Press Briefing by Secretary of Labor Robert Reich and Assistant to the President for Economic Policy Bob Rubin
The Briefing Room
11:50 P.M. EST
MR. JONES: This briefing is ON THE RECORD and for the cameras, and will be conducted by Assistant to the President for Economic Policy Robert Rubin, who will have an opening statement, and he will be joined by Secretary of Labor Robert Reich.
MR. RUBIN: Thank you. Let me comment briefly on the numbers that were announced this morning and relate that to what's been going on more broadly. Then Bob Reich will speak, and then we'll be delighted to respond to anything you all would like to discuss.
If you take a look at the last 11 days, there have been three numbers announced that, in our judgment, are very much a function of the President's broad-based economic strategy and the efforts of this administration.
Number one, the deficit, as you know, that was projected for 1994 was $100 billion higher than the number that we have actually experienced; or, to put the matter differently, the actual budget deficit number was $100 billion less than the number that had been projected before we came into office, before the President came into office.
Secondly, growth in the third quarter was 3.4 percent, and growth since the President's deficit reduction plan was passed by Congress, has been almost four percent per annum. And, thirdly, something over five million new jobs have been created in this economy since President Clinton took office.
At the same time, all indications are that inflation remains at moderate levels. When you talk to people here and abroad who run businesses, they all tell you virtually the same thing, which is that, on the one hand, in this country business is good, and on the other hand, they do not see signs of a significant increase in inflation and expect inflation to remain at moderate levels, based on everything that they see in their businesses.
Finally, let me wind up where I started, which is that there have been many factors that have contributed to the economic performance that's been experienced under President Clinton. But in our view, there has been a sea change in public policy, and without that sea change in public policy, we would not have experienced the recovery, combined with moderate inflation, that has been the experience of -- almost two years now.
An enormous amount has been accomplished, but there is a great deal left to do, and it is absolutely critical, in our view, both in the short term and the long term with respect to the economic future of this country, that we remain -- this country and this government -- remain on the track the President's strategy has started us down.
SECRETARY REICH: Thank you, Bob. Let me give you a little bit more detail and context. The Goldilocks expansion continues. It's not too cool; Americans continue to gain new jobs at a very healthy clip. Overall unemployment is down to 5.8 percent in October; that's from 5.9 percent in September, 6.1 percent in August, 6.7 percent last January.
The unemployment rate is at its lowest level right now since October of 1990. The payroll survey of the Bureau of Labor Statistics shows that the economy added 194,000 jobs in October. The private payrolls actually increased by 198,000, as government payrolls declined by 4,000.
Now, this marks steady progress. It's directly in line with September's revised private payroll gain of 189,000 jobs, and as has become customary each November, the Bureau of Labor Statistics also announced today its preliminary benchmark revision -- an additional 760,000 jobs between April of '93 and March of 1994, which brings job growth since January of '93 to well over five million.
We're continuing, also, to receive very good news in manufacturing. Employment there is up 40,000, continuing the manufacturing comeback that started last year.
Over the last year, 193,000 new manufacturing jobs were added to the economy. The number of jobs in the automobile industry, especially, is at its highest level in 15 years. The factory work week has edged up to 42.1 hours; this is a level not seen since the end of World War II. Throughout the industrial Midwest -- in fact, I've heard complaints from workers who say that they don't want to work as much overtime as they are getting -- and that's certainly a problem if workers don't want to work overtime, but it's a far better problem than not having a job.
A final note on the quality of these jobs. Most net employment growth has been in higher-than-average wage occupations. And so far this year, the economy has added more jobs in high-wage industries than in the previous five years combined.
I said this was a Goldilocks expansion, not too cool, but it's also not too hot. I want to remind you that 7.6 million Americans are still out of work. That's down from what we had before; 4.4 million are working part-time that rather would be working full-time. Over 1.6 million are available for work, but either too discouraged to look, or otherwise not searching. We still have a lot of work to do. The economic data are moving very rapidly in the right direction, but there is still work to do.
The employment cost index continues to show no sign that inflation is accelerating. Total compensation this year has risen 3.1 percent on an annualized basis. The consumer price index so far this year has risen 2.8 percent, with no evidence of acceleration at all.
And now we'll take your questions.
Q: Why isn't everybody happy? And have you told all this to Greenspan, or are you trying to tell him?
SECRETARY REICH: I'm happy. Are you happy? You're happy.
MR. RUBIN: I'm reasonably happy.
Q: Why do the voters not believe all this?
SECRETARY REICH: Well, people have different views, and I'll let Bob comment on this. I think when we came, when the President came to office, we had to pay the bills. We had a $4- trillion debt. Remember in 1981, it was $1.5 trillion. It was necessary to get that deficit down, it was necessary to cut spending, and we did it, and a lot of the effects of these changes -- we're moving in the right direction, but remember: we've had 12 years of the economy moving, in many respects, in the wrong direction, and it takes time for all Americans to feel it. I think that's one very important factor.
A second factor is that this is a new economy; it's not like the old economy. That means a lot of job changes. We're working on that as well -- with our reemployment program, our skill training, our efforts to make it easy for Americans to move from job to job. But Americans, more than ever before, have to face a different kind of economy -- much more technologically different.
Q: Interest rates are going up, aren't they? I mean, this is what you hear everywhere.
SECRETARY REICH: Bob, when we talk about interest rates, that's your field; not jobs. But you go ahead.
Q: Why are they going up?
MR. RUBIN: Because there's more demand for capital than supply -- (laughter) -- that's not -- that's accurate, but I don't think it's a very full response.
I think what's happened, Helen -- and we said this to the President when we originally talked to him about the deficit reduction program -- was that if all of this worked and, if, in fact, the market believed -- as we felt they should believe and they did believe -- the deficit reduction program, that long-term rates should go down. If long-term rates went down, then our view was that would generate economic activity, and we'd have recovery.
But we also said to the President at that time, if we have a recovery, then rates will go back up, reflecting growth. But I think what has happened, and I think the critical difference that you need to note, or that one should note, is that the rates today are a reflection of growth and of whatever inflationary expectations may be.
What had happened prior to this administration -- and I remember very well, because at that time I was on Wall Street and I was very involved in markets -- was that the markets always attached a very large premium to long-term interest rates, because they felt our society would not have the discipline to work its way out of the deficit in any way other than inflation.
When they saw our program and began to see evidence of it actually before it was adopted, they took it seriously, and I believe what the markets did was to say, we are now on a different track. And so that deficit premium came out of long-term rates -- in very large measure; not fully, but I think in very large measure.
So I think we're in a situation today where, over time, long-term rates will be consistent with solid growth. And that change makes an enormous difference in the economic future of this country.
Q: Mr. Rubin, if the economy is not overheating and there's no signs of inflation accelerating, why should the Federal Reserve be attempting to slow down economic growth by pushing up interest rates?
MR. RUBIN: Well, we never, as you know, comment on the Federal Reserve. We have enormous respect for their independence. And I do believe that their independence is very much a part of the credibility of our markets which, in turn, is very important economically.
Let me just go back and comment on what I commented on before. If you talk to people around the world -- and I do that because of my job -- I think you will get an almost universal view, that while there may be some small increase in inflation due to growth, that none of them see signs in their businesses of any significant increase in inflation. They expect inflation to remain at moderate levels for the foreseeable future.
Q: This is follow-up to Helen's question. I do talk radio; and when you release these statistics, people don't believe them. The question is, how do we arrive at them? Are they full-time government employees, are they political appointees? Who actually collects the statistics? And that's a question I get constantly.
SECRETARY REICH: The Bureau of Labor Statistics collects these statistics. These are high-level, full-time government employees. They are shielded from politics. I don't know if you remember during the 1980s, they guarded their independence, they still guard their independence. These surveys are very carefully done. They are sealed. We don't see them until the morning of the release, and again, I can attest -- and others who are outside the government can attest -- to the independence of the Bureau.
Q: I'm just wondering if you think that the administration will ever get any credit for the economy until the real economy -- family incomes and standards of living -- and all the things that you really campaigned on changing, improve? I mean, you didn't campaign to just boost Wall Street or to, you know -- you campaigned to change the way people experience the economy, and that hasn't changed. Do you think you can't get any credit until it does?
SECRETARY REICH: There are signs that it is beginning to change. That is, we see that, again, most of the net new jobs are paying better than average wages. Unemployment is going down. We're creating new jobs. Now, how long will it take, you are asking, for the average working American to actually feel these changes.
In 20 months can we count on everybody feeling the changes? Well, I hope we can. I think we're moving as fast as we can on the agenda that the President set out in his first budget -- moving from spending to investing; and education training; and other sorts of investments; getting the deficit under control; getting the economic house in order. Is 20 months enough time for everybody to feel it? Well, again, I don't know.
Q: But you don't think it's puzzling that people don't feel the economy is getting better? I mean, you think there are good reasons for it -- or, they should be giving you more credit than they are?
SECRETARY REICH: Do you want to take a crack at that Bob?
MR. RUBIN: Yes, I'll give you one person's opinion. I agree with what Bob said before -- if you have 15 or more years -- as Bob's people can document, where most Americans have had stagnant or falling real wages -- it's not surprising that it's going to take time for people to feel better.
But I do think this. I think that the key is to continue to do the right things and to keep the economy growing --and in time, I think that feeling will spread. Having said that, I also think there's a period -- as Bob said earlier -- of enormous change. And change inevitably brings anxiety. And I think one of the powerful things the President has said really is, this is a period of change, we need to face it and deal with, rather than shy away from it. But change inevitably brings anxiety. I think it will take time for people to feel more secure about the economy -- what Bob called "the new economy."
One final comment. There are people who feel actually that there has been -- although you are correct -- a lot of people don't feel it -- that when you look at people's anxiety indexes, and what they're most worried about, as the economy used to be number one on the list, now there are other things that are number one on the list. In a perverse way, without getting credit for the economy, we seem to have lowered where it ranks on the list of peoples anxieties, which, I think, is a product of the economy being better.
Q: May I ask one off-beat question? You're now in charge of health care -- or, you with Carol Rasco --
MR. RUBIN: With Carol --
Q: Do you have a new plan? Have you started work on a new plan? Where do they go from here?
MR. RUBIN: What you've had is two years during which this enormously important social problem has received, I think, extremely good attention. And the result is that, I think there's been a tremendous advance -- both in public understanding and in the understanding of policymakers with respect to this issue. And I would give the credit to that to people like Hillary and Ira.
Having reached the point where we've reached, it was felt -- and particularly Hillary and Leon Panetta -- the people that developed this idea -- that we could now move this into a regular policy process; like we do everything else around here.
Carol and I are co-chairing that -- she being head of the DPC and my being Coordinator the National Economic Council. And we have begun a process now of analyzing the issues and working toward where we're going to come out with respect to health care. But we're in the early stages of that process.
Q: You're not going to have a 1,300 page plan to present to Congress, are you?
MR. RUBIN: I think that's probably right, but -- I think that's probably right, but I don't -- I think that's --
Q: Are you going to start from scratch? Beyond public awareness, I mean.
MR. RUBIN: We have a tremendous reservoir, if you will, of work that's been done. We basically have the work, now we can go through the regular policy process and work toward putting this together in whatever way makes sense in this environment.
Q: One idea you seem to be emphasizing now though is that the administration's primary concern next year is keeping the deficit under control, and that health care is just now one of the other items on your legislative agenda. How does that square with your concern the past two years that in order to really ever receive true deficit control, you have to have comprehensive health care reform? Can you do it in an incremental fashion?
MR. RUBIN: I don't think I agree with the premise of the question. I think deficit reduction is one emphasis, training and education are absolutely -- as Bob said -- are absolutely critical if the American people are going to be prepared for a modern economy. The President believes deeply, as you know, in health care reform. So I don't think that our emphasis has changed. There may be changes in the way we get to achieve the objectives that we have, but I don't believe there has been a change in our objectives.
Bob, do you --
SECRETARY REICH: No, indeed. I think that the headline here, from our standpoint, is the economy continues to improve; people continue to get more jobs -- they are good jobs; it is steady as she goes -- both in terms of our economic policies, but also in terms of our overall approach.
Just -- what I was saying something a moment ago -- I do think though, that in times of anxiety about stability of jobs, brought on because of technological change -- there is a choice that the public has. You know, we can either scapegoat immigrants or foreign traders or government or whomever else people want to scapegoat, or we can acknowledge that the core issues have to do with getting our economic house in order, continuing vigilantly to worry about the deficit and also to invest in people, in their capacities to be fully productive citizens in this country.
I think the choice is very clear. That's what this Tuesday is all about.
Q: Mr. Panetta seemed to suggest last week, in an interview with wire service reporters, that the FY '96 budget, now under preparation, would be similar -- or just like the FY '95 budget, now in operation -- which would suggest that there will be no significant deficit reduction element to it. Is that the current thinking of this administration, that you will sort of follow the track established by the 1993 reconciliation bill, and that you will not have a large, new, significant deficit reduction element to your FY '96 budget?
MR RUBIN: Well, I didn't see Leon's comments, but let me respond this way.
We clearly need to make the very difficult cuts that will keep us on the track that was established with the caps that were put in on the discretionary side of the budget. And that, we are committed to, and we will do. Beyond that, our budget process is in relatively early stages, as you know, and won't reach a conclusion until the end of December. So I think, beyond that, there really is nothing I can comment on.
Q: Is that a decision that would have to be made at the very early stages of your budget preparation? Because if you're going to have a new significant deficit reduction element, you either adopt some of the cuts or taxes that perhaps, the Rivlin memo talked about -- or you have to start plugging that at the beginning, don't you?
MR. RUBIN: Let me save you some trouble. The answer to the question -- no.
I think that, as I said before, we will certainly keep on the track that was consistent with the caps. But beyond that, we have to go through our budget process right now, and at the end of our budget process, we will reach conclusions to what we're going to do.
Q: I have another question on the health care element. You've been asked about -- it's been suggested, perhaps, that you're waiting to see the composition of Congress after next Tuesday's election, to have some sense of what kind of package is politically feasible in the Congress next year. Do you folks have a meeting -- the people who are going to be running health care -- do you have a meeting set for immediately after the election to begin moving this on a more rapid pace?
MR. RUBIN: Well, again, I think I would take issue a little bit with the premise of the question. I think we need to work through health care in a very serious and thoughtful way, and that's what we're going to do. But we've had some meetings, we will have more meetings and they're not scheduled in relation to the election.
I think we actually have some meetings coming up next week, but we've also had some meetings thus far. You know -- we meet.
Q: As Helen pointed out today, the long rates have gone up another notch to 8.1 percent today. They look like they're going to stick there, so this is another new high for the administration. The U.S. had to step in this week on two separate days and rescue the dollar -- looks like a switch in your dollar policy. The market is looking ahead. A little nervous by virtue of the fact the deficit's going to start rising in this next 12 months. So, put that all together, it's not according to a game plan you had devised, is it?
MR. RUBIN: Well, I think I'll say the same thing I've said since we've started this administration -- and, understandably, every time we have a press conference, the press people always ask you about whatever the market happens to be at the moment, and those are understandable and good questions.
And my answer always is that what we do is, we take a look at what we think is going to happen over time, and I think that's really the base on which we should do things. I also believe, having spent 26 years doing this stuff before I got here, that, over time, markets will reflect what is, in fact, happening in the economy, and I think the economy is very much on the track that we had hoped it would be on, which is one of solid growth and moderate inflation.
Q: It's not also -- toward higher interest rates and a weaker dollar?
MR. RUBIN: Well, you're asking me to predict the future. I think I'll stick with what I just said. I think that we will have markets reflecting fundamentals, because I think that's just what markets do, and I think the fundamentals are most likely to be quite favorable -- so long as we keep on the right policy track. I think Bob said it very well -- you've got an election coming up Tuesday, and I think it's just critical that this country remain on the right track and address these issues and continue playing the strategy that's in place.
Q: The other thing is, is that some economists this week have said that the other side of long-term rates is foreign investors' fears of investing in the United States; they don't see it as a good place to invest, and that has helped to drive up long-term rates.
Now, one thing they said that they're looking for is firm commitment on the part of the administration. They said they've seen that more in the last few days, but people are still looking for the administration's commitment on the dollar. You guys say you want a stronger dollar, but how much stronger? I mean, where do you want it to go?
MR. RUBIN: Well, as we have said on this issue many times before -- before we came into office, we all agreed that we would only have one spokesperson on the dollar, and that's Secretary Bentsen; you've got it. And there's a good reason for that.
Q: You're here.
MR. RUBIN: I know I'm here. I used to trade Foreign Exchange; I actually know something about it. Foreign exchange markets tend to be very sensitive to what people say, and our thought was, let's have one spokesperson, then we don't have a confusion of signals.
The Secretary has said, as you know, many times, we believe a strong dollar is in the best interest of this country, and that we will not use the dollar as an instrument of trade policy.
MR. JONES: One more question.
Q: Mr. Reich, Republicans are saying, yes, the economy is growing, but if you elect us -- Republicans -- the economy would grow so much more. What's your reaction? (Laughter.)
Q: Do you agree or disagree?
MR. REICH: I disagree with that proposition, but let me tell you why. The American public saw the results of trickle-down economics. Most Americans -- average working Americans -- saw upon whom the trickle fell. (Laughter.) It is not difficult for Americans to make a choice between joblessness, huge indebtedness, trickle-down economics that really was a matter of the rich getting much richer and most Americans continuing to slide and the kind of path we're on now, which is deficit reduction, investment in people, more jobs and better jobs. That's not a difficult choice. And the Republicans who try to say with a straight face that they could do it better than we're doing, unfortunately have a record prior to 1992 to run on. Thank you.
THE PRESS: Thank you.
END 12:14 P.M. EST
William J. Clinton, Press Briefing by Secretary of Labor Robert Reich and Assistant to the President for Economic Policy Bob Rubin Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/269518