Remarks to the United States Chamber of Commerce
Thank you, ladies and gentlemen. I want to thank Bill Kanaga for those kind words and commend you on the fine job that you've done as chairman. And I also want to congratulate the chamber's incoming chairman, John Clendenin, and of course say hello to the chamber's long-time president, media star -- [laughter] -- household word around DC, Dick Lesher. What a job he does for the chamber!
And I also want to thank the chamber for providing me a chance to deliver a May Day message, American style. On May Day, I always think about the celebration in the Soviet Union -- all those red banners, the big military parade. Even the Economic Planning Ministry had a unit in the parade: 200 economists marching along yelling, "May Day! May Day!" [Laughter] Today that is beginning to change. Even the Socialist world is beginning to see that socialism isn't just another economic system: it's the death of economics. And there is a new breeze blowing. Nations the world over are coming to realize and recognize that free enterprise is the wave of the future, and that's a promising forecast for prosperity and for world peace.
In the United States -- let me just say in that regard, though, whenever in the world there is economic reform, the United States should be hoping that that reform succeeds. Economic reform, with its emphasis on incentive and market economics, leads to more freedom. You know, I made clear to Mr. Gorbachev up there in New York -- Governors Island, when we met -- that we wanted to see perestroika succeed in the Soviet Union. And likewise, we want to see success for the economic reforms in China. Incentive, economic reforms, market economies, private ownership are indeed replacing Socialist dogma in many countries, large and small. And that is an exciting trend, and in my view, it will continue.
In the United States, the single most significant economic indicator of this decade is up today. We've enjoyed 77 full months of the longest peacetime economic expansion in American history. Without a doubt, this long-running economic expansion has been good for American business and for the American worker. In the past 77 months -- and the chamber has been very helpful getting this message out -- we've added nearly 20 million new jobs. And more Americans have moved up on the pay scale. Since 1982 the number of jobs paying less than $5 an hour is down 25 percent, while jobs paying $10 or more an hour have increased by 95 percent. Unemployment is at its lowest point in the past 15 years. During the economic expansion, America's industrial output is up 33 percent, overall growth up 26 percent. For those with an eye on the international competition, that's more than double Europe's industrial output growth. And the expansion has been just as good to the average American family. Per capita personal income is up 19 percent, and that's take-home, after-tax pay, adjusted for inflation. Real median family income has reached a new high, and that's quite an economic success story.
Our challenge now is to keep it going. We can, and we will. We've all heard the nay-sayers. I think there are a few out there whose predictions of economic disaster are now in their 78th straight month. [Laughter] And the nay-sayers are wrong. But why? What they've underestimated is the resilience, the remarkable responsiveness of the free enterprise system. And you can focus on government so long that you forget that it's the private sector that's home to the innovation and the economic creativity that powers this expansion.
I've been a small businessman, starting out with an idea and then working with others and building it into a successful business. And I know the risks and the rewards and the payoff in pride when you succeed. Entrepreneurs know this simple truth: nothing wagered, nothing won. And that's why I want a government that prompts entrepreneurs to take risks, not a government that forces them to take refuge. That doesn't mean that government's only job is simply to stand back and step out of the way. There's plenty for the Government to do to make sure commerce is free and fair and to maintain a climate where free enterprise can take place and prosper.
And today the Federal Government's number one economic priority is dealing with the deficit. We've made a good start. The budget agreement Congress and my administration concluded 2 weeks ago can keep the Federal deficit below the Gramm-Rudman target. And we haven't sacrificed our social or national security responsibilities in the progress. The budget level we've agreed on will allow us to discharge the critical duties of government. We'll be able to provide for our national security, meet the needs of the disadvantaged, and fund high-priority programs.
Our agreement is a first, important step. It sends a signal to the American people and to our trading partners: We're serious about getting that deficit down. And the deficit is coming down not only in straight dollar terms but as a percentage of our annual gross national product. You know, by the end of this fiscal year, we will have cut the deficit in half, from 6.3 percent of gross national product in 1983 to an estimated 3.1 percent in 1989. I urge the two Houses of Congress to pass the bipartisan budget resolution so we can keep the deficit coming on down.
One word more about the budget agreement for 1990. We've agreed to $5.3 billion in new revenues as part of the deal. And let me say a word about that $5.3 billion. I mean to live by what I've said: no new taxes. And let me tell you what my favorite source of new revenue is -- three guesses for this crowd. We don't have to raise taxes; we have to release the energies of free enterprise. In a growing economy, tax revenues will take care of themselves. In fiscal 1990 alone, thanks to the expanding economic activity, the Treasury will take in more than $80 billion in increased revenues not through higher taxes but under the existing tax structure -- $80 billion more in 1 year.
So, let's not be hunting for ways to wring another dollar in taxes out of our economy. Let's concentrate on creating conditions for continued growth. And that's why I've called on Congress to restore the capital gains differential. I am absolutely convinced that in 1990 alone this step would bring an extra $4.8 billion into the Treasury, and that doesn't count increased economic activity that is spurred by a lower tax rate. That $4.8 billion is the lion's share of the $5.3 billion we need in the way of new revenues under our budget agreement.
Let's take a look at what our competitors are doing. Canada's maximum capital gains rate is about half of the U.S. rate. And how about Japan's rate? For entrepreneurs who built their businesses from scratch, a scant 1 percent. West Germany exempts all long-term capital gains on securities from any tax whatever. And the newly industrialized economies of the Pacific Rim -- Singapore, Hong Kong, South Korea -- have no capital gains tax at all. Among our competitors, those low rates contribute to low capital costs. Cutting our own capital gains rate would encourage productive investment in addition to generating the new revenues that we need to meet our deficit reduction agreement.
I think the case for a capital gains cut is a strong one, but there are several other economic issues that I want to discuss here today. First, a pressing problem with important consequences for our long-term fiscal health, and that is the S&L situation -- savings and loan. This administration recognized the immediate need to take action to stabilize the S&L system, and less than 3 weeks after taking office, we proposed a comprehensive S&L reform plan, one designed to stop the dollar drain and deal with the insolvent thrifts and restore confidence in the S&L system. The Senate passed an S&L package with a resounding majority. I think it was 91 - 8. I urge the House to move quickly to give us the tools we need to reform the savings and loan system by passing my bill quickly, with its central provisions intact.
Now, I have a second message for the Congress as it debates an increase in the minimum wage. I've indicated my support for increasing the wage over 3 years to $4.25 an hour. I also want to establish a 6-month training wage for new workers at the current $3.35 rate and expand the exemption for minimum wage requirements for all small businesses with annual sales under a half a million dollars. It's time for those who want a higher wage to move out beyond the rhetoric and take a look at the consequences. We all know the studies that show that each 10-percent increase in the minimum wage will cost America between 100,000 and 200,000 jobs, and they're jobs for those who need them the most. What happens when minimum-wage workers open that pay envelope expecting a fatter paycheck and find a pink slip instead? An irresponsible increase in the minimum wage will cost jobs, as employers cut back to compensate for increased costs -- $4.25 is as far as I can go. It is my first and final offer, and I repeat that here today.
We must guard against conferring benefits by government mandate and leaving employers to cope with the costs. I share your concerns about legislative efforts to mandate medical and parental leave. I also believe that choice in child care is best made by parents and not by government. And I know, because I've talked to Dick Lesher and others, that the Chamber supports the concept of choice. There are some child-care initiatives up on Capitol Hill -- well-intentioned, I would readily concede -- well-intentioned initiatives that would increase government intervention and crowd out parental choice.
You know, as I look at government, I feel an obligation to look at every piece of legislation to see that it strengthens rather than weakens the family unit in this country. Now, cost is yet another issue. We're determined to hold the line on government spending, so it is important that money allocated for child-care assistance goes for child-care assistance. Under the ABC bill, for example, much of the money would be used to set up another Federal bureaucracy instead of getting financial help directly to parents. The child-care tax credit initiatives that I've proposed do preserve choice, letting parents decide whether to place their child in the care of a relative or in a church-run center or in a public day care facility or in their own home. Let's let parents decide what's right for themselves.
And finally, I'll close with a brief comment on an issue I know is vital to those of you here today -- vital, in fact, to all Americans in our evolving economy -- and I'm talking about international trade. The global economy is a fact of life. It is no longer possible to draw a sharp line between domestic and international markets. This administration is committed to securing an open and fair world trading system because fair trade provides opportunities for America's competitiveness to come to the fore. We have the ingenuity to be preeminent. We have the drive to succeed. Entrepreneurs like you are our ace in the hole. Our challenge, then, is to make the most of this competitive edge.
And that's why we will work vigorously to break down barriers abroad while keeping markets open here at home. If any country, including the United States, is fooled into thinking that a closed market can be a prosperous one, they're wrong. Closed markets mean closed doors to opportunity, and that means less prosperity. The Chamber of Commerce has always stood for economic freedom, and I know you share my view that there is no surer route to prosperity and progress than the system of free enterprise.
The message of the past 77 months is clear: We can keep the economy strong, sustain the longest peacetime expansion in American history, and ensure America a prosperous and productive future, provided that government policies preserve the greatest possible freedom for American enterprise to innovate, to create, and to compete. I am pledged to those goals.
Thank you. God bless you all. And God bless the United States of America. Thank you all very much.
Note: The President spoke at 10:20 a.m. at DAR Constitution Hall.
George Bush, Remarks to the United States Chamber of Commerce Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/263329