look at nondefense R&D, it's at a similar, even more precipitous course. In '68, nondefense R&D in the federal budget was 1.1 percent of GNP. In '78 it was .6 --six-tenths of a percent. In '88 it was threetenths of a percent. In other words, the federal budget has essentially shifted away from investment toward consumption, is the point that Jack tried to make.

Second point is that we're trying to recognize in addition to making a shift toward investment, to make a shift specifically toward technology. And the third point is that we're trying explicitly to shift toward a policy in which we go beyond the mission-oriented technology. I gave a -- in my last sojourn in the White House, which was in the Carter administration, when I would

speak about technology, basically what our policies would consist of would be a focus -- we thought a good one and a strong one -- but on mission-oriented technologies. What's happened is that the world has changed, the nature of the economy has become more and more clear, and we feel that as a matter of policy we need to go well beyond missionoriented technology, which is the shift that's being made.

And, finally, the point that I said I'd conclude with, this should give some sense of what we're beginning to think economic policy is. And economic policy cannot be simply the carrying out of a good, short-term macroeconomic forecast. It has to integrate both our domestic and our international policy thrusts and our micro and our macro policy thrusts and our several different kinds of microthrusts. Forgive the gobbledygook. What that means is we have to bring together home and abroad what we do as a whole and what we do as parts, and what the several parts of the federal government do. I suspect and hope that five, ten years from now you'll look back on this as the Gibbons technology shift. (Laughter.)

DR. GIBBONS: A new form of Doppler Effect, I guess. Well, the background in science I couldn't help but observe to the President the other day that there does seem to be a new rule that goes on beyond Newton, namely that for every action there is at least a greater and equal and opposite reaction in anything you propose.

But Bo and I now have gotten you started. Since so many of you have read the document -- and you've had a chance to look at some more of it now -- why don't we take some questions and we'll see how far we can go?

QCan you be specific about the types of jobs you want to create? Last week in Boston you mentioned that you want to create jobs, and yet I haven't heard from what area or what sort of jobs you're talking about.

DR. GIBBONS: Job creation, we hope, will be in the area that can be classified as good jobs -- that is, jobs that typically come from the manufacturing sector, high technology sectors in which we are substituting more and more of our brainpower and individual productivity for the labor of our backs. So these are jobs that are nearer the top of the spectrum of the kinds of jobs that are in the marketplace today.

MR. CUTTER: May I add a point to that? Let me add a point to that. Rather than the -- it would be foolhardy for us to suggest what sector of the economy those jobs are going to come from. But if you observe what's happened in both the manufacturing and the service sectors, if you go and look at the specific nature of jobs that are being created, one of the things you realize is that there's a tremendous kind of misnomer or misapprehension about what job creation today is in the private sector. It is not the creation of an unskilled -- unskilled, low-skilled jobs, that the pure labor cost content of jobs in both manufacturing and services steadily declined over the course of the last decade, the last 10 years.

What's happening is that in every industry and in every service sector is the rise of very skilled, knowledged workers who frequently carry out as much of a service function as they do as a pure manufacturing function.

QRight. But if you're talking about improving technology, particularly on the manufacturing side, you're talking about putting people out of work. Where will you put those people?

MR. CUTTER: Oh, absolutely not. These changes -- first of all, this is a $6-trillion economy. That these changes occur over time is that, a matter of fact, quite the opposite, that through the kinds of investment policies that the President has proposed and

within the larger framework of the economic plan that the President proposed, bringing the deficit down, if we can raise the long-term rate of growth of the economy, which is exactly the intent, that in fact, you go exactly the other way.

In a static economy, increased productivity is just arithmetic; it obviously leads to fewer jobs. But in a growing economy, what it does is, it increases -- is it does exactly what President Clinton said in his campaign -- high-wage, good jobs.

QBut where will those jobs be?

MR. CUTTER: We can't say by sector-by-sector, and it's not our business. What -- our problem and our task is to say generically we would like to work with the private sector to produce, to embed the kinds of technologies that will produce those sorts of jobs.

DR. GIBBONS: Let me just add a brief one to that. The jobs will be likely in smaller entrepreneurial activities. Because if you look at the President's plan, it reflects the fact that most new job creation occurs in small business rather than in very large business, if you look over the last several decades. And if you look at the President's economic plan, it tilts toward trying to make an even better seed ground for small innovators to enter the market and be successful with small business development.

But as Bo points out, there is no way that we should or could try to predict exactly where these jobs are going to show up. You would also hope that as we improve the international environment portrayed through the implementation of NAFTA and other things to establish ourselves even more competitively in world trade, this, in turn, is going to generate demand for products and services here that will increase American jobs.

QTwo questions. First, how close did you study, if you studied at all, the Japanese or the German models -- private sector of the government? And, secondly, what is the difference in your opinion between a subsidy, which American trade laws are going to prosecute, and government money boosting R & D in the private sector? When does that kind of subsidy --

DR. GIBBONS: Your first question had to do with Germany and Japan, but I didn't quite catch what part of the --

QHow closely did you study Japanese and German models, if you did at all, in terms of technology initiatives?

DR. GIBBONS: Yes, we did, indeed. But we have, indeed, been looking very carefully at our competitors, the Asian Rim and the European Community. And the extent, for instance, which worker training is embedded as a very essential part of their policies is something that we want to emulate better, because they're so far ahead of us in that regard.

The same thing on, for instance, the extension of information -- knowledge, technical information, especially to the smaller businesspeople, but can't afford that as part of their overheads -- is another example for Japan is an order of magnitude ahead of the U.S. in the ability of a small businessperson to get that kind of technical assistance.

In terms of trying to keep a level playing field in international trade, there is quite a controversy about what one should be able to allow or include before you get into arguments about subsidization. You know, the problem with Airbus and the extent to which that has been at least allegedly underpinned by the Western European countries, there's a problem with the U.S. and the

allegations that our basic research, being supported by the public, should be somehow included in the GATT negotiations.

These are all ongoing and tough issues to resolve. But I think what we find here is that we're stopped short of trying to help develop a particular product or an airplane or something. What we're talking here about is a public investment at the precompetitive and generic level of information and technology development that does not get that close to the marketplace. We hope that will help distinguish our approach here from things like the Airbus.

QYou spoke to the subject that you've been talking about that product line is going to be measured in months in the future -- and that there's tremendous global competition out there. How does that portend what's considered a large technology base, such as IBM, then, because it's harder and it takes more time to make decisions? Are you saying to them that their future is in jeopardy? DR. GIBBONS: Let's let Bo handle that one. (Laughter.) MR. CUTTER: This isn't a dodge. I didn't hear the angle on it.

But give me -- try to --

QIf you're saying that a product line very short in the future and there's going to be some tremendous global competition out there, how is that going to affect what would be considered a large technological company right now, that just because it's large it takes longer to make a decision?

MR. CUTTER: Absolutely. I mean, do I think that companies of that kind are in jeopardy? Hell, read the newspapers. Look at the business pages. In general, back when I was in that sector I used to think of something -- the defense concept called the tube-to-tail ratio, which is the degree to which a company actually faces the market as opposed to the proportion of the company that's really not involved directly in the market one way or the other.

Our sort of Fortune 500 has real problems in that respect. They're a real anomaly in that they are on the one hand this sort of great repositories of technology and scientific resources in this country, and on the other hand they are -- as a class it's the wrong term, but that company after company in that category of very large companies have shown a distressing inability to move rapidly as they've been exposed to competition.

So, yes, I think companies that can't move fast can't adjust to short product lifecycles, don't invest in their people are in jeopardy.

QIs this administration going to do something to try to nudge these companies along --

MR. CUTTER: I think that my own personal view is the government's composed of bureaucrats like me and Jack that don't have a lot to teach, that the opening of -- that the increasing competition in the world is, itself, very destructive.

DR. GIBBONS: I visited Silicon Graphics yesterday with the President and the Vice President. If you look at the vitality of an organization like that, how rapidly they're able to move, how distributed they are in decision-making and authority, and compared with some of the large companies, you begin to understand what's known as the diseconomy of scale.

MR. CUTTER: I'll add one other point about that, is that -- a little filibuster here -- is that it's not a given that large companies are like that. The point Jack made earlier is absolutely right, is that slightly more than 100 percent of all job

growth in the United States has occurred in middle-sized or small companies in the course of the last 10 or 12 years. But there are big companies that have shown an absolutely extraordinary capability to survive and thrive.

One I mentioned, for example, which is a high technology company is 3M, which, in some extraordinary number of cases, like 23 out of 24 of the last years, has been the nation's leader in new sales and sales produced from products that didn't exist five years before. So it's not that bigness mitigates against it, but managers of big companies have to be very concerned about it.

QI have two questions, too. The first one is really simple. When you take the D off of the DARPA, do you also take ARPA out of the Defense Department?

DR. GIBBONS: No, not at all. ARPA is a part of the Defense Department. ARPA's orientation will be not simply go to the Department of Defense, but the extent to which its advanced research can be commingled and conjoined and supportive with the civilian sector, the extent to which the Department of Defense, in other words, can become more merged and interdependent with commercial markets, to that extent, the Department of Defense, like the other departments, are going to be much more engaged with their colleagues in the private sector, but it'll remain within the Defense Department.

Now, you may be getting after this notion of a so-called civilian DARPA that has been talked about. What we have described in this report that you have before you is, in effect, the civilian equivalent of a DARPA, except it's distributed over existing institutions, existing laboratories. And what we hope to do is to orchestrate these rather extraordinary public federal resources in a way that is equivalent to having a new institution. But the last thing we want to do is go out and build new buildings and start new institutions. That's a substitute for not using effectively what you already have. The single most least productive, least edifying, most frustrating kind of exercise that one can be involved in, in either the public or the private sector, is --

QYes, the second question goes to the heart of this little company, big company competition. Try an example, take this electronic super highway and talk about how you're going to help the private sector without picking winners? How do people get a foot up on some of that?

MR. CUTTER: Let me try one round at it and then we'll try Mike. Take an area -- I gave you a warning -- take an area that is emerging and I'll pick a service and I'll invent a company or I'll invent a need. One of the things that's occurring around the world now is advance logistics management. The entire logistics chain of an industry is the management of it. And you'll find that the distribution that -- many aspects of distribution are being managed from a long way away. I mean, there is no particular -- a company offering a service today located in the United States in -- should expect competition from a company physically located somewhere else and exercising its management through a network.

By the enhancement of the basic infrastructure of the information age -- of information technology and telecommunications technology, what you can do is lower the entry costs and lower the entry costs substantially. It has exactly the same effect on a whole new breed of kinds of companies that the highways --.

DR. GIBBONS: Mike Nelson worked for the Vice President for some years in this regard. Mike would you like to add a little bit to that?

MR. NELSON: Just to make it clear, we're not proposing to pick one particular winning technology to deploy this information superhighway. We're not proposing to take one particular company. There are seven pieces to it, but one piece is the program at the National Tech Telecommunications and Information Administration of the Commerce Department, which will fund networking -- schools and hospitals. In a way we're subsidizing the users so that they can go and pick the winners. They'll have them in schools and then they'll be able to go out and contract with phone companies or whoever they wish to wire up their school district, for instance, or to hook up hospitals and libraries. It's a demand-pull mechanism rather than the government coming in and saying we're going to spend $100 million and wire the country. So it's a much better model. And it allows the best of technology to come forward.

QBut something like Internet already exists. That's kind of the heart of my question. Are you -- this is not --

MR. NELSON: And that's a very good example where we have several different companies all working together to provide networking services. The government can provide the leadership so that everybody is moving in assigned direction and using compatible standards; but we're not proposing that we create new network -- trying to energize the private sector, provide the competition, which will make sure that the best technology gets out there quickly.

QA follow-up? How much money are you proposing to give --? -- federal money you're proposing for this --

MR. NELSON: -- three pieces to the information infrastructure component of the plan. You can see this in this package. The first part is providing adequate funding for the high performance computing and communications initiative which Gore initiated two years ago. That will be -- we'll be adding about $50 million more to bring the total up to about $850 million for this FY '93. That's a research program that develops new super computers.

The second piece is developing applications technology so that the manufacturing sector can use this and the education community can use this technology. That's another $47 million. This is all in the handout you have with the budget numbers.

And the third piece is the NTIA portion, which I believe is just under $50 million. It's subsidized to help states and school districts and hospitals experiment with relatively low-tech networking technology.

QYou're going to spend $2.6 billion in the next four years on government automation and efficiency and Social Security Administration. How many jobs is efficiency and automation going to cost?

DR. GIBBONS: What we hope is that is will result in a more efficient government in terms of its ability to keep -- to carry out its services more accurately, more completely. I can't tell you what net job displacement there will be because while we may lose jobs on the one hand, we gain jobs on the other in terms of operating the equipment, the people that make that kind of equipment. And if you run through the whole stream of employment in a kind of a input-output way, I'm not sure how the number will come out, but I doubt that it will be a major -- a significant number.

MR. CUTTER: Once again, I think it's sort of the fallacy of assuming a --. It isn't as if the job content is immutable and forever fixed. And one puts in technology, and there's in the service sector, in the government sector, which is really what the statistics assume, there is no possibility of increasing productivity. You increase the productivity by increasing

productivity. You increase the productivity by increasing the quality of the work and the quality of the job and the degree of the service.

QI have been listening very closely the exposition that you made in connection with the initiative of technology. And I wonder do you realize that what -- is very important to develop the human resources. And in that respect in the new century, the work force of the United States will be minority and female. Are you aware that we have the -- and the capability of the those segment of the population to be competitive in that work market? And that way, we can compete with the Japan and the -- European Community. How do you respond?

DR. GIBBONS: We concur that there is a major demographic transition going on now in the young people that are moving in the higher education and the job market. And there is a great deal of concern on the part of Secretary Riley and others about how to attract these people into these areas of quantification -- engineering, science and technology -- because we lose so many, particularly from those groups early on in life, and they need more encouragement and sustaining. And this is a very active consideration in the notion of human resource development. Thank you for the question.

QI wonder if you can talk a little more explicitly about how you expect defense R&D and defense technology to be married more closely with commercial technology? I mean, they've tried this for some time with defense and it's been so successful so far.

DR. GIBBONS: Let me ask Skip Johns if he would respond to that. We have to share the load here.

MR. JOHNS: The DARPA, now ARPA, is going to be concentrating more significantly on dual use technologies, which, of course, are those which benefit both the commercial and the industrial in the defense industrial base. It's increasingly as the Defense Department becomes -- or has become in the past decade -- more dependent upon the commercial sector for the creative new enabling technologies which support much of what DOD needs in their new technology. DARPA has increased its attention to manufacturing technologies, flexible technologies, flexible manufacturing and the other elements, including high speed computing, that are fundamental to both the defense establishment and to a highly competitive commercial economy. This effort is going to be expanded. There is going to be increased cooperation between Congress and DOD. And OSTP and NEC are going to be involved in helping that coordination.

QCan I just follow up from that? What about the rest of defense because DARPA is not the hall of defense R&D? I mean, how is the rest of the DOD to be involved in this project?

MR. JOHNS: I think, importantly, the Department of Defense is going to be encouraged to use its buying power in order to buy what we have called best commercial practice, where it's possible for them to do so, rather than have Mil-Spec. I think you're also likely to see the Department of Defense buying more in common between services.

QWould that be legislatively? Would that be put in legislation?

MR. JOHNS: I think that -- I'm not prepared to say at this juncture.

DR. ROBYN: I think the first step is -- there is a panel called the Section 800 Panel that the FY '91 Defense Authorization Bill commissioned. And that panel has just reported

its results, and I think the administration for starters will review the results of the section 800 panel which looked at 900 some different laws and regulations and made recommendations on a much more detailed basis than the Packard Commission and the CSIS Commission previously. This is a very high priority. Bill Perry, the Deputy Secretary-designate --

QCould you say something about how you would integrate the Commerce Department's -- ATP program with the new ARPA activities. Is it going to be corrected? What sorts of project would be in that -- and would remove the focus of the ATP program away from large corporations to small ones?

DR. ROBYN: Let me just say a bit about the coordination between ARPA and ATP, because I have been talking to both sides about an ongoing effort of DARPA, DOE and NSF to develop an implementation plan for the defense conversion projects -- $575 million dollars of programs in R&D, regional technology alliances, manufacturing extension. They have developed a very strong working relationship. I think that already existed. I think that one of the things that DARPA brings to the table is seeing manufacturing extension. For example, if as part of an effort to get 365,000 small firms to an age where they can participate in what we call virtual corporations, so they are electronically networked to other corporations and can instantaneously form partnerships to go after fast changing market opportunities. That's a much more visionary picture of what manufacturing extension is all about, but it's what DARPA brings to the table. And this brings to the table a very pragmatic sense of what it involves to work with these small firms. And I think that's sort of collaborative effort illustrates that this sort of cooperation will go on in the future.

QDo you plan to reconstitute PCAST or some equivalent of that?

DR. GIBBONS: Did you all hear the question? It had to do with reconstituting the advisory committee to the President on science and technology. As part of our streamlining of government and making more horizontal and hopefully efficient government, I now wear four hats. And I'm Assistant to the President for Science and Technology and Director of OSTP, but I also now am Director of the Space Council and the National Critical Materials Council. So you can see that the way we make ourselves more efficient is we load more jobs on each one of us as we reduce staff. But that same sort of coalescing of -- a natural, I think, coalescence of previously separate activities in the White House is causing me to have to look back at PCAST and see what its role therefore must change; how we need to broaden itS perspectives and constitution in order to provide the President with the appropriate kinds of resources. So that's under consideration now. The present PCAST continues until, I believe, June; and long before then I hope we'll have our answers for whatever succession needs to come.

QIn all this discussion about revamping the government's role in technology, there's been scarcely any reference to NIH. How does that big agency fit into these plans?

DR. GIBBONS: I had breakfast with Secretary Shalala this morning. And NIH and NSF are two, of course, of the several major R & D establishments, especially for basic research in the federal government. And I think there's good question there about the extent to which NIH should be seen in almost a line-item, just as NSF is seen, so that we don't lose sight of the fact that that's a very major basic research establishment in government.

I can't tell you how it's going to work out, but it obviously is one of the major actors. And we had breakfast over that very subject this morning.

QThe administration obviously sees NTIA taking a lead role in this -- information infrastructure.


QI wonder though how it squares with the -- what critics say is a lack of emphasis on the FCC; specifically, the President having not yet appointed a permanent chair. Congressman -- today backed -- to avoid the auditors at the FCC being unable to find overcharging the telephone companies. I guess my question -- the question basically is if all of this attention is focuses on NTIA, where does that leave us in terms of regulating this huge information infrastructure?

DR. GIBBONS: Let's let Bill handle that, and I'll learn along with you.

MR. PERRY: I think the short answer to it is the organizations have different roles. The FCC is a regulatory organization that operates according to administrative law, has the powers appropriated to that and it doesn't have others.

NTIA is more of an executive branch organization, and I don't mean in the sense of the -- within the control of the President, although that's relevant too. I really mean more that its role is program and policy development as an implementation. The institutions are completely and totally different.

Clearly, the FCC will have a very considerable set of tasks at hand as the convergence within the telecommunications world continues and accelerates, as we've seen in over the last few years. But it's really not the same thing. The FCC simply isn't the kind of organization one would choose to lead a major presidential initiative. It's not been it's role in the --

QOn page nine there's a reference to Department of Energy -- labs. can you tell us what that review is about and who's involved with it and what the -- are?

DR. GIBBONS: Well, that's a rather broad sweeping statement. We were addressing the question of utilization of the federal labs, which of course are dominantly under the jurisdiction of these agencies that you mentioned. And there's a generic question at hand here, independent of the agencies, of how well the resources in those laboratories might be reshaped and redirected given the President's priorities in this plan so that they could be more --drawn more directly to bear on these questions before us.

In other words, instead of always going after new money to do something, how can we reorganize our priorities within those laboratories to make them a better fit to the national economic plan. And I think it's independent of the agencies -- contact with all those agencies about some common mode -- way of approaching an alteration in the use of those and the direction of those resources so they better line up with the President's plan.

Q-- plan to cover x percentage of our new funds --how to reach out of all that? (Inaudible).

DR. GIBBONS: One notion is that some target percentage of each of these labs should be aimed at cooperative ventures with various private sector partners where everybody has some money on the table as a market test of the activities. And let's see who does the best job at it. Let's reinvent -- reintroduce, in a sense, some competition in the federal government, its own operations, to see whose doing well and reward those that are doing the best.

QCan you tell us about when it will be done?

DR. GIBBONS: I can't tell you when it will be done. It's beginning now as a process with the agencies but as Bo intimated a while ago and I think of our questioners, we're only getting to the sub-cabinet position appointments at this point in the new agencies, and it's not quite fair to try to jam all of this in in the midst of that process before their leadership is on board.

QThere's a statement on page one that says, "ensuring the coordinated management of technology." That sounds like a oxymoron --. Does that suggest that perhaps there is going to be czar of technology in the country, something like a World War II --?

DR. GIBBONS: Absolutely not; as far as I'm concerned, anyhow. If you'll go to page four, what you will see is a little breakout of that statement in which we talk about the role of the OSTP and the National Economic Council, just to begin with, in helping orchestrate a better coordinated program across the agencies. Not in any sense directing these agencies, but providing a kind of cohesion and integration that will make all of these programs add up where the whole is greater than the sum of the parts.

And I think the exercise we went through to prepare this plan is a good example. We not only had the NEC and OSTP involved, but also deeply involved was OMB, other White House groups, as well as deputies from at least a dozen of the executive agencies have met and worked this over and added and subtracted. And so the document itself is an expression of the extent to which we're trying to build, what Vice President Gore would call a gestalt -- a situation in which the whole is truly greater than the sum of the parts.

We hope what will happen out of this is is that our work will not be seen as somehow meddling or getting in the middle of the agencies work but as rather catalytic in helping the agencies even become more effective in their relationship, each with the other, and in turn the private sector.

QCan I follow up on that? As your predecessor tried something similar to that, perhaps not in the detail that you're trying, but he tried it --

DR. GIBBONS: -- fix it --

Q-- to try to bring the agencies together and have better cooperation and that kind of thing. And I think he failed; I think most people recognized he failed because the agencies pulled it all apart themselves. What kind of mechanism are you going have in place to make sure that the agencies do what you tell them?

DR. GIBBONS: Well, I'm not sure that Al Bromley failed. I think the answer to the question of, how are you doing, depends on compared to what? And if you look at how things were going before Bromley instituted this fix-it process, I would say he made some real progress. He also made some progress in an environment that wasn't all that conducive, it seems to me, for the things we're talking about. So what I hope we can do is build on the progress that Bromley made and move ahead quite a bit further. The basic institution, the basic notion of the federal coordinating committees, I think is still a very -- quite a valid one and we hope to build on that.

And I think having the active interest and involvement of the Vice President as delegated in this area for environment and technology by the President is going to help the clout of this kind of coordinating work. And so I think we find a very strong ally in this work that my predecessor didn't have.

Q: I have a question about energy and technology. And my impression is that you've sort of, at this point, written off nuclear power as sort of a dying or dead technology, or at least you're not going to be investing much or maybe curtailing it at best. How did you reach that decision --

DR. GIBBONS: We didn't really look at nuclear technology per se. I know there are some numbers that came out of OMB, and I'm not sure how those numbers came out. If you remember, this President is the first in history that's had to prepare a budget in about three weeks. And the front of the document, of the OMB document points out that it's a process. And a lot of them, there are bound to be some mistakes in here we're going to change.

But the issue of nuclear power is not one we directly address, but I can tell you that it's not an option that's given up; we just don't have that many options that we can afford to give up any option. The question that you will find in the budget is whether or not some of the very advanced nuclear powered things, whether it's timely to move ahead on those versus other priorities, such as renewables and energy efficiency as an example.

But, no, there's no way one can claim that we've given up on nuclear power. After all, it furnishes almost a fourth of our electricity at this point.

QHow much, if any, opposition have you had to greater government involvement in the private sector, in R & D, and where is it coming from if have --? And, secondly, how long is it before you'll be -- in the marketplace with the sorts of -- research and R & D that you're talking about? For example, in a clean car, or whatever example you choose to --

DR. GIBBONS: We've had -- the only expressions of concern about this that I have at least heard about at this point have come from misimpressions about what we're saying. We're not talking about meddling in the competitive marketplace. That's an inappropriate role for the federal government, except to the extent that -- how it chooses to buy products. If the government chooses to buy products based on things in addition to market price because they have other public goods attached to them, that's the government's business.

Now, what we're trying to do -- and the automobile is a good example -- is to assist one of our largest industries -- what is it, 20 percent of our whole GDP -- assist that industry in the areas in which public interest lines up with private interest. And if, in fact, we can help Detroit -- and we've been in conversation with them about this -- both in terms of their short-term needs as well as their long-term objective of moving on beyond the internal combustion engine, something that can finally resolve the Clean Air Act, the CAFE, all these other regulatory standards, then to that extent that we have this alignment of public and private interest, and the extent to which government can help that industry move in that direction, we see it as a very valid concept. But it's not involved in product development, it's involved in precompetitive generic research and development.

QAnd a time frame --

DR. GIBBONS: Time frame runs anywhere from a couple of years for some of their near-term problems. I'll give you an example -- the ability to build a high-capacity, safe, on-board storage for compressed natural gas; or improved nitrogen oxide caplets. Those things are areas in which our federal laboratories have some considerable expertise and may be able to help Detroit in moving that technology into the marketplace.

In the longer term, it has to do with how can you build a better and cheaper fuel cell or other things related to the -- on cars.

QYour clean car ideas is a very good example of a question -- to my mind, to what extent did Detroit come to you and say we need help with that? To what extent does industry and small business -- do they come to you, or have they come to you to seek your support, or are you pushing them -- new cooperation?

DR. GIBBONS: I think like any good partnership, it works both ways. If you look at the inquiries and proposals to NIST alone, for cooperative joint sharing of the research and development, you find that they have an enormous number of ideas that have come forward from the private sector.

In the case of the automobile, we knew of considerable interest in that sector and we also understood the opportunity of public needs through lower pollution, lower airports, a lot of other public sector needs. And we made an initial approach there, but it was based on what we already knew were some of their interests. And now we're working together with them to try to define terms of reference, or as one of them called, migration path that could be defined from where we are now as a nation as an industry to where would you like to be 10, 20, 30 years out.

QBut maybe this is they still want government off their backs. Is it going to be tough to dissuade a majority, possibly, of businesses that you're going to --?

DR. GIBBONS: Well, I think -- I would hope so because of the very reason for this new kind of partnership is not to get on the backs of these people, but to help them to get, in a sense, off their backs. And many of them are in that sort of tough situation now, whereas one industrialist described to me, it's not a ballgame because in my business one strike and you're out.

So there is an issue. If you can line up the public interest and the private interest in the same direction, then you've got a good basis for a deal.

QI want to ask you a mechanical question that's related. Since the dissolution of the Quayle council, the related question comes up about trying to help business in terms of the regulatory concerns that they would have. You talked about trying to provide some sort of giveand -take about what the federal government can help in terms of -- signs. What, mechanically, is the setup, the arrangement, in which business can come and seek, say, regulatory help or, in addition, some national lab assistance or whatever?

DR. GIBBONS: I think, as recently as yesterday with the Vice President and the President, we heard out the interests of the airline companies, the airplane manufacturers, Silicon Valley as examples where are gathering and exchanging ideas about their problems, the role of the federal government, how one can obtain the public goals -- the social goals that we're talking about and at the same time, enable these people who employ -- the workers of America with a -- for healthy, competitive activities.

So I think it's an -- that what we're moving, I hope, is from an adversarial relationship that has too often been the case between government and the private sector to more of a partnership.

QRight, I understand that. But I'm talking about more the -- Obviously, the President was interested in meeting with the airline industry. It was his interest. I'm talking about the mechanics of actually -- you know, when there's --

DR GIBBONS: Each of those will transform in different ways. Some may transform in the status quo. It's just -- there's not much you can do. Others may transform in the way of saying, all right, we may be able to give you relief in the following area, if, in turn, you can help us out in this other area. And it will appear in the activities of the various regulatory agencies as well as with Congress. So it's not a centralized activity, but rather a mood or an approach to problem-solving that I think can deliver much better progress in this regard than we've had in the past. It's not a matter of trying to override the law, which I think you might ascribe to the way the previous Vice President's counsel was trying to do it.

QThis will be the last question.

QI have a question about basic science. You talk on page 24 about the damage of stretching out research schedules, because they hurt research teams and they fail to set priorities. But in the upcoming budget, you have proposed stretching out the SSC funding specifically. And I was wondering if that means that it is not a high priority program because, according to your definition, high priority programs will receive, sustain constant support.

DR. GIBBONS: Well, let me take a crack at that and then ask Bo if he'd like to follow. The SSC stretch-out is one in which we're trying to recognize that there are certain projects that --such as the finding of the top -- or of building certain space capabilities or other socalled big science, big technology projects, in which the sense of urgency may be -- have been miscalculated compared to other priorities in terms of our national recovery and the putting in place of an investment strategy for future economic prowess.

In the case of the SSC, there still is some significant uncertainty about some of the cost factors. For instance, the magnets. They've not done a production run yet. They've done basically one at a time. And the potential gains for tying down some of these costs, plus the potential gains of having a little bit more time to attract our international partners into that activity, we believe more than offsets the potential loss of having a stretch-out. And you can't do it forever, but there are gains as well as --certain very important gains in addition to simply being able to save some money for a few years in performing that stretch-out.

In the case of a space station, it's more than a stretch-out. It's an attempt to try to reapproach the space station, reexamine those goals, and devise a more affordable system. The way that system was moving with any kind of realistic projection of the budget, NASA would have had to steal all of its aeronautics research and a lot of its other resources in order to do that station. And that's not seen as in the national interest.

Q? Let me just follow up. The big problem that a lot of the foreign investors in the SSC, specifically Japan have, is they're not sure the U.S. is committed. Doesn't stretching-out send exactly the wrong message if you're -- if you want them to buy into the project?

DR. GIBBONS: I don't think necessarily so, because part of the concern of the Japanese has been that they were near the point in their budget cycle in which they needed to make a decision, at least for this year. And it seems to me that a stretch -- I'm not speaking of fait accompli at this point for the process -- but a stretching-out -- but a reaffirmation -- a strong reaffirmation of a commitment to that project and its internationalization of effort might give them even greater assurance that their investment will be well made.

QCould I follow up on the space station?

DR. GIBBONS: Let's have a follow-up on the space station. And then I would invite you to meet with any of us separately or together, but I think this will be the last question we'll have as a group. Yes?

QThe subtext of this report is that the civil space program embodied in the space station essentially is not really relevant to the country's economy now. Is that true? And, if so, does that mean that the space program will take a back seat to these other initiatives in this administration?

DR. GIBBONS: No, that's not correct. It's not felt that the space station is a useless endeavor of employing aerospace engineers. It is felt that the presence in space is a very important part of our longterm national investment in a science and technology infrastructure. On the other hand, if you try to build a space station that inherently would rob you of virtually all your other capabilities to do work in space, then that's seen as a very poor way to go. And the challenge now before Dan Goldin and the task force he's putting together -- advisory group he's putting together -- is to see how much of the original goals in science and in -- both in the physical sciences and in the life sciences -- how much of that goal can be achieved for a substantially less grandiose or grand design. So that if in doing so we have enough resources to be serious about aeronautics -- and believe me, at Boeing yesterday, I found out how important it is to be thinking about aeronautics -- and other activities of NASA which would literally be starved out of NASA under any kind of realistic budget projection.

I'm sorry. We'll have to stop now. Thank you for your attention. We're at your disposal here for further questions.

END3:15 P.M. EST

William J. Clinton, Press Briefing by Assistant to the President for Science and Technology Policy Dr. John Gibbons and Deputy Assistant to the President for Economic Policy Bowman Cutter Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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