Press Briefing by Secretary of Labor Robert Reich and Secretary of Education Richard Riley

Carl Sandburg Community College

Galesburg, Illinois

1:47 P.M. CST

MS. TERZANO: Secretary Reich and Riley will be available here to answer questions. There's no opening statements; they're here to answer questions on the record and for camera for you. And Secretary Reich has a 2:00 p.m. meeting that he needs to go to, so this will be fairly brief.

SECRETARY REICH: So any questions anybody has, we will dispense with any introductory statements, but please fire away.

Q: The skills program being announced today -- I should remember this -- is there new money being asked for in that, or is it essentially old money? The President talked about it just in telescoping a lot of existing --

SECRETARY REICH: The President's budget, as you know, comes out on February 6th. I can only say at this point that the President will be asking for some additional funds, in addition to the job training, the consolidation of jobs that are -- job-training funds that are already there.

Q: This morning a number in the realm of -- was it $3.5 billion was talked about. Does that include the --

SECRETARY REICH: I'm sorry, just because I'm not able to talk about the budget that's going to be presented on the 6th, but let me just say that the bulk of the funds obviously come from consolidating job-training programs. And the President will be asking for somewhat more, simply because of the scale of the problem is so great. We want to make sure that the delivery system is efficient. We want to empower individuals to get the skills they need. But the universe of people who need those kinds of skills is extraordinarily great.

Q: Secretary Reich, the size of that program now -- the aggregate size of the 60 programs would be what in dollar terms?

SECRETARY REICH: I don't have the figure right in front of me. The aggregate size is in the order of $12 billion. But let me -- I want to check back with you, because the GAO estimate included a lot of programs like vocational rehabilitation programs, veterans programs, small business programs -- training programs -- that have nothing to do with job training. So I want to make sure that we have the right figure for it.

Q: Secretary Reich, is this program being proposed as an alternative to the Republican program, or is it a signal that the President is seeking a compromise in terms of job growth -- the same positions that are currently being espoused by Mr. Gingrich and his colleagues in the House and Senate?

SECRETARY REICH: There's a fundamental difference between the President's approach to raising the incomes of hardworking American families and the Republicans' approach. The Republicans are talking about capital gains tax reductions, including capital gains tax reductions on assets already owned. They are pushing what they call a neutral cost recovery tax break, which is a very rich depreciation allowance which will cost upwards of $160 billion over the next 10 years. Those and a few other proposals form the core of their efforts to build jobs.

The President's approach is very different. The President is saying, in effect, look, the best way of rebuilding America's middle class, given that there has been a profound shift of demand in favor of skilled workers and against people who don't have the education and skills necessary for this new economy, is to give people the wherewithal to get the skills; to empower people directly. Not empower the masters of physical and financial capital, but empower individuals to be their own masters in the next economy.

Q: Mr. Secretary, using the scenario the President described in his speech today, and also in the meeting earlier, with Maytag, needing skilled workers and not finding them in the work force, would get them by having the federal government provide vouchers so the workers can buy the training -- why should the taxpayers pay for the training that Maytag needs to give its workers?

SECRETARY REICH: There's a very substantial difference between the kind of training that individual companies give their workers and the kind of training that workers need to get for themselves. Individual companies provide very companyspecific training. Companies do not want to train their workers in skills that are applicable to their competitors, for the simple reason that anybody who gets those skills can walk down the street and get a good job with a competitor. There is no incentive for an individual company --

Q: the kind of training the company would give would not be good enough, and therefore, the taxpayer should foot the bill?

SECRETARY REICH: No, they're completely different. The kind of training that companies provide -- let me just repeat this because it's a very important point -- the kind of training that companies typically provide their workers is companyspecific training that is not applicable to their competitors for the very and simple and logical reason that there's no incentive for a company to train workers in general skills that those workers can take anywhere. The kind of training that workers need to get better jobs, and often to have the kind of flexibility they need in this new economy is more general training -- the kind that they can get at a community college, like this.

This is what -- not to get too highfalutin about it -- this is what economists would call a market failure. If the companies could all get together in industry, if we didn't have to worry about antitrust collusion -- which we do -- if companies could get together in industry and the companies altogether in industry could say, yes, we need trained workers in this industry and let's all chip in to buy the training for this industry -- yes, maybe then you'd have industry-specific, as opposed to firmspecific training going on.

But for a variety of appropriate reasons, we don't allow companies to get together and collude -- we don't want companies to get together and collude. So these are complementary policies. We want companies to train their workers. Companies need to do more firm-specific training. They're not doing much -- as much as they need to do. Only 35 percent of American workers are getting any formal company training at all, and most of them are college educated. But in addition, American workers need to be empowered themselves -- to get training that no company has an incentive to provide.

Q: Mr. Secretary, I thought that former Treasury Secretary Bentsen had distanced himself from your remarks on corporate welfare before, and I noticed that you repeated some of them today. I wondered if this is an administration proposal you're talking about, or is it something you're pursuing on your own?

SECRETARY REICH: Let me just say that there is a profound difference between the approach that the President is taking and the approach that the Republicans are taking toward rebuilding incomes. We already have got the great American job machine started. We spent two years getting the budget deficit under control; getting more than five million jobs. And those are, on average, good jobs, paying well. The problem is that the 110 million old jobs are splitting between a few that are very good, but a majority that are not so good.

The Republicans want to provide tax breaks to companies. We want to provide tax breaks to individuals and also skill grants to individuals to get the skills they need to flourish in the new economy. That is the difference.

Q: Does the administration oppose a capital gains tax then?

Q: Can you go over the examples of the programs that are being folded in -- the more significant programs that are being folded in to pay for the vouchers? I also want to be clear on what happens to those programs? Are their old functions -- they no longer exist?

SECRETARY REICH: Our proposal would be to take a lot of the -- many of these individual programs -- there's a Clean Air Act program, retraining program, for workers that may lose their jobs because of environmental regulations. There's a defense diversification program, another defense downsizing program. There is the JTPA Title 2 A program for adults. There is the JTPA Title 3 program, which is basically your general dislocated worker program. There are several programs in the Education Department. And I could go through a long list of programs, and I don't have the entire list in front of me.

The point is, it doesn't matter why you lost your job. If you lost your job, you should be able to get skills necessary for the next job.

Q: over, or simply won't exist anymore? I just want to be clear on that. Under the old format --

SECRETARY REICH: Yes, our proposal is to consolidate all of these and provide the resources in terms of skill grants.

Q: Secretary Riley, under the individual education account, sir, how much can people -- how much can students borrow from these low-cost loans? What's the cap on it? What kind of interest rate are you talking about?

SECRETARY RILEY: I don't think that that's been identified. You're talking about how the -- you're talking about the --

Q: Individual education accounts -- student loans.

SECRETARY RILEY: Yes. Well, in the direct student loans, you can -- it depends on the cost of the school and the number of children in the family that gives the level that you can borrow up to. In other words, if the school is a lot more expensive, under the current formula, you can borrow more money. So those two factors really control the amount that you can borrow.

Q: So this is not a new program, this is just the same programs that are --

SECRETARY RILEY: Yes, the direct student loan is the same program.

Q: Secretary Reich, do you support the idea being floated in Washington today by Gephardt for a flatter income tax code?

SECRETARY REICH: I would have to now more about the program. I don't think that there is any administration position on that yet. We would just have to look at it very carefully.

Q: Secretary Reich, I've heard many reasons why you guys came to Central Illinois to announce this Bill of Rights, but one other thing that hasn't been addressed and that is, in Central Illinois there are many labor disputes going on. Is it the government's intent to intervene in any of those disputes, and if not, why?

SECRETARY REICH: I'm going to meeting with several labor leaders very shortly. Let me say a few things about that. The federal government provides mediation services and we encourage collective bargaining. The President, the Executive Branch, should not, in my view, ever get directly involved in a labor dispute. But we do want to encourage all sides to a dispute to use peaceful collective bargaining as the means of settling their dispute.

I'm encouraged that Caterpillar seems to be, once again, on that road. I am distressed about BridgestoneFirestone. In fact, Bridgestone-Firestone's decision to bring in striking replacement workers is the largest decision of its kind since the 1980s, since Eastern Airlines, Greyhound, International Paper, many of the major problems we had during the 1980s.

Now, I have personally asked that the president of Bridgestone-Firestone come in to visit with me to talk about the issue. I have talked with rubber workers, and the President of Bridgestone-Firestone, I regret to say, has denied my request -- will not meet with me. I consider this outrageous, quite frankly.

Japanese countries in this country have a sterling record of social responsibility, in general. Japanese companies in this country, like most foreign companies working in the United States, have gone out of their way to abide by our laws, our rules, to give every impression, both in appearance and reality, of cooperating with American citizens and American institutions. I do not for the life of me understand why this company is such an outlayer. We have had problems in other areas as well.

THE PRESS: Thank you.

END2:02 P.M. CST