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1 NATIONAL GOVERNORS' ASSOCIATION
2 79TH ANNUAL MEETING
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4 Bay Room Grand Traverse Resort Traverse City, Michigan 5
6 Sunday, July 26, 1987
7 The meeting convened at 1:15 p.m., Governor Bill 8 Clinton, chairman, presiding. 9
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1 NATIONAL GOVERNORS' ASSOCIATION
2 79TH ANNUAL MEETING
3
4 Bay Room Grand Traverse Resort Traverse City, Michigan 5
6 Sunday, July 26, 1987
7 The meeting convened at 1:15 p.m., Governor Bill 8 Clinton, chairman, presiding. 9
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1 PRO C E E DIN G S
2 CHAIRMAN CLINTON: Ladies and gentlemen, I now
3 call to order the 79th annual meeting of the National
4 Governors Association. I need a motion now from my vice
5 chair, Governor Sununu, for the adoption of the rules of
6 procedure.
7 GOVERNOR SUNUNU: Chairman, I move that adoption.
8 CHAIRMAN CLINTON: Is there a second?
9 GOVERNOR DI PRETE: Second.
10 CHAIRMAN CLINTON: Second from Governor DiPrete.
11 All in favor?
12 (Chorus of ayes.)
13 CHAIRMAN CLINTON: Opposed?
14 (No response.)
15 CHAIRMAN CLINTON: We can now begin.
16 I would like to announce at this time that any
17 governor intending to offer a motion of suspension of the
18 rules for the purpose of introducing a policy statement for
19 consideration at Tuesday'S plenary session must do so in
20 writing by close of business tomorrow. If governors have
21 substantial amendments it would be appreciated if they were
22 also made in writing. Please give copies of all suspensions
23 and all amendments to Jim Martin of our staff.
24 Before we begin our formal business, ladies and
25 gentlemen, I would like to ask, on behalf of all of the
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1 governors, if we could observe a brief moment of silence in
2 memory of the distinguished Secretary of Commerce,
3 Mr. Baldridge, who had an unfortunate accident and passed
4 away yesterday. If we could just bow our heads for a moment
5 of silence.
6 (Moment of silence.)
7 CHAIRMAN CLINTON: Thank you very much.
8 At this time I would like to announce the members
9 of the nominating committee for next year's executive
10 committee. They are Governor Moore, chairman; Governors
11 Harris, Bryan, Martin and Branstad.
12 Now I would like to calIon our distinguished
13 host, Governor Blanchard, to formally welcome us to the state
14 of Michigan.
15 Governor Blanchard.
16 (Applause.)
17 GOVERNOR BLANCHARD: Thank you very much, Governor
18 Clinton. Welcome to all of you, one and all.
19 Before I give you the official welcome, I would
20 like to indicate that another tragedy occurred yesterday here
21 when one of Michigan's finest, a state trooper of 20 years,
22 was killed right in Traverse City in a hit and run accident.
23 His name is James Boland. He leaves behind a family and I
24 would like to recommend a moment of silence in his memory and
25 sympathy and love for the family of James Boland.
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1 (Moment of silence.)
2 GOVERNOR BLANCHARD: Now I hope from this point
3 forward, on a more optimistic note and productive note, let
4 me welcome you all to the great state of Michigan.
5 Governors, their families, distinguished guests, those who
6 will be testifying and advising us on policies, friends from
7 Washington, California, Maine, friends of the news corps and
8 those who are part of the political community of America. We
9 are delighted you are here.
10 You can see, without my explanation, why we are
11 the Great Lakes state. You may not know, however, that the
12 Great Lakes represent 95 percent of the surface fresh water
13 of America. 20 percent of the surface fresh water on the
14 face of the earth. You have known of Michigan as a great
15 manufacturing state and a state with great urban centers, but
16 you probably hadn't seen this side until this weekend.
17 But there are other sides to our state as well.
18 It's a major agricultural state. It is a citadel of thriving
19 small businesses. We have more state-owned forest land than
20 any state in the nation, and more shoreline than any state in
21 the nation, except Alaska. We have great universities, great
22 institutions which serve people, and that means that we have
23 all the ingredients that you have in your states, as well.
24 The potential as well as the problems, great resources and
25 ideas and systems in leadership, but also challenges, whether
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1 it's the black child in Detroit who grows up without hope or
2 opportunity through no fault of his or her own, or the
3 challenges of education, or the laid off auto worker in
4 Flint, or the working mother in Grand Rapids, or the
5 struggling farmer in mid-Michigan or the miner in Marquette.
6 Like you, we have many faces, we have many faces.
7 But we have the resources if we work together, and
8 if we provide the kind of leadership that I am proud to say
9 the nation's 50 governors have done. Governors of both
10 parties who believe that government can be a force for good,
11 that we can innovate, that we can solve problems, that we can
12 deal with the challenges without becoming obsessed with
13 ideology. In that spirit, in that spirit, we will go forward
14 in these next few days, I am sure, to have a productive
15 session. In the meantime, I would like to give you again a
16 very special Michigan welcome. We hope you will enjoy your
17 stay and we hope you will come back real soon. Thank you.
18 (Applause. )
19 CHAIRMAN CLINTON: Thank you very much, Governor
20 Blanchard. In this year in which you have given me the
21 opportunity to serve as chairman of the National Governors
22 Association, I have asked all of you to work with me on
23 determining how we could do better to make America work.
24 Today we deal with one-half of the great project we have
25 undertaken together, the task force on jobs, growth and
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1 competitiveness, cochaired by Governors Dukakis, Baliles and
2 Branstad. The purpose of this work, which is embodied in
3 their report, which you have before you, was to develop
1 4 strategies and actions that state government can implement to
5 make our country more productive in the new international
6 economy, and especially to implement strategies in the
7 depressed areas of our country, which will generate more jobs
8 and more rapid economic transformation.
9 The task force talked with farmers in Iowa,
10 production workers in Ohio, scientists in New Jersey,
11 researched and analyzed the problems and the potential
12 solutions. This report indicates that there is a new
13 economic reality, with an optimism that the governors and
14 state government are doing much and can do more to lead our
15 people and our economy to new heights in the 1990s.
16 I released this report yesterday, along with
17 Governors Sununu, Governor Baliles and Governor Castle
18 speaking on behalf of the task forces, both the jobs, growth
19 and competitiveness report, and the barriers report. I am
20 pleased to see that it received prominent coverage in many of
21 the major papers in our country today. I have to tell you
22 that even though we don't have some of the interesting angles
23 of that important event, I think that what we are doing here
24 is probably more important to the future of this country than
25 what is going on in the Iran/Contra hearings. I hope all of
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1 you believe that, too.
2 We have today, to open our conference, a
3 distinguished American who believed that government and
4 business and labor could work together before it was popular
5 to believe it, who believed that America could compete and
6 win again, before it was evident to everyone else, and I want
7 to ask his governor, Governor Blanchard, to come back to the
8 platform to formally introduce to you the chairman of the
9 Chrysler Corporation, Lee Iacocca. Governor Blanchard.
10 GOVERNOR BLANCHARD: Thank you very much, Governor
11 Clinton.
12 We governors know that leadership counts. We see
13 it in state capitals, we see it in Washington, we see it in
14 the private sector, business, labor, universities, all around
15 our country. Nowhere has this been more evident than in the
16 life story of the man I am about to introduce. He needs no
17 introduction. I will tell you that he is the cochair of my
18 governors commission on jobs and economic development. He
19 is, as you know, the chairman and chief executive officer of
20 the Chrysler Corporation, a Michigan corporation. His name
21 is Lee Iacocca.
22 Lee.
23 (Applause. )
24 MR. IACOCCA: Thank you very much, Jim.
25 Congratulations on hosting this great conference here. By
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1 the way, when Blanchard talks to you this week you better
2 listen. He got 68.5 percent of the vote last year.
3 But, seriously, thanks for coming up and helping
4 us celebrate 150 years of statehood. I might say it's also
5 good to see many other friends here, Governor Jim Thompson,
6 Governor Celeste, Governor Orr, Governors Castle and
7 Ashcroft. Maybe you have noticed, but wherever I have got a
8 plant, I know the governor, and I mean very well. My good
9 friend Governor Cuomo. I not only have a plant in his state
10 but he once offered me a job as head of his transit
11 authority. I won't go into why, except that it's something
12 to do with the fact that Mussolini got the trains to run on
13 time, so why not me. It's obvious today he couldn't get the
14 planes to run on time, because he didn't make it.
15 But I am truly honored that you asked me to be
16 part of this meeting, even though I have to say I seldom work
17 on the Sabbath, but I couldn't refuse. First of all, there
18 is a very good chance that someone in this room may be a
19 future president of the United States, and I wanted a shot at
20 him early. In fact, the odds are really pretty impressive,
21 because I looked these up personally. Did you know that 16
22 governors have gone on to become president, 17 if you count
23 Taft, because he was the governor of Cuba for a while.
24 Then 35, in 35 of the 50 presidential elections we
25 have held in this country, at least one of the candidates was
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1 a governor or former governor. Now, when I looked this up I
2 thought to myself, I don't know why you people have such a
3 burning desire to trade in a good job for a lousy one, but
4 that's your business.
5 I guess the real reason, though, so many governors
6 get to be president is because being governor is a great
7 training job for the country's top CEO position. You all
8 know what it's like running a big organization, meeting a
9 payroll, trying to keep the customers happy; and, most of
10 all, you happen to know what it takes to balance a budget.
11 Every governor balances his budget, and all but one state, by
12 law, and that's Vermont, and they do so well they don't even
13 need a law, I will have to say, though, that some governors
14 seem to forget everything they learned while they were
15 governing once they get to Washington, especially the part
16 about balancing budgets. They always seem to blame it on
17 defense, of course, or the Congress. I think we are getting
18 used to the idea in the country that defense is something we
19 really need, but something we don't have to pay for. We just
20 sort of put it on the tab as we go along. As for Congress,
21 the current fashion in Washington seems to be to pretend that
22 it's just not there.
23 Something else that certain governors seem to
24 forget about when they go to Washington is competing, which
25 is ironic, because it looks like competitiveness is going to
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1 be the big issue in next year's presidential election.
2 So I want to talk about competing for a few
3 minutes today, and then and this is really a big
4 announcement -- I am going to tell you who I am going to vote
5 for in that election and why.
6 First of all, I know that I am preaching to the
7 choir here today in a way. You discovered, as governors,
8 competitiveness long before it got to be the popular buzz
9 word that it is today. Your states and the programs for a
10 long time designed to attract new industries and support old
11 ones. In fact, four of you in this room covered me for $207
12 million in loans that helped Chrysler survive a couple of
13 years ago. And, things like that, well, you never forget
14 them, naturally. But today, I see 50 states fighting, really
15 fighting for jobs. But a funny thing, I don't see that same
16 kind of fighting spirit in Washington. I see 50 subsidiaries
17 doing a decent job, but, truly, you are not getting much help
18 from the home office. And every state seems to have a
19 foreign trade policy, with missions going allover the world
20 to increase exports and attract new jobs.
21 But I have looked for a long time now, and I
22 really cannot find an American trade policy. I cannot find a
23 policy in Washington with the same determination to compete
24 in the world.
25 Maybe it's simply, because you people here are
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11 closer to the problem. You see first-hand the human
2 tragedies that come from an America that seems to be losing
3 its competitive edge. You live up close with the realities
4 of a ghetto or a mill town where the mill just closed. You
5 have to, because over and above the human suffering, your tax
6 base changes every time you shutter one of them.
7 I couldn't help but notice over the years that
8 there just aren't many idealogues in state houses, and I have
9 known a lot of you for a long time. Hell, you have got to
10 get the damn trains to run on time. But there are plenty of
11 practicing idealogues in Washington, not in Lansing, not in
12 Columbus or Springfield or the other state capitals. I don't
13 think many of you tuck yourselves in at night reading Adam
14 Smith. 18th century economic theories don't help you to
15 explain to your constituents why the local steel mill is
16 going belly up next month.
17 As governors, you have got to be pragmatic, you
18 have got to govern, you have got to solve problems and you
19 have to solve them today. Some of you really got pragmatic a
20 couple of years ago when the GM Saturn plant was up for
21 bids. Anybody in the room remember that? You fought like
22 tigers. You tried to outgun each other with free land, free
23 training programs, free roads, low cost energy, tax
24 abatements, you name it, anything it took.
25 I thought to myself, this is really strange.
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1 Nobody in Washington is fighting for American jobs, but we've
2 really got the states fighting among themselves for those
3 jobs. By the way, I have to add at the same time, I saw our
4 old labor unions resisting productivity changes in myoId
5 plants but cutting any deal, any deal it took to represent
6 employees at a new plant financed by foreign capital.
7 Well, the sad fact is that you may be competing,
8 but without a coherent national policy and without the same
9 commitment in Washington that you people have, you are
10 competing for pieces of a smaller and smaller pie. I am
11 afraid, as an American now, that one of these days you are
12 going to find yourselves fighting over crumbs.
13 Let me tell you what we are up against as a nation
14 right now. This is a quote from Oturo Harasumi. He is a
15 prominent member of the Japanese diet, and he is talking to
16 an American reporter when he says this. He says, "Japan is
17 not going to change." That's straight English, right? "We
18 love to work hard and Americans don't. The result is that we
19 will continue to work hard and amass huge surpluses of
20 money. We will buy up your land, and you will live there and
21 pay rent, but we won't go to war. We won't destroy each
22 other, but we are condemned to live together."
23 Gee, that kind of takes your breath away, doesn't
24 it? I learned early in life how to read between the lines,
25 believe me. What I read between those lines scares the
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1 living hell out of me.
2 Hard working Japanese against lazy Americans,
3 America as a nation of renters leasing back our country piece
4 by piece from the Japanese landlord, the two peoples merely
5 condemned to live together as though something a little
6 higher, like mutual respect is no longer possible. Is that
7 the kind of world we are going to hand off to the kids? I
8 don't really think so.
9 Mr. Harasumi has a lot to learn about Americans if
10 he thinks that scenario will ever play out. But I can
11 understand why he thinks it's coming.
12 Look at this. You probably saw this, I hope you
13 did. This is a full-page ad that a big Japanese conglomerate
14 took out in the New York Times just a couple of months ago to
15 brag that it had just "a landmark year." "It has awed U.S.
16 industry by snapping up $1.8 billion in real estate in a
17 scant 12 months," including some buildings you know of, the
18 Arco plaza in L.A., the ABC building in Manhattan, and the
19 kicker line in here, they say "stay tuned for future
20 developments because the best is yet to come."
21 They really know how to rub a guy's nose in it. I
22 will say that for them. A lot of Japanese made a fortune
23 exporting to the United States when the yen was $2.50. Now
24 that the currency finally has flip-flopped, some are taking
25 those windfall profits at $2.50 and buying American real
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1 estate at $1.50. Why get mad, I think they got a hell of a
2 bargain both ways.
3 Well, the Japanese always talk a good line on free
4 trade, of course, but when our construction companies wanted
5 to bid on the new airport in Osaka -- you know all about that
6 the Japanese said "no, no, no, you don't understand the
7 soil conditions here." When our steam manufacturers wanted a
8 piece of the action in Japan, they were told, "no, no,
9 Japanese snow is different from American snow." Is that
10 their idea of free trade? I have got to back off here a
11 minute. I really hate to pick on the Japanese, but they give
12 us such great material to work with, I can hardly help
13 myself.
14 Well, I think we are spinning our wheels in a
15 bunch of theoretical debates, when we really need to cut
16 through all the fog and get down to the business of
17 competing. We have run up a cumulative trade deficit since
18 1980 of almost $700 billion. That is one hell of a lot IOUs
19 out there. While we have been debating, we have been losing
20 the economic war. Like anybody who does that, when you lose
21 a war, you have got reparations to pay. We only have a
22 couple of options available to pay those reparations. Think
23 of it; we could default, but I don't think that's American at
24 all. I think that's unthinkable. Maybe it's an option in
25 South America, but not here.
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1 Two, we could start the printing presses and
2 inflate the currency, and maybe hope that we inflate it
3 enough to pay back the debt at 50 cents on the dollar. That
4 cure is worse than the disease, Germany tried it in the '20s;
5 it doesn't work too well, by the way.
6 We can swap, number three, all the rous we have,
7 the paper for our land and businesses, but there's a limit to
8 that. Gee, they already own a good chunk of Hawaii and
9 southern California.
10 We could here is one for the governors we
11 could cut our wages and lower our standard of living so we
12 can undersell the competition. My economics department at
13 Chrysler, that's one guy by the way, one man guy, tells me if
14 we cut our standard of living by roughly 10 percent a year
15 for 10 years, we could probably do it that way. How would
16 you like to sell that idea to the voters? Great platform to
17 run on, huh?
18 Or, simply, we can regroup and get serious about
19 competing through a combination of greater American
20 productivity and smarter American economic policies so we can
21 start exporting more goods and services and payoff that
22 debt.
23 That's the only option we really have. r don't
24 know about you, but r think it's the only one that makes any
25 sense. We'd better, together, figure out how we do this.
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1 Let me bring back Mr. Harasumi for just a minute
2 he is the diet member who is going to rent back America to
3 us one day. He had something else to say in that same
4 interview, that I happen to agree with 100 percent.
5 He said, his quote again, "Americans have never
6 had an economic or business competitor of this magnitude.
7 This is why Americans are having a hard time with us. You
8 are unnaturally scared."
9 Hell, he is absolutely right. We are unnaturally
10 scared. But what the hell are we afraid of? Have we
11 suddenly forgotten how to compete? Have we gotten soft? The
12 American farmer, he is still the most productive in the
13 world. With all his problems, he is still the most
14 productive farmer in the world, isn't he? Come on down to
15 Detroit when you are through here and I will take you through
16 some auto plants that are as modern and efficient as anything
17 they have got in Japan or anyplace else. We still have the
18 natural resources when the chips are down. A little short on
19 oil here and there, but we have got the natural resources.
20 We have got the technology. We have got the human talent to
21 compete with anybody. What we seem to be lacking, I think,
22 is the will to compete.
23 I am not just talking here about individual will,
24 you know, the guy who wants to feather pin on the job, goof
25 off, or the guy who wants to stay home on Monday mornings to
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1 sober up. I'm not talking about him. I am talking about the
2 national will here, I am talking about national policies
3 designed to help America compete, like the national policies
4 in the countries that are cleaning our clocks right now. And
5 maybe, just maybe, the bottom of this whole lack of will is a
6 fact that we don't want to face up to the costs of
7 competing.
8 Getting competitive again is going to be
9 expensive. We won't do it with pep rallies, lapel buttons,
10 T-shirts. We won't do it that way. It is going to take one
11 hell of a lot of sacrifice.
12 Now, I have got a plan to make America competitive
13 again. But then, who doesn't? Everybody has got a plan
14 these days. It doesn't take a real genius to put one
15 together. The things we need to do aren't hard to see. They
16 are right before our our eyes. But I am afraid that what we
17 don't want to see is the cost. My plant happens to have
18 seven points, all of them simple, all of them very
19 expensive. I will go through them quickly with you.
20 Number one on my list, and it had better be number
21 one on everybody's list on this room, is to cut the federal
22 budget deficit. Is there any arguing on that one anYmore
23 with anybody in the world? Politician, businessman, union
24 leader, press. That is the root of all evil and we have got
25 to dig it out and quick. Almost a trillion and a half
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1 dollars of new federal debt in just less than 10 years, and
2 an annual interest bill alone that is pushing $190 billion
3 annually? We have got to be losing our minds in this
4 country. We went from the biggest creditor nation -- you
5 have heard this a million times to the biggest debtor
6 nation, but in just a couple of years, because we have had to
7 suck in so much foreign capital to feed this monster.
8 When we try to get the Japanese and others to mend
9 their mercantilistic ways they throw our debt right in our
10 faces and say, hey, if you didn't have such a big budget
11 deficit, you wouldn't have such a huge trade deficit. Of
12 course, they are interrelated, I think everybody has agreed
13 to that too. They are absolutely right. By the way, I have
14 got to say, even on that score, because I deal with a lot of
15 Japanese businessmen, I say you guys could help out a little
16 by sharing the burden of our defense budget. At $300 billion
17 a year for defense and yours, theirs, we don't look red hot.
18 The debate raging in Washington right now is over the last 5
19 percent, or 15 billion of the 300. Why don't we ask the
20 Japanese to help out a little? Has anybody even asked them
21 to kick in? I am not sure of that. I doubt it.
22 But how do you really fix it? Well, you can dance
23 around the truth all you want, but it will not go away. You
24 have to cut spending. Why am I telling you this? Some
25 defense and some of the entitlements out there, and you have
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1 to raise some taxes. Politicians, like yourselves, have to
2 call them revenues, I can get away with just yelling right
3 out, "raise taxes." Mondale tried that. He got his head
4 blown off. I don't think that can happen to me.
5 But that means sacrifice, that means sacrifice by
6 everybody, even for you governors, because it might mean, I
7 don't know, it might mean fewer dollars going from Washington
8 to the states. You would have to make up for it somehow.
9 Well, I am sorry about that. We all have to face the music,
10 one way or another.
11 Number two on my list is the competitive trade
12 policy. We are playing by different rules than everybody
13 else, and we can't keep this up too long. If you really
14 believe in free trade, or, I hate to say it, fair trade, we
15 should, as a country, right now, be retaliating under the
16 definition of free and fair trade.
17 Instead, even though we are the ones getting
18 mugged so badly, we are worried about the guys with the super
19 surpluses retaliating on us. Do you know these people? Do
20 you think they are crazy? This is not only their biggest
21 market, it's where all their profits are, and it's our
22 market, and they respect it. I went to Washington earlier
23 this year -- don't snow me, some of you guys; I lobbied for
24 the Gephardt amendment because I thought it was at least a
25 start. But it's been labeled so protectionist, and any
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1 red-blooded guy down in Washington would rather be called a
2 pervert rather than a protectionist, believe me, right now.
3 Hell, nobody is talking about closing the borders
4 or bringing back old Smoot-Hawley. I spent about three hours
5 one night reading about Smoot-Hawley. I'm sorry to tell you
6 the Depression started long before Smoot-Hawley, but forget
7 that. To me it's almost become a battle cry, you yell
8 Smoot-Hawley, it's like "fire" in a theater. Everybody says,
9 "God, that wrecked the country. Remember the Depression."
10 Well, to me it's a bit of a red herring that -- I have to say
11 ofttimes the New York Times and the Washington Post throw up
12 -- every time they bring up the subject of free trade, old
13 Smoot and Hawley are in the article. But we can't let the
14 American market be the dumping ground for the world's excess
15 capacity right now either. And that's what we're doing right
16 now.
17 We need a trade policy with teeth, that says to
18 our friends -- the way I talk to them, why can't you talk to
19 them that way -- "Hey, trade has to be two-way, guys, don't
20 give me any crap about soil conditions or your snow being
21 different. It's okay for you to corne and sell here, but
22 while you are in town, you damn well better be doing a little
23 shopping." But, of course, a tough trade policy, you know,
24 has got some costs, too. We will probably all pay a little
25 bit more at the store for imports. The odds are you will,
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1 and it might be tougher to control inflation, but there's no
2 free lunch.
3 Number three, if you are going to compete, you
4 have got to change the tax code. You can say, now, wait a
5 minute, we just did that last year. That was the first
6 change in the tax code in 74 years. True, but we screwed it
7 up.
8 A tax code should do three things, think about
9 it. It should be fair to everybody. It should raise enough
10 money to pay the bills, and it should, in this one world of
11 ours, now, it should help the country compete in the world.
12 We spent a whole year in tax reform and only got
13 one of the three right. I will grant the new law is a bit
14 fair. But it had to be revenue neutral, they said, going in,
15 so it didn't raise a dime against the scandalous deficit, and
16 it shifted, in case you didn't know this, about $120 billion
17 directly on to the backs of American business. So we got
18 less competitive with the change in the tax code.
19 Toyota, make no mistake about it, made out better
20 than Chrysler, and it was our bill. Everybody else writes
21 tax laws that encourage exports. Ours do nothing, nothing to
22 encourage exports. I will give you an example. I want to
23 start exporting, big deal, a few cars to Europe this fall --
24 first time in my lifetime I will be shipping the other way.
25 But guess what, I can make $11- to $1200 more per car if I
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1 ship them from my plants in Mexico or my plants in Canada,
2 instead of Michigan, Illinois, Missouri, purely from the tax
3 savings. Of course, 11- or $1200 is enough to break the
4 deal, but that's the way it is.
5 So we have to do tax reform again. This time I
6 have a strong hunch that some of those rate cuts that most of
7 us got last time -- gee, I used to be in the 90 percent
8 bracket, then went to 70, then to 50, now I am at 38.5 and
9 they are taking me to 28. I am almost saying I don't need
10 that much, slow it down a little. Part of those rate cuts
11 (Applause. )
12 MR. IACOCCA: Don't applaud too loudly. I got a
13 break but my company got hit for, I think, $106 million a
14 year more, so it wasn't fair to my business. We may lose
15 some of the rates. I don't know what will happen, but I
16 don't think it will stay the way it is. Why do I say that?
17 Part of the price of competing.
18 Point number four. We need an energy policy. We
19 had one for a while but we dropped it when OPEC guys started
20 fighting among themselves and oil prices dropped like a
21 rock. But right now we are right back in the '60s,
22 joyriding, literally joyriding on cheap gas again. We will
23 not learn from history as Americans. I don't know, I'm the
24 same way. We just will not read histories. We have already
25 been clobbered twice and we are setting ourselves up -- you
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1 can quote me on this one -- we are setting ourselves up for a
2 third fall and soon, especially when you look at some of the
3 headlines out of the Persian Gulf, it doesn't give you any
4 good feeling. The import share of our oil is higher than it
5 was just before the first oil embargo. The federal economy,
6 standards for cars, went out the window last year. We just
7 tossed them away.
8 I have got to tell you, I wish I had a lot more
9 big V-Bs because that's about all I can sell, but I make all
10 the money on those. I don't know what I am mad at. I don't
11 know how we got so blind so fast after all we've been through
12 before. The Senators standing in line at 4:00 in the
13 morning. Maybe we need another shot at that. I don't know.
14 But we cannot compete without a secure and independent energy
15 source. We have been capping our wells and the oil patch in
16 Texas and Oklahoma has been bleeding just like the Rust Belt
17 was just a couple years ago.
18 To maintain our energy independence, we have all
19 got to bleed a little. We need -- I have been saying this
20 for six years -- we need an oil import fee, or in my book,
21 better still, a gas tax, or both, so we don't get hooked on
22 foreign oil again. Between the states' and our federal
23 government's 9 cents, we are only up to about a quarter; the
24 next closest country in the world's taxes are 86 cents. In
25 Italy and France they go to $2. I don't know what is scaring
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1 us so much. I think that's another cost of competing, by the I
2 way, on oil tax.
3 Number five, we have got to gang up on the
4 corporate raiders and run them out of town. Last year more
5 money was spent on takeovers in this country than on all the
6 new plant equipment and a lot of our best management talent
7 that should have been trying to ward off the Germans and the
8 Japanese was busy warding off the raiders -- happened to a
9 lot of friends of mine. My biggest supplier, in fact, was
10 Goodyear. Goodyear escaped by the skin of their teeth by
11 taking on $2.6 billion in needless debt, and an Englishman
12 named Goldsmith, who I happen to know, walked off with a cool
13 $94 million in greenmail profit in one week's time. Not
14 bad. All that money, though, moving around, and not a dime
15 of it made either Goodyear, the company, or the country,
16 United States of America, one bit more competitive.
17 I have to say we are involved in a big acquisition
18 of our own right now, but it's not a very sexy one, because
19 there are no raiders involved -- doesn't get much press -- no
20 raiders, no greenmail, no proxy fights, no poison pills, no
21 junk bonds, no LBOs. Who wants to read about that stuff,
22 just buying the company. Our American Motors acquisition is
23 just an old-fashioned deal that will, by the way, make
24 everybody involved more competitive. We are buying the
25 company back from the French government and bringing it
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1 home.
2 But the big money lately has been made on deals,
3 deals that pull equity out of the company and load up the
4 balance sheet. We need to stop that. Of course, if you stop
5 that, there's another cost involved. All the easy money made
6 by the raiders, the arbs and the paper pushers on Wall Street
7 will have to be made, as Mr. Houseman says, the old-fashioned
8 way, by competing.
9 The sixth point of my plan -- I almost hate to
10 bring it up before this group is to -- everybody is
11 talking about it, but it's true and it's real give our
12 kids an education that equips them to compete later on.
13 Here is an irony I have never been able to
14 fathom. America still has, by far, the best graduate schools
15 in the world; Harvard, Stanford, MIT. They are the meccas
16 for the brightest students from Japan, Korea and everywhere
17 else. They come over, they study hard, then they go home and
18 beat our brains out.
19 But across town, in our own high schools, we have
20 students who can't read, can't write, can't count, and you
21 can bet on it, they can't compete.
22 Japanese kids go to school longer and they study
23 tougher subjects at an earlier age. They are not only taught
24 math and physics and other tools of a high-tech future, but
25 they are taught how to compete. Geez, they even take tests,
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1 by the way, to determine what kindergarten they get into. We
2 have got to spend more money on education if we're going to
3 catch up. We have to do a lot more than just throw money at
4 the problem, but -- we cannot duck the cost is a point I am
5 trying to make.
6 You can debate all the day in this forum whether
7 the money should come from the feds, the state or push it
8 down to the municipal governments. All I am saying is, we
9 better get our act together on that one.
10 Finally, number seven, companies such as mine have
11 to spend whatever it takes to get more productive than the
12 people overseas. There's some good news on this one, at
13 least we are at Chrysler -- Chrysler is going to spend $12.5
14 billion over the next five years on plant and product. I am
15 proud of this.
16 Our productivity at Chrysler has gone up -- are
17 you ready for this -- since 1980, 9.1 percent every year,
18 compounded. The whole manufacturing sector, by the way, has
19 chalked up productivity gains in that period since the '80s
20 started of more than 4 percent a year. That compares to
21 about half of that, 2 percent a year during the '70s. Most
22 people don't realize that. Manufacturing productivity in
23 this country has been, by those figures, a raging success.
24 But you know what the productivity gains have been
25 in the nonmanufacturing side of the house, the service
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1 sector? Zippo, zero. That's right, zero.
2 Here is the punch line: With the shrinkage in
3 manufacturing that has taken place since '80, 76 percent of
4 our whole labor force in this country is now in the service
5 sector. That's a big group, of course; not manufacturing,
6 all service. But now that 76 percent of the workforce --
7 they don't do much about our trade programs, by the way,
8 because services are a little tough to export. On the other
9 hand, the service sector is a whole lot safer place to have
10 your dough in these days because there's virtually no foreign
11 competition. Banks, by the way, being the big exception, and
12 you know the jam they are in right now.
13 The fact is, there isn't too much incentive to
14 improve productivity in any establishment because nobody from
15 Japan or Korea is breathing down your neck. We don't send
16 our laundry to the Far East, is the point I am making, yet.
17 We can't call up Swiss Air to get a run from Detroit to
18 Chicago, but New York Times, I tell them and the Wall Street
19 Journal, they can write editorials all day long telling
20 people like you and me how to handle foreign competition, but
21 being a service, they never in their lives have ever faced
22 any foreign competition in selling newspapers or ads.
23 Never.
24 Do we really want to become just a service economy
25 and maybe hide a little bit longer? Or do we want to
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1 encourage investment needed to make our heavy industry and
2 our country even more competitive? I think the answer gets
3 pretty obvious, if we are serious about competing in this
4 world.
5 Well, those are my seven simple points: cut the
6 deficit, give us a trade policy, take another stab at tax
7 reform, maintain our energy independence, run off the
8 corporate raiders, give our kids a better deal on education
9 and encourage more investment in our industrial
10 productivity. They are simple, but they are all very
11 expensive. They all mean sacrifice.
12 NOw, I will be honest. I have lost track of how
13 many people want to be President next year. There's a slew
14 of them out there. My hat's off to anybody who wants it,
15 because that poor soul is going to pay for a lot of sins over
16 the past few years. We are either going to end up in this
17 country with another Herbert Hoover or Franklin Roosevelt, I
18 don't really know which one at the moment, by the way. One
19 thing is sure, every candidate will have his or her own
20 competitiveness program. Maybe it's a five point program or
21 10 point, doesn't matter. What does matter is that they
22 level with us about the cost, and that's how I want to wind
23 up today.
24 You see, everybody is saying that we have got to
25 get more competitive, and almost nobody is willing to talk
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1 about the cost of getting competitive. As a voter, that's
2 what I am going to be listening to in the next 15 months. I
3 will listen to anybody's campaign promises as long as the
4 last line on the promise always is the same: "By the way,
5 folks, here is what it will cost you." Promise me anything
6 you want, but then tell me what the bill is going to be.
7 I will toss off as phony candidate who implies
8 that somebody else out there is going to pay the cost, and if
9 I ever hear "competitiveness is free," I am turning off my
10 hearing aid completely. I am just not going to listen. I am
11 going to assume that the candidate with the guts to talk
12 about the costs will be the right one to tackle the
13 problems. NOW, even though I am not a politician, I
14 understand how risky it can be to take that kind of message
15 out to the voters. But presidential elections are about
16 leadership, and this is going to be at least my measure of
17 leadership. We do not need anYmore blue ribbon commissions
18 to study American competitiveness. All we need is a blue
19 ribbon commitment to accept the costs of making America
20 competitive again. The candidate who asks for that
21 commitment is the one who gets my vote, so there.
22 Well, my best to all of you here today, whatever
23 your political ambitions, and thanks for having me here.
24 Thank you very much.
25 (Applause.) (Standing ovation.)
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1 CHAIRMAN CLINTON: Thank you very much.
2 Mr. Iacocca has generously agreed to answer some questions.
3 Some people wished that he were in the process of telling
4 people what the cost is. I can only say when he began his
5 talk by saying that he made the point to know the governors
6 in the states where he had plants, I sure wish he knew more
7 governors.
8 (Applause.)
9 CHAIRMAN CLINTON: I also couldn't help noting
10 that there was a little -- he did play fun and games with one
11 set of numbers. He said there had been 16 Presidents who
12 were governors and then a lot later in another section he
13 said there had been 35 elections in which governors were
14 involved, which means we are rating less than SO/50, not as
15 good as we had hoped. Governor Sununu has a question.
16 GOVERNOR SUNUNU: Thank you very much. Thank you,
17 Mr. Iacocca, for coming to spend a little time with us. Two
18 of the industries in this country that are extremely
19 important are the auto industry and the electronics
20 industry. Frankly, they seem to be the two industries that
21 have worked the hardest to move a lot of their manufacturing
22 offshore.
23 What specifically can we do to get your plants and
24 your sister company's plants and the auto industry back here
25 and the electronics industry back in terms of assembly
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1 manufacturing within our own country?
2 MR. IACOCCA: Well, Governor, the biggest single
3 thing, I have to admit openly, has happened already. I used
4 to be a crybaby at 250, even 200 yen, but at 140 to ISO, most
5 of my problems are gone. I have a -- I give you a good
6 example of it. I have a plant with Mitsubishi where we went
7 half and half to build a car in '88. It was going to be
8 shore 60 percent, the good stuff, in Japan, and 40 percent
9 here. Since the dollar/yen changed, it has already flipped
10 to about 2/3 and 1/3 there. That change alone is making more
11 supplier jobs to build those 150,000 cars end up here. So,
12 to me, that's the biggest single thing.
13 When you get in other areas, we could still be
14 helped on tax policy, we can probably get some Rand D
15 credits. I am dismayed that the steel industry is gone. The
16 auto industry -- this is an old bias -- we plowed $40 billion
17 back since '80. We plowed them back. So we are going to be
18 there when the bell rings. We're am not worried about that.
19 I am worried that our Toland electronics industry,
20 telecommunications, the works, went into a deficit for the
21 first time about 18 months ago. I didn't think they would
22 join us that fast. So I don't know what the government can
23 do other than -- as a businessman, all you have to do is have
24 some parameters of stability. I am only talking change
25 rates. I don't demand 140, but of 150 to 175 I can live
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1 with. I deal in oil prices. My cars happen to use
2 gasoline. I can deal in a band of 80 to $1.20, but I can't
3 go from 60 to $2.
4 Interest rates, I can deal at 10 to 12 percent,
5 but I can't go to 22 like last time without dying. So all
6 government can do on a federal level on a macro look is give
7 us as much stability as they can.
8 If you are any company and can't stand a 10 to 15
9 percent drop, you should sell the company. You have to
10 weather those kinds of storms. But in '80, to '81 we dropped
11 over 50. I don't know of any business in the world that can
12 drop in two years' time 50 percent of all its revenue and
13 survive. Of course, we almost tested the thesis at Chrysler,
14 didn't we? We hung by our toenails and just barely made it
15 during that crisis. I don't know if I've answered your
16 question the long way around, Governor, but that's the only
17 way I see for maintaining a good backdrop for us to give us
18 stability as currency rates, interest rates, things of that
19 nature.
20 GOVERNOR SUNUNU: If I may follow up, is the
21 anticipation, then, that in particular in the auto industry
22 that we are going to be looking at a return on shore for some
23 of the manufacturing and assembly operation?
24 MR. IACOCCA: Yes. Somebody suggested the other
25 day in a meeting that the yen might drop to 88 to the dollar,
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1 less than 100. That might be wishful thinking, but then I'd
2 show you how to compete. Stay about 140 and you will see a
3 red-blooded competitor, because I think we're okay. We will
4 bring jobs back, yes.
5 GOVERNOR SUNUNU: Then you will be calling on
6 other governors, I presume.
7 MR. IACOCCA: Right, exactly. I don't know about
8 New Hampshire, Governor, but --
9 (Laughter. )
10 GOVERNOR SUNUNU: You are right. Our unemployment
11 rate is 2.3 percent. We probably couldn't accommodate you.
12 (Laughter.)
13 CHAIRMAN CLINTON: Governor Gardner.
14 GOVERNOR GARDNER: You made the argument that -- I
15 am over here. You made the argument that plant and product
16 innovation is necessary to compete and if we assumed that
17 most of the workforce that will be working in the year 2000
18 is working today, that assumes a great deal of technological
19 advance and training and retraining. My question is, do you
20 think the traditional institutions of higher education are
21 capable of meeting these retraining needs?
22 MR. IACOCCA: That's a great question, because I
23 am deeply involved in it and personally involved in it. I
24 deal with Pennsylvania because I was born there and I am very
25 close to my alma mater and I deal with Governor Blanchard
ACE-FEDERAL REPORTERS, INC. 202-347-3700 Nationwide Coverage 800-336-6646 34 here in Michigan. In both those cases, we have all the university people in, when we have all the labor people in and all the banking people in, and I am there, and I see my governor and local government all together in one room.
Specifically, academia has to change their approach to life. The professors are telling the students,
"We have done this." I have talked to all these universities for a decade. We send the good Harvard business school guys into Wall Street. We send all the good technical minds into
NASA for the Defense Department. You suggest to some brilliant guy -- because the answer is the factory floor manufacturing things better, the process. The professor tells me, "You have to be crazy to get your hands dirty and go into an auto factory." First of all, they are not dirty anYmore. They're very clean, they're robotic, there are laser equipment for fits. I mean, we have really arrived.
But unless we change our whole approach early that producing goods and services is not something dirty -- we can't all be working on Star Wars. My contention always is -- Hughes, which was bought by General Motors, is a fantastic national asset.
I think they've got 23,000 scientists all working on this exotic stuff. Japan has 23,000 guys like that. They are all back home doing new instrument panels. We're beating our brains in. We won't let them do defense stuff, you see.
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1 Our real assets in brains are being pointed in you say the
2 areas of growth. I hear professors say, "don't go into a
3 factory. Are you crazy?" The auto business and steel is all
4 gone. If they keep saying that, it definitely will be
5 doomed.
6 "Well, where should I go?" Teacher says, "Go
7 where the action is; defense industries, exotic
8 electronics." And I can say for MIT -- I have been with them
9 -- I would say for Lehigh, where I am raising $40 million to
10 start an institute, campus, at the top of their campus, a new
11 school that will bear my name, by the way. I guess for $40
12 million they will do that. And it's intended to do one
13 thing, to train the businessman of the future and start with
14 the process in the factory and then also remind him that he
15 can't operate unless he gets into labor relations and
16 exchange rates and environmental protection laws, which are
17 costly. I am not against them, but it's 99 bucks a car now
18 at Chrysler; 99 bucks a car. Got to have them, price is
19 being competitive.
20 Korea, they say, "What? EPA? Are you guys
21 crazy? Just give us the jobs." It's not $1 a car over
22 there. I am not suggesting we imitate them, that's taking
23 our standard of living down. We don't want to do that. But,
24 sure, academia and their change in recognizing this problem,
25 I think, is absolutely key to all of this.
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1 I think -- we are going to try to be a prototype.
2 Give us three years and I will be able to answer your
3 question better, whether we have made it or not.
4 CHAIRMAN CLINTON: Governor Orr, Indiana.
5 GOVERNOR ORR: Mr. Chairman, thank you.
6 Mr. Iacocca, I am wondering if you would be willing to
7 entertain the addition of one more to your seven points.
8 That is a pOint which comes home to me every time I visit
9 overseas, and I was just over in the Pacific area three weeks
10 ago on Taiwan. I was banging some of them over the head
11 about some of the things you are talking about. Let's lower
12 some tariff barriers, let's get rid of some of the things
13 that are interfering with our ability to do business with
14 you.
15 This young man, who was familiar with the United
16 States of America, said, "Well, strange thing, sir, every
17 time we do lower from barriers, it's not the Americans that
18 come in and sell the products to us, it's the Japanese."
19 My point simply being something which I think most
20 of us as governors struggle with, it's important to educate
21 our children, your sixth point, so that they will be able to
22 compete when they are grown ups. But that's a generation
23 away. It seems to me it's essential that we change America's
24 attitude about our ability to sell. Competitiveness alone
25 won't do it. We have to get over in the marketplace, just as
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1 the automobile companies have so successfully done through
2 their dealer network, we have to sell. It seems to me it's
3 absolutely vital to do it in a current basis, rather than
4 waiting for the next generation.
5 MR. IACOCCA: I agree, Governor. I can give you a
6 lot of shining examples, but I won't take your time. You
7 have got to sell the hell out of the product. You've got to
8 get the cost down, get competitive. Then you have to go to
9 market, and that means -- marketing is not just running ads
10 in Japan, for example. It's financing, it's your
11 distribution system.
12 Did you know there's a barrier? You can't -- as
13 an auto dealer in Japan, you can't take on another
14 franchise. Well, I am going to buy American Motors. I think
15 I can sell a lot of Jeeps, but I can't get representation.
16 We don't have a law like that. They can come in and duel
17 with anybody under our laws. So we can't get shelf space.
18 By law, you have got to start scratch. I am only selling 18
19 Chryslers a year there. I can't get the volume to get a
20 distribution center started.
21 So I would like them to go to GAT and tell them,
22 "Those barriers have got to go, buster."
23 GOVERNOR ORR: But there are products where the
24 barriers have been lowered, but we aren't over there
25 selling.
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1 MR. IACOCCA: I agree.
2 GOVERNOR ORR: It would be an encouragement, I
3 think, to most governors who have made a conscientious effort
4 to encourage their people to sell oversees to add that eighth
5 characteristic, American salesmanship in the market.
6 MR. IACOCCA: I agree with you, Bob. I am going
7 to hear from all the governors in the Midwest now, because
8 they have taken more junkets over to these foreign spots and
9 they have been selling hard, and they could teach me a thing
10 or two. Go ahead, Thompson, I know you are going to talk.
11 CHAIRMAN CLINTON: He's not next, though. I have
12 got to keep this in order and we are running late, but I want
13 to recognize everyone who wants to be recognized, but try to
14 ask a question instead of giving a speech.
15 Governor Kean. There he is.
16 GOVERNOR KEAN: Lee, first of all, thank you what
17 you did for all of us last year in the Statue of Liberty,
18 that well known New Jersey landmark. That's what Cuomo gets
19 for not coming.
20 But one of the things which we are all trying to
21 do in the states, as you know, is really reinvent the school
22 in many ways. Businessmen help us, because every time we ask
23 them to serve on a commission or help in some way they do.
24 But talk to them privately and there's an incredible sense of
25 outrage. There's no other expression for it, outrage at what
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1 the American education system is doing and what they find it
2 is doing when they try to hire somebody.
3 Now, "outrage" to me means energy. How do we, as
4 governors, take examples -- take advantage of that kind of
5 outrage and energy so that the business people are not just
6 involved at the margins, but really involved at the guts of
7 it in trying to reinvent the school just as you really
8 reinvented the American car.
9 MR. IACOCCA: Well, I should defer to Blanchard
10 because we are working with him here in our own group here at
11 Michigan. You have got to get in early. You've got to get
12 in the grammar schools and junior high schools. We have just
13 got to have standards. What business can do is say, "Hey, if
14 you don't meet some minimum standard like, reading and
15 writing, you ain't going to make it in this country."
16 Everybody decries it's -- Michigan State
17 University turns outs a lot of teachers. They tell us the
18 problem is that some people we get in our plants -- I often
19 said in foreign plants you put up, because you have guest
20 workers, symbols, international symbols, because they don't
21 understand English. I am not being facetious, but I think we
22 have to do that in some of our American plants. They can't
23 even read the simplest words. You've got to put up a picture
24 for them. They are all supposed to be knowing the English
25 language. So, I agree with you, you can't be outraged. You
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1 have got to see what you can do early on. I think business'
2 role is not only to participate, but convince them there is
3 no future for them in any kind of a job unless they get back
4 to the ABCs.
5 I know Michigan is trying to do a lot in this
6 area. We really -- we have great graduate schools here and
7 great colleges. You know, in Japan they don't go to
8 college. They are terrific through high school and then
9 college is kind of a goof-off time for them. Then they
10 really get into work. I think it's really from grades 1
11 through 12 where all the action should be concentrated,
12 myself, not in the universities.
13 CHAIRMAN CLINTON: Governor Sinner.
14 GOVERNOR SINNER: Mr. Iacocca, in 1983, in
15 September, you gave a brilliant speech to the Washington
16 Press Club and I have to apologize -- I hope it wasn't
17 copyrighted, because I have distributed hundreds and hundreds
18 of copies of it.
19 MR. IACOCCA: We named a truck after you because
20 of that.
21 (Laughter. )
22 GOVERNOR SINNER: And I was there to help Jerry
23 York with that christening. That was a great show, and I am
24 grateful.
25 One of the issues that you addressed briefly in
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1 that talk was the issue of the disparity and the cost of u.s.
2 Regulation on our industries. And you cited all the ones
3 that we all know about; EPA, OSHA, Equal Opportunity,
4 retirement costs, health costs, liability costs. You went
5 through them all.
6 But you also made a point about the terrific cost
7 to industry of the disparity between states in these
8 regulations and I wondered, with all the fuss and the furor
9 that we make over states' rights, if we haven't actually
10 increased the cost tremendously on industry with 50 sets of
11 truck regulations, 50 sets of environmental regulations, and
12 on and on. Have we made any improvement or are we going
13 downhill there?
14 MR. IACOCCA: I, very honestly, don't know the
15 answer to that. I am always for having one standard in
16 anything, because even in California, even when they started
17 on emission standards, having that set of emission standards,
18 we had to have two sets of cars made and it gets costly. We
19 have to pass on those costs to the California drivers one way
20 or another.
21 If you had 50 states with evaporative emission
22 standards, which are up now -- they want to slap, EPA, $80 to
23 the cost of every car for a canister three times the size of
24 the present one. It's going to cost billions every year.
25 It's gotten into an intramural battle, by the way, between us
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1 and the oil companies because the oil companies say, "You do
2 it on the car. You want us to do it at the pump." Well,
3 it's cheaper to do it at the pump. In the long-term somebody
4 has got to pay for this.
5 So, if you start to proliferate the standards, the
6 cost just skyrockets. I am of the school that says can't we,
7 where it's meaningful certainly in the areas of -- many of
8 the areas of safety, environmental, I don't know about
9 healthcare, but even there -- one set of rules would do. But
10 I am talking as a national company. I respect states'
11 rights, but I don't want to do 50 Chryslers for 50 states,
12 it's murder. So, I don't know. I don't know more to say
13 than that.
14 CHAIRMAN CLINTON: Last question to Governor
15 Thompson.
16 GOVERNOR THOMPSON: Lee, where do you draw the
17 line between warding off the greenmailers and protecting
18 shareholders and getting companies innovative again by
19 outside challenges to management? Is there some commonly
20 accepted standard that we could use to reach what you want to
21 do?
22 MR. IACOCCA: Well, I am a great believer that the
23 shareholders, their money should be protected first and
24 foremost. I happen to be of the school -- I am not turning
25 socialist, but there are other people involved when a plant
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1 shuts down. There are employees, the townspeople, the
2 citizens out there, not just the shareholders.
3 If it's a true restructuring, you are getting more
4 efficient, that's one thing. My great concern is when there
5 is a takeover, who are these stockholders? So many of them
6 are in the hands of a couple of guys that are going for the
7 ride for 72 hours. So many are in the hands of little people
8 sitting there with their computers, that one huge pension
9 fund saying, "I have to make a buck because the quarter is
10 closing."
11 If they are true shareholders, that's one thing.
12 If they are there to make 5 bucks more -- a guy once told me
13 he would sell anything for $5, his mother, but if suddenly a
14 guy came in and offered $5 a share more than the going market
15 price for Chrysler, he would dump it. I said, "Geez, an old
16 loyalty?" He said, "I represent pensions. That's my
17 fiduciary responsibility. If I didn't take the $5, I would
18 be illegal." And he suggested with me there's only one
19 answer. You know what he said? "Legislation, it's an abuse
20 that has to be tackled."
21 You know what they are going through now in the
22 banking committees, waiting periods, can't sell for a year.
23 If Goldsmith couldn't sell for eight weeks he's have taken a
24 powder. For a year, he'd have said, "NOW, wait a minute."
25 That would have tested, because he said to Goodyear, "you
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1 guys are in the wrong business. You shouldn't be in oil."
2 They have been in oil because you need seven gallons of oil
3 to make a tire. They have been in it for 50 years. He
4 forgot to do his homework. "You shouldn't be in the
5 aerospace business." They were there for 50, 60 years. He
6 said, "We have got to get back to the core of what you know
7 best, tires, and I can do that better than Goodyear
8 management can." So they went for $2.6 billion sleighride.
9 I happen to believe this, I don't like more
10 legislation, but I think in this case you need some running
11 rules. I think it's gotten out of hand. I really do.
12 CHAIRMAN CLINTON: Thank you very much.
13 (Applause. )
14 CHAIRMAN CLINTON: Thank you very much for a
15 terrific job. We are running late, but I know all of you
16 wanted to ask those questions, and I think they were very
17 well taken.
18 I especially appreciated the strong emphasis that
19 Mr. Iacocca put on the exchange rate issue. I have heard a
20 lot of people deny the fact that the overvalued dollar for
21 four years had a terrible impact on our trade deficit. Every
22 reasonable study I have seen indicates that it was possible
23 for more than half the growth of the trade deficit. And I
24 was happy to hear him address it.
25 Now we are going to hear from Governor Dukakis,
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1 Governor Baliles and Governor Branstad who cochaired our
2 report on jobs, growth and competitiveness, after which we
3 will have some time for some questions from the floor.
4 First, Governor Dukakis, to address the issue of
5 productive workers and labor/management relations. I would
6 like to ask the Chairman to come up to the podium, and then
7 we will take questions from the floor.
8 GOVERNOR DUKAKIS: Let me begin by thanking Bill
9 Clinton and all of you for being part of this. It was really
10 Bill's leadership which got us involved. I know I speak for
11 Jerry, Terry and myself when I say that without his
12 leadership and constant prodding we wouldn't be here with
13 this report. What we tried to do was divide it up into
14 sections. I am going to try very briefly to summarize the
15 first couple of chapters, first on the challenges and
16 opportunities of international competitiveness and then on
17 the whole question of how we help to make a productive
18 workforce and Terry and Jerry will be summarizing the rest of
19 the report.
20 I am not sure you are going to find anything here
21 that is tremendously new, that's dramatically different. We
22 have just heard from a very impressive spokesman and
23 corporate leader who has said a great deal, frankly, Bill, of
24 what is in this report. But there are some particular
25 points, emphasis, kinds of things which I think every
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2 we tried to do.
3 It was an interesting process, we had an
4 opportunity to visit some very interesting places. An
5 opportunity, incidentally, to be encouraged and inspired by
6 some of the things we saw. In rural and small town in Iowa,
7 in a steel mill in Cleveland -- which these days isn't much
8 of a steel mill, but has one building in the middle of it
9 which has been cleaned up, fixed up, which has new equipment,
10 new machinery, new technology and a whole new relationship
11 between management and labor -- they are making galvanized
12 steel in that building and they are knocking the socks off
13 their Japanese competition. But it's a very different way of
14 making steel and it's a very different way of building good
15 relationships between management and labor. There is a
16 lesson in that steel plant. Terry, there is a lessen in
17 Oceola, Iowa and a lesson, Tom, in New Jersey and in those
18 parts of this country and in our basic industries that are
19 competing and are competing successfully. Some of it has to
20 do within investing, a lot of it has to do with transforming
21 human relationships, whether we are talking about community
22 relationships or relationships between those who manage and
23 those who work on the shop floor. You will find a great deal
24 of that in this report and especially stories, anecdotes,
25 examples, because in a very real sense, it's in these living
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1 examples of people and communities, companies and industries
2 that are working hard at this and succeeding at it that we
3 have the answer to how we are going to create good jobs at
4 good wages for people of this country and be competitive.
5 There have been some dramatic changes, obviously,
6 in the international economy. I hate to be monotonous. You
7 have just heard Bill and you have just heard Lee Iacocca.
8 But those trade practices that we all complain about, and
9 rightly so, the kinds of things which take up a great deal of
10 time, great deal of debate in the Congress of the United
11 States, were restrictive trade practices seven years ago, 10
12 years ago, 20 years ago. We haven't suddenly confronted,
13 over the past four or five or six years, an epidemic in
14 restrictive trade practices. I don't really believe that
15 Japanese trade practices in the '60s and '70s, Bill, were
16 much different than they were in the early and mid-80s. That
17 doesn't mean that we don't have a right to get mad if they
18 violate a microchip agreement, or when barriers to American
19 goods are thrown up or maintained as third world countries
20 become more modern and more industrial.
21 But something has happened in this country in the
22 last four or five or six years which has hurt us and hurt us
23 badly, in the face of what, to repeat, have been restrictive
24 trade practices -- have been around for a long time. You and
25 I know what it is. We have been sitting for a lot of time
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1 around this table discussing it, suggesting, recommending. I
2 remember in 1983, when, under Jim Thompson's leadership, we
3 passed a budget deficit plan, reduction plan, which I think
4 it's fair to say, if it had been adopted by the President and
5 the Congress of the United States, would have us today in a
6 much, much stronger position, financially.
7 Unfortunately, they didn't listen to us, here we
8 are. There is no question in my mind, and I think in the
9 minds of most of the people who we talked with and listened
10 to in preparing this report, that this is largely a
11 government made disaster. That isn't my phrase, it's Pat
12 Moynihan's phrase on the floor of the Senate when they were
13 debating the trade bill. This is largely a government-made
14 disaster.
15 When you run up a $220 billion deficit, when you
16 drive the value of the dollar through the roof, when you, in
17 effect, give every single foreign good a 50 percent discount,
18 and that's what we did, or conversely, impose a 50 percent
19 export tax on American goods, we shouldn't be surprised if
20 what has happened has happened.
21 Now, it is true, as Lee Iacocca just said, that
22 now that that is changing and the value of the dollar is
23 dropping, that we are not going to see some of those things
24 happening quite as much.
25 In the meantime, we have destroyed American
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1 markets, we have seriously damaged American industry, and
2 it's not an argument against doing all of the things that we
3 suggest we should do at the federal and state level. But it
4 is simply a recognition, once again, that you can't spend a
5 buck for every 78 cents you're taking in and not do serious
6 damage to your competitive position, serious damage to your
7 productivity, serious damage to your farmers and to American
8 industry. And this wasn't their fault, this was a public
9 failure. It was a government failure. It was a failure of
10 public pOlicy.
11 So, in dealing with the issue of jobs and growth
12 and competitiveness, quite obviously, the report talks at
13 length about federal deficit and its impact about those trade
14 relationships and equity and fairness in those relationships
15 -- and there must be some -- about economic disparities
16 across states and regions, which can be minimized so that all
17 Americans share in our economy. That is why we recommend
18 some very specific focused regional development strategies.
19 It's terrific for John Sununu and me to be able to
20 get up here and say that we have record low unemployment
21 rates and I am proud of the fact that one out of every 10 New
22 Hampshire residents works in Massachusetts and we are
23 providing that kind of employment for John's people so he can
24 make those statements. But the fact of the matter is there
25 are whole regions of this country which are hurting and
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1 hurting badly. You know where they are because many of you
2 have to struggle with those problems. So we do recommend
3 some very specific things to deal with the problems of the
4 iron range, Rudy, and Minnesota and the heartland and south
5 Texas and so many places that are hurting badly, need help,
6 need resources, in partnership with states, communities,
7 business, labor, the educational community, because it is
8 those partnerships in the last analysis, as all of us have
9 learned, which really are going to make a difference.
10 The second chapter in this report has to do with a
11 productive workforce. Here, again, Bill, the governors have
12 been deeply into this for some time. "Time for results," in
13 my judgment, was one of the great achievements of this
14 organization; one of the great achievements of this
15 organization. We are very grateful to you, Tom, for
16 maintaining and expanding on that and providing the kind of
17 leadership you have. We are all working very hard. We all
18 learned from that report.
19 I don't know where Lamar Alexander is right now,
20 but he, himself, deserves a bouquet for his leadership in
21 helping us to see how important it was for us to invest in
22 quality education at all levels. Improving the productivity
23 of the current workforce. You have heard from Lee Iacocca
24 how dramatic those improvements have been in the
25 manufacturing sector and they are and they have been.
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1 People talk about manufacturing employment
2 dropping in this country. But the percentage of GNP in this
3 country going to manufacturing is staying about the same.
4 That has to tell you something. It tells you we are making
5 more manufactured goods with your people and that, whether we
6 like it or not, is what productivity oftentimes is all
7 about. The question is, how do we take advantage of that,
8 how do we make that transition. And how do we deal with some
9 of the consequences when that happens?
10 The efficiency of our labor markets. I think I am
11 correct in saying that 70 to 75, maybe 80 percent, of the new
12 people entering the workforce in this country between now and
13 the year 2000 will be either women or minorities, in some
14 cases, both. That is something to think about.
15 How do we help to train those workers? How do we
16 do what we discussed just a few minutes ago at the executive
17 committee, in talking with Senator Moynihan and Congressman
18 DOwny about welfare reform? How do we make it possible for
19 hundreds of thousands of people in this country that aren't
20 part of the world of work, haven't been part of the world of
21 the work, to get the skills, get the support for themselves
22 and their kids that would make it possible for them to
23 support them and become productive and self-sufficient?
24 How do we improve the relationship between
25 management and labor, the kind of thing that has meant
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1 success for that new unit within that steel mill in
2 Cleveland? How do we increase the quantity and quality of
3 scientists and engineers? And how do we deal with the fact,
4 as Lee Iacocca just pointed out, that investing in defense,
5 as we must, we are taking scientists and engineers from
6 nondefense activities; and, if we think we have to do that,
7 and we must, we better start making some investments in the
8 training of additional scientists and engineers to deal with
9 nondefense activities as well.
10 Finally, Bob, we talk about understanding the
11 international marketplace. What does it take to sell? How
12 do you sell?
13 You fellows may be making some trips to the
14 Pacific from time to time. I suspect they are very valuable
15 for you. I think one of the things that you have discovered,
16 as I have discovered, is that, at least until recently,
17 countries like the Japanese are outselling us, outhustling
18 us. We all know about the 10,000 Japanese salesman in this
19 country, all of whom speak English and what, 500 Americans
20 until recently who could possibly speak Japanese in Japan.
21 That isn't selling. That isn't going out and marketing.
22 That isn't doing the kinds of things that we have to do.
23 Those are some of the issues that we address in
24 the first two chapters of this report; again, things many of
25 us have been working on, things many of us have been
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1 collaborating in, as John says, constructively plagiarizing !I 2 as we do all the time because we learn from each other. But
3 we hope in offering this report to you that it will be
4 helpful, will give you ideas, will give you examples of
5 successful partnerships that are taking place in virtually
6 everyone of the 50 states. Again, we are very grateful to
7 you, Bill, for keeping us on track, keeping us moving. And
8 we hope very much that this report will be valuable, too. Is
9 it Jerry or Terry?
10 CHAIRMAN CLINTON: I think Governor Baliles is
11 next to discuss international education, research and
12 development and technology. I want to thank Governor Dukakis
13 for those fine remarks and also, at least, to abuse the chair
14 a moment, to associate myself with the point he made that
15 while we shouldn't countenance restrictive trade practices,
16 neither can we blame our present predicament primarily on
17 them and I appreciate you making that point.
18 Governor Baliles.
19 GOVERNOR BALILES: First, let me tell you what
20 this report does not do. This report offers no quick fix,
21 ideologically driven solutions, panaceas or get-happy-fast
22 formulas.
23 Rather, this report talks in sensible terms about
24 real problems which must be addressed at the ground level.
25 This report is about jobs; how states are helping to create
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1 them, what states are doing to keep them and what states do
2 when they lose them. So I am honored to participate in the
3 delivery of this task force report, and I am going to do it
4 in about 10 minutes, or about the time it takes Lee Iacocca
5 to sell a dozen cars.
6 Ladies and gentlemen, the states have confronted
7 administrative impasse with innovation and economic
8 difficulty with determination. The task force report tells
9 the story. History instruct us, unambiguously and
10 unequivocally, that economic strength follows efficient
11 travel and transportation. States know that without an
12 ability to efficiently travel and transport, without highly
13 developed skills of communication and understanding and
14 without the desire to economically move past the provincial
15 to the global, our economic aspirations will remain beyond
16 our reach.
17 The history of this very region tells us as much.
18 Here, in the heart of a continent, a maritime world was
19 built. Five inland seas which hold a fifth of the earth's
20 fresh surface water. In the early 1600s, the French
21 penetrated this forested country and began turning natural
22 resources into economic strength. Yet, real economic
23 progress would await the effects of transportation
24 improvements in the early 19th century.
25 In fact, the laying of adequate infrastructure
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1 enabled Michigan to grow faster than any other territory or
2 state in the 1830s. Similarly, across the continent,
3 commerce followed roads, rails and waterways.
4 Yet today, in many of our states, we witness and
5 endure an increasing morass of crammed, inefficient, urban
6 and suburban highways and crowded, unreliable national
7 airways. We watch as our productivity declines from the
8 simple inability to quickly move our people to work in their
9 products to market.
10 Accordingly, the task force recommends a variety
11 of initiatives to improve local access to public works
12 financing, to provide new technology for infrastructure
13 investment, to develop quick response mechanisms for
14 accelerating projects and to secure interstate cooperation on
15 strategic regional projects.
16 In short, it's critical that we establish new
17 avenues to action to insure that the future is not
18 compromised by an inability to move our people in their
19 enterprise.
20 Likewise, our intellectual infrastructure must
21 consistently reflect the realities of world commerce and
22 political competition. In the past, Americans possessed a
23 unique ability to work together and to use the advantage of
24 cultural diversity.
25 We understood the world because we were the
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1 world. In 1910, for example, when less than 15 percent of
2 the U.S. population was foreign born, almost 1/3 of the
3 residents in the northern Great Lakes region had been born
4 abroad. We grew as a nation of many lands, where every
5 citizen had an immigrant for an ancestor. Yet we lost our
6 sense of the world. To almost 3/4 of high school juniors and
7 seniors, geography is a black hole.
8 They can neither identify the states nor make
9 informed guesses as to whether Ireland is to the east or west
10 of England, but which country lies south of Texas. In one
11 study, only two students could locate Chicago. A junior at
12 UCLA opined that Toronto must be in Italy. A prelaw student
13 put the nation's capital in the state of Washington. "How,"
14 one student asked, "could Latin be called a dead language,
15 when there are millions of people living in Latin America?"
16 We pay a political and economic price for our
17 inability to understand and communicate with our global
18 neighbors. Knowing the language of trade is to be able to
19 communicate with the buyers and sellers of the world.
20 Knowing the geography of other nations is to appreciate the
21 basis of other economies. In a sense, we urge the
22 acquisition of a heightened sensitivity and an appreciation
23 of the diversity of the people of our planet. The task force
24 concludes that if we are to benefit from global
25 interdependence, members of our current workforce must
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1 understand the world around them. Accordingly, as the
2 principal providers of education in the nation, states must
3 invest in and internationalize their schools. Our economy
4 rests upon, it depends upon our physical and intellectual
5 foundations. And when deterioration sets in, states must
6 act.
7 But investing transportation and education is not
8 enough. We must not stop there. To the contrary, the task
9 force report catalogs innovations and collective action,
10 efforts of the 50 states that are taking across -- taking
11 shape across the country to shape the future, rather than be
12 shaped by it. Whoever may ask of today's challenges, "Well,
13 yes, but what can we do about them," here is an answer: Read
14 the report.
15 The task force reports detailed ground floor
16 responses created by states and tested by experience. Here
17 is some of what the report says: "To make our workers more
18 productive, we must build bridges between classrooms and
19 marketplaces to establish a flexible, adaptable workforce
20 with programs similar to those in Georgia and Indiana. We
21 must increase the quantity and quality of our scientists and
22 engineers. In fact, we must increase the number of students
23 in these fields by 50 percent, as a program is seeking to do
24 in South Carolina. We must balance training programs between
25 long-term investments in education, which is critical for
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1 future productivity, and short-term market driven
2 requirements for retraining, which is necessary for current
3 productivity, just as is being done in Missouri, Florida and
4 Delaware."
5 But what about where the workers work? What can
6 states do? This report tells you, "States can encourage
7 development in the application of new technology. States can
8 promote more productive employer-employee relationships.
9 States can help identify new markets for exports. States can
10 help with financial assistance in leverage capital."
11 How do we do these things? The task force report
12 tells us how. We do it by making work places more efficient,
13 by stimulating technology development with links between
14 businesses and universities to upgrade research and
15 development, as is being done in North Dakota, North Carolina
16 and Virginia, by increasing the rate of technology
17 transferred through incubators and centers for applied
18 technology so that America, not others, capitalize on our own
19 inventions we can do it with programs such as those found
20 in Michigan and West Virginia -- by promoting state exports,
21 so that the 200,000 American companies with export potential
22 are encouraged to find overseas buyers. And we do it by
23 finding new markets and expanding old ones, just as it is
24 being done in state after state across America.
25 We can make work places more efficient by
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1 establishing financial and technical services with small
2 business financing, with direct and indirect programs, as is
3 being done in Illinois, Pennsylvania and Ohio. States are
4 taking these actions, and we know we can do more. We know
5 that our task is to come to terms with today's complex,
6 integrated world along with other cultures, other ideologies
7 and other economic systems. The task force report says that
8 the ground work must be laid now, not with the false promise
9 of instant redemption, but with the understanding that our
10 efforts must be crafted across generations.
11 Further, we believe that states are uniquely
12 qualified, politically and administratively, to provide the
13 leadership and the direction. Louis Brandeis once
14 characterized a constitutional arrangement between national
15 and state governments as vibrations of power. Now is the
16 time to use that power, not as a source of division and
17 indecisiveness, but as the genesis for the future of
18 America. The task force report is a functioning document, a
19 centralized clearinghouse of good ideas and working
20 programs. This report and its supporting documents will be
21 taken back home by governors and used, not as a plan for
22 study, but as a plan for action.
23 A few years ago, the National Governors
24 Association did the same thing for education, and it's made a
25 difference. Our schools are better. We believe that this
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1 report will make the difference as well. We must push the
2 states forward. We must push the outside of the envelope, as
3 Chuck Yeager likes to say, so that our people and their
4 enterprise are made stronger and brought faster to the
5 economic future that they desire and deserve. This report
6 underscores what Governor Clinton has said so well for all of
7 us; we must make America work. Thank you.
8 (Applause.)
9 CHAIRMAN CLINTON: Thank you very much for that
10 excellent statement and for your fine work, Governor
11 Baliles.
12 Governor Branstad.
13 GOVERNOR BRANSTAD: Governor Clinton, thank you
14 very much. I want to thank my colleagues who served as
15 cochairs on this task force on jobs, growth and
16 competitiveness. I want to especially acknowledge our
17 chairman, Bill Clinton, who really gave us the leadership,
18 the insight and the devotion to really pursue this task force
19 and to give you the report that we are presenting today.
20 Also, as you know, we had the opportunity to host one of
21 these meetings in the state of Iowa, and Mike Dukakis was one
22 of those who came, along with Governors Clinton, Mickelson
23 and Sinner. Mike liked it so well, he has come back several
24 times since.
25 Bill, on the other hand, has decided that he would
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1 rather stay in Arkansas, at least for the present time. But
2 we appreciate all of your visits and your commitments to this
3 very important task.
4 The health of our economy depends upon the health
5 of our individual communities in both rural and urban
6 America. It is our communities from which we draw our
7 strengths. They provide the basic social and economic fabric
8 of this nation. Just as our nation draws on the strength of
9 our states, we, as states, draw on the vitality of the
10 individual communities that make up our states. Yet, we are
11 witnessing in this country today an increasing disparity
12 between the health of some communities and the sickness of
13 others.
14 We have what some have called a bicoastal
15 economy. The coasts are doing very well economically. Yet,
16 the great middle struggles to recover from a prolonged
17 economic downturn. And we see the disparities within our
18 individual states, with regions and communities doing well
19 and seeing significant growth contrasted with areas of great
20 poverty.
21 We see it across the land, with urban areas Cdoing
22 generally well and being areas of significant growth and
23 leaving rural areas in the dust.
24 Indeed, rural areas and communities, whether they
25 be in places like Iowa, Oregon, Texas or West virginia, has
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1 suffered more during this decade as a result of uneven
2 economic growth. Consider these facts: But migration of
3 people from rural areas to urban areas in the years 1985 and
4 1986 was larger than during any similar period in the
5 previous three decades. Three times as many new jobs were
6 created in metropolitan America than in rural America during
7 this period. Per capita, personal income in rural areas, 25
8 percent less than metropolitan areas.
9 Incidentally, that is in stark contrast to Japan,
10 where it is just the opposite and rural areas have 40 percent
11 higher personal income than they do in urban areas, and where
12 they subsidize agriculture to the extent of $40 billion a
13 year.
14 In the 1960s and '70s, the nation's focus was on
15 urban blight and the need to target resources to our cities
16 and to our inner cities. In the 1980s and the '90s, many of
17 these urban areas have become centers of renaissance and
18 redevelopment and growth in our country. Yet it is our rural
19 areas that need to be targeted for assistance and help during
20 this time.
21 What can we do about it? In many respects, many
22 of our communities are facing the same problems that Lee
23 Iacocca had when he took over in Chrysler in 1978. Chrysler
24 needed strong leadership, adequate financing, a working
25 partnership between the government and a commitment to be
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1 competitive to survive.
2 Our communities need the same prescription for
3 success. In our task force hearings, it became apparent that
4 we have some communities that have demonstrated their ability
5 to succeed even against the odds. We found out, for example,
6 despite adverse economic conditions in the rural heartland,
7 communities like Oceola, Iowa or Cuba, Missouri were building
8 strong economies for the future. Drawing from those
9 experiences and from the report, we have a five-point plan
10 that is offered for state assistance to help with these
11 communities and to develop their leadership.
12 First, the states need to have a rural development
13 strategy to deal with these pockets of poverty and problems
14 in rural America, a strategy based on economic
15 diversification so the communities are not so dependent on
16 one industry like agriculture, forestry or mining. We need
17 to be providing transitional services and targeted
18 infrastructure investments.
19 Second, investing in both development of our human
20 resources and physical capital is critical. Quality
21 education programs and public services are essential to
22 economic success.
23 Additionally, selected infrastructure improvements
24 with a goal of stimulating the economic growth is an
25 important factor. New telecommunications technologies can
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1 link up rural America, in this information age, to the other
2 parts of the country.
3 Third, entrepreneurial development must be
4 encouraged and supported. A recent study of the Council on
5 State Planning and Policy Agencies looked at rural Iowa in
6 the decade of the 1980s during this period of agricultural
7 crisis. They found some interesting things.
8 Despite the loss of jobs related to farm machinery
9 manufacturing and related to agriculture, there had been
10 108,000 new jobs created; and, 20,000 new business ventures
11 started right in the midst of these agricultural troubles in
12 rural America.
13 As states, we need to recognize there is this
14 wealth of entrepreneurialship. We need to capitalize on it
15 and use it and use the technological and financial assistance
16 programs that we can provide to encourage and assist the
17 entrepreneurial development and growth. Increasing emphasis
18 needs to be placed to the development of new businesses
19 within our states and our communities.
20 The fourth point, access to financing new economic
21 initiatives is vital for success. Both state and federal
22 assistance is needed to attract financial investments,
23 especially to rural America. When the banks have been hurt
24 by major losses in farm loans, it's hard to get them to make
25 the loans, even though there are great opportunities there.
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1 Banks and other financial institutions need the
2 funding sources that will motivate them to reinvest in rural
3 America. They need to be able and willing. We need to make
4 sure that they take advantage of a willing and able
5 workforce, a spirit of individual initiative and a high
6 quality of life that exists in so many of these communities.
7 Finally, and I think this is crucial -- and we saw it in
8 Oceola, Iowa and you have seen it in communities in your
9 states -- local leadership is critical.
10 As governors, we need to do everything we can to
11 promote it, to stimulate it, to nurture it, and we can't do
12 it by ourselves. We have got to do what we can to generate
13 that at the local level. One characteristic that runs
14 throughout the successful rural communities is that they have
15 aggressive and visionary local leaders who have taken it upon
16 themselves to do something for themselves and for their
17 communities.
18 In Iowa, we recently initiated a program to try to
19 take the star players, the Oceolas and the Mount Pleasants
20 and those leaders, out to talk to the other communities that
21 aren't doing as well. We call it the STEP program, Shaping
22 Tomorrow's Economic Progress. As a part of this program, we
23 are setting up town meetings in communities across the state
24 where the successful communities can go and visit with the
25 leaders in the other communities and say what they went
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1 through and the experiences they had and how they were
2 successful in helping with the diversification of their local
3 community, how they used a local commitment, how they built
4 the partnerships and how they developed the public and
5 private leadership that made it a success.
6 We have certainly seen what has happened in New
7 England. That is beginning to happen in some of the rural
8 areas of this country as well, and we need to tap on to
9 that.
10 Each community will then organize its own
11 development team to assess its strengths and weaknesses and
12 to develop a plan and to aggressively pursue their
13 initiative.
14 I hope that we can designate each of those areas
15 as an enterprise zone so they can get state incentives to
16 match their local initiative.
17 I During the course of this project, our task force
18 devoted most of its efforts to state actions and to the
19 accomplishments that we have seen in economic development at
20 the state and local level. We deliberately avoided going
21 into great detail about actions that could occur at the
22 federal level. But it would be remiss in our
23 responsibilities as a task force if we did not address that,
24 so in my closing remarks here, I want to talk a little bit
25 about what the federal government can do to help us.
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1 States do not operate in a vacuum. We are all
2 part of a great federal system. Our programs, our work, our
3 plants, our daily lives, are influenced by federal policies.
4 We certainly heard that in such things as the value of the
5 dollar versus the yen. In our approach, we did identify four
6 broad areas where federal action is imperative.
7 First and foremost, a stable federal economic
8 environment and reducing the federal deficit. We all agree
9 on that. We also need to encourage more private savings to
10 promote a stable international and financial framework that
11 contributes to fair trade and to high productivity and
12 growth. The debt in less developed nations must be better
13 managed. The federal government can playa role in getting
14 that accomplished.
15 Combined monetary and fiscal policies with our
16 major trading partners is very important. Establishing a
17 more equitable trade relationship and reviewing export
18 policies and export licensing procedures, broadening the
19 scope of the GAT agreement, all need to be pursued. We need
20 to provide for an effective rational targeting of flexible
21 state programs. To the final point that I want to brief you
22 on, and that is the governors are calling for a more
23 effective federal/state partnership, a partnership that will
24 help build that national competitiveness to minimize the
25 economic disparities to help us all work together to be
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1 competitive in a world economy.
2 We need to create a flexible and responsive
3 employment system. That means looking at some of the
4 national programs, like employment service, the unemployment
5 insurance program, the job training and vocational education
6 programs, and not looking at them separately, but look at
7 them together and see how they could be adopted -- adapted to
8 become more responsive, so that we don't just merely cope
9 with the misery of the disparities and the problems, but we
10 use these programs in a creative way to train people to
11 become more competitive for the jobs of the future.
12 The federal/state partnership needs to be
13 redefined. The states are assuming new roles and
14 responsibilities. We are becoming more aggressive. We need
15 the flexibility to be responsive to today's needs.
16 Much can be done. However, often separate actions
17 and programs from the federal government conflict with each
18 other. We need to be competitive in the international
19 environment and we need to make sure that one hand of the
20 government knows what the other hand is doing so that we
21 don't have the intolerable duplication or the poor
22 coordination of programs where they could make a difference.
23 It is time that the federal and state governments pull
24 together and that we target our resources, we reevaluate our
25 present relationship and we make a new partnership between
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I the two levels of government.
2 So, Mr. Chairman, with that, I am pleased to close
3 this report to say that our focus is on economic growth in
4 all parts of this nation. Our goal is to make all of America
5 work, and our commitment is to focus the resources of this
6 nation to make us competitive again in a global economy.
7 Thank you very much.
8 (Applause.)
9 CHAIRMAN CLINTON: Thank you very much, Governor
10 Branstad, for that fine statement. We now have a few
11 questions, beginning with Governor Martinez.
12 GOVERNOR MARTINEZ: Thank you, Mr. Chairman. I
13 think all the subchairmans did an excellent job in presenting
14 the document. I know that before us lies a great challenge
15 in terms of how to expand the economy to absorb the newly
16 trained people that we hope to put into the labor market.
17 I know that we have heard some great speakers here
18 today, including Lee Iacocca, and our ability to compete in
19 terms of creating jobs here.
20 I, for one, would like to join with all governors
21 to make sure that our national government sets the proper
22 policy to expand jobs so that our road is not simply to
23 relocate jobs; that my mission, out of Florida, would be not
24 simply to take a company from another state, but to truly
25 expand the economy to create the opportunity for all those
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1 that I think this fine document will educate and train for
2 the future of this country. So that I think we are good
3 partners, but I think the partnership we need at this moment,
4 the strongest partnership, is the federal government.
5 CHAIRMAN CLINTON: Thank you very much. I think
6 Governor Harris has a statement or a question.
7 GOVERNOR HARRIS: Mr. Chairman, I would like to
8 take this opportunity to commend you and these three
9 cochairmen that have work so hard with members of the task
10 force in compiling the report. It's an excellent report
11 which gives us tremendous insight into our current economic
12 conditions of our states and also outlines the ways that we
13 as governors can respond to the many challenges that face us
14 in our state that need attention, such as jobs and growth and
15 competitiveness and also the four-step framework for economic
16 competition. What the report sets forth is, I think, an
17 excellent and sound approach for revitalizing our states'
18 economies and moving us forward as a nation.
19 I can say, with a lot of appreciation, that we
20 have already tried a number of the recommendations that have
21 been made in our state of Georgia from education, to our
22 quick-start special training program, the aggressive
23 industrial recruitment we have had and the market development
24 programs that have been recommended in this report, and it
25 has been effective for Georgia. The working relationship
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1 that we have established with the local governments and the
2 team spirit that has presented itself from that relationship
3 has certainly enhanced our capabilities.
4 So I would like to just calIon each one of the
5 governors that are here today to join with me in giving you
6 and these three cochairmen and the members of this task force
7 a hand of appreciation. Would you join with me at this
8 time.
9 (Applause.)
10 CHAIRMAN CLINTON: Thank you very much. We have
11 to hear now from Governor Ashcroft. Are there any further
12 questions or comments that anyone wants to make at this
13 time?
14 Governor Orr.
15 GOVERNOR ORR: Thank you, Mr. Chairman. I am
16 sitting where I don't belong, but in a sense, I am sitting
17 here by Lee Iacocca's sign. I wanted to reaffirm what I had
18 suggested to him, sort of in the form of a question. You
19 took me a bit to task for making a statement rather than a
20 question, Mr. Chairman.
21 CHAIRMAN CLINTON: I agreed with you, though.
22 GOVERNOR ORR: This report that has been put
23 together here, we have heard from this afternoon, is a true
24 achievement for the governors, in my opinion. It is setting
25 a course of action for all of us to observe as we move into
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1 the future. But, more particularly, it is dealing with a
2 future that is beyond tomorrow, especially with education.
3 That is not going to have its effect until some time well off
4 into the future.
5 I most strongly believe that we have a major
6 undertaking in each of the 50 states to cause our business
7 community, to cause our people, to understand what is
8 happening in the world; and, therefore, what they need to do
9 to hustle business. I am not sure exactly how to approach
10 it, except that it seems to me very important indeed that we
11 carry forward with what has been found in this report and
12 what has been made evident to us as a result of the report.
13 I believe that the most important thing we need to do in the
14 next two or three years is to awaken America's attitude
15 towards doing business in the rest of the world.
16 We have been fortunate, over a period of the last
17 200 years, not to have to go elsewhere to get business. We
18 have been enjoying doing it within our borders. We could
19 enjoy doing it on a basis where we are selling to each
20 other. And very few of our more enterprising companies have
21 gone abroad and sold their product.
22 But the point I was trying to make of the young
23 man who spoke to me in Taiwan was that in response to what
24 America has asked us to do in lowering tariff barriers and
25 things of that kind, it's not Americans that come in and sell
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1 I with products to us, it's the Japanese who do so. We are I 2 being beaten out because the attitude of America about
3 hustling business is, unfortunately, confined mostly to our
4 domestic economy rather than to the international world. I
5 would like to suggest that a thing we ought to be doing in
6 the future is to work on what we have been found in this
7 report, but to bring some of that to the current period and
8 doing what we can do as governors to encourage a quicker
9 response to the opportunities that are now becoming so
10 evident throughout the world.
11 CHAIRMAN CLINTON: Thank you. Anyone else? I
12 would like to pOint out that tomorrow there will be several
13 opportunities to follow up on and flesh out this report. And
14 for the benefit, not only of the governors, but others here,
15 John Kenneth Galbraith will be speaking at the governors
16 workshop on rural development that Governor Branstad will
17 chair in the morning. Governor Dukakis's committee will
18 feature a very important session on responsive communities,
19 including the mayor of New Haven. The committee on trade and
20 international relations, which Governor Blailes chair, will
21 have a big focus on Governor Orr's subject of a moment ago,
22 exports of governors' secret weapon.
23 Then at 10:15, we will have a special work session
24 on this report, which we will be able to hear from the
25 private sector; from business, from labor, from the
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1 scientific community, about the importance of this report and I
2 'its relevance to the future.
3 So I think we will have a very good day tomorrow
1 4 working on this. We are going to talk about worker
5 adjustments and a number of other things in the other
6 committees.
7 Before we adjourn, I have to calIon Governor
8 Ashcroft, who was the cochair or the chairman of our task
9 force on literacy which is part of the various projects. He
10 will not be able to be here on Tuesday, unfortunately, and
11 therefore has asked for a few minutes to be heard today.
12 I want all the governors who are here who weren't
13 on that task force to know I think that he did a terrific job
14 on the report. I would hope that all of you would sit here
15 just a few more minutes and listen to what he has to say,
16 because he won't be able to be with us on Tuesday.
17 Governor Ashcroft.
18 GOVERNOR ASHCROFT: Thank you, Chairman Clinton.
19 I want to thank you for letting me give the report early. I
20 will trying to make it very quick.
21 None of us would expect a team that was playing a
22 player short to be able to be successful in the competition.
23 If we allow people who can't read or write to continue to be
24 on our team, or if we continue to carry them without those
25 skills, they can't play effectively. We simply must have all
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1 the members of our team in our productive capacity and with
2 that capability of helping contribute to what we want to do.
3 Illiteracy is one of the most imposing barriers to
4 participation in our society, to joining the productive
5 engine or community we call America.
6 Today, over 20 million Americans can't read or
7 write above the fourth grade level. Another 30 million can't
8 read or right above the 8th grade level. By the year 2000,
9 well, six out of every seven jobs, almost 90 percent of the
10 jobs, will require more than a high school education in order
11 to do successfully.
12 If we are going to be competitive, we are going to
13 be productive in the years ahead. We are going to have to
14 have even higher levels of skill than we now have. We simply
15 face a major challenge in terms of literacy.
16 Our task force took very seriously your charge to
17 be action-oriented rather than merely study-focused. We have
18 worked very closely with Capital Cities, ABC, the Public
19 Broadcasting Service and their highly successful PLUS
20 project; Project Literacy, U.S. With the National Alliance of
21 Business, who have benefited from the work of the U.S.
22 Department of Education's adult literacy initiative. The
23 National Assessment of Education Progress has published solid
24 information on literacy skills of America's young adults.
25 The task force met twice, once to take expert testimony, a
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1 second time to convene with the education commission of the
2 states with ABC, with PBS; a national literacy summit. I
3 think both of those meetings were helpful. The summit was
4 the first of its kind of event on this topic. There were a
5 number of people there from private as well as public
6 agencies in the literacy movement. And we worked on building
7 partnerships for a literate America. We made a good start.
8 We plan to follow up on that meeting with another literacy
9 summit in the months to come.
10 Literacy task force also worked closely with one
11 of NGA's affiliated groups, the Council of State Policy and
12 Planning Agencies. The first week of June, CSPA sponsored a
13 state policy academy on increasing literacy for jobs and
14 productivity. Academy attendees came from 10 states to learn
15 how to develop and improve state literacy policies related to
16 its work on the policy academy and with input from our task
17 force. There was a state policy guide for literacy, which is
18 on the table before each of the governors today. I recommend
19 it to you; it's important. Each of you can find ways to
20 improve our approach to the problem of illiteracy.
21 The formal report of our task force recognizes
22 that governors want to shape an environment in which citizens
23 can prosper and participate. Successful state strategy will
24 encourage, I believe, every ablebodied person in our society
25 to be a part of the team, to have the skills necessary to be
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1 productive workers in a competitive universe, in a global
2 circumstance of competition. I think we can help develop a
3 set of strategies -- we might call these strategies a line up
4 for literacy -- that can help our citizens improve their
5 basic skills. The task force has identified seven major
6 components of what we would call an effective state literacy
7 strategy. More detail will be given about these on Tuesday,
8 but I want to share some of the broad, quick outlines.
9 First, we need to focus on the needs of adult
10 learners. We are doing a lot in education to try to prevent
11 illiteracy. This task force focused on the intervention; how
12 do we correct illiteracy?
13 Second, find ways to enhance literacy training in
14 the workplace, cooperation with the private sector. State
15 government should take advantage of the motivation to learn
16 in the work setting as we structure effective literacy
17 programs and -- working together with individuals in the
18 workplace.
19 Third, we need to foster cooperation among state
20 agencies, the private sector and volunteer groups that deal
21 with literacy.
22 Lots of people want to be involved. Some of them
23 want to teach other people how to read, but they don't know
24 how to teach reading in spite of the fact that they know how
25 to read. Sometimes a state can be the agency that helps
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1 train volunteers who will later on through the volunteer
2 agencies provide the actual instruction.
3 Fourth, state government should improve
4 productivity and accountability of literacy programs. We
5 need to make sure that literacy programs that are supported
6 with tax dollars are very effective and that they use those
7 tax dollars wisely. We need better opportunities for parents
8 and children to work together on literacy skills. The PACE
9 program in Kentucky and the Parents as Teachers program in
10 Missouri are just two of the programs that can help
11 accomplish that goal.
12 Although our focus was on adult literacy and on
13 successful intervention strategy, we do recognize the need to
14 follow through with existing efforts to reform secondary and
15 elementary education to prevent adult illiteracy. Our
16 schools must do a better job so that we aren't pumping
17 additional illiterates into the workforce.
18 Finally, the task force believes literacy
19 strategies can play a large part in efforts to reform our
20 welfare system. We suggest that governors formalize plans to
21 help welfare recipients develop basic literacy skills that
22 will help them find productive emploYment.
23 I currently am working on a program called "Learn
24 Fair" in the state of Missouri, which is designed to require
25 people who do not have high school or GED skills to work
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1 toward those skills of they are to continue as recipients in
2 the -- in our system. Literacy is simply a matter of
3 fundamental importance, which I believe is key to our being
4 competitive.
5 If I may have another 30 seconds, I need to make
6 one other item as a report.
7 Governor Joe Frank Harris of Georgia and I are
8 serving on a committee of the National Thanksgiving
9 Foundation, which is putting together programs to celebrate
10 the benefits of 200 years of life under the United States
11 Constitution. Both houses of the Congress have enacted
12 legislation which was signed by the President designating
13 1987 as the national year of Thanksgiving. Bob Hope is the
14 national chairman of the committee.
15 The purpose is to express or develop an attitude
16 of gratitude in the United States for the blessings of life
17 and liberty under the Constitution for 200 years. There are
18 a lot of important plans. Last week the U.S. Conference of
19 Mayors sent a letter to well over 800 mayors of the country
20 to help them get involved in organizing this celebration of
21 Thanksgiving. Governor Harris and I, through the NGA, will
22 be writing to you in the near future to ask you to
23 participate in this exciting and historic event. For now, I
24 want to urge you to issue a state proclamation similar to the
25 national proclamation designating the period Thanksgiving '87
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1 to '88 as a year of Thanksgiving in your state.
2 Thanksgiving 1987 could be a very exciting and
3 meaningful celebration. While we think about
4 competitiveness, I think it's important for us to understand
5 that we have all benefited from a structure and circumstance,
6 set of values in this country, for which we ought to be
7 grateful which will allow us to be competitive in the
8 future. Thank you very much, Mr. Chairman.
9 CHAIRMAN CLINTON: Thank you very much for that
10 excellent statement. Does anyone have a question of Governor
11 Ashcroft on the adult literacy or comment? Then I am going
12 to adjourn this meeting. Keep in mind that we begin
13 immediately now with the committee on criminal justice,
14 Governor Deukmejian's committee, and Governor O'Neill's
15 committee on transportation.
16 We are adjourned.
17 (Whereupon, at 3:10 p.m., the meeting was
18 ad journed. )
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NATIONAL GOVERNORS' ASSOCIATION
PLENARY SESSION
Tuesday, July 28, 1987
Traverse City, Michigan
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1 NATIONAL GOVERNORS' ASSOCIATION
2 PLENARY SESSION 3
4
5 Governors' Hall 6 Grand Traverse Resort Traverse City, Michigan 7 Tuesday, July 28, 1987
8
9 The plenary session convened at 9:43 a.m., Bill
10 Clinton, chairman, presiding.
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1 PRO C E E DIN G S
2 CHAIRMAN CLINTON: This morning we have a very
3 tight agenda. We are going to hear from a very distinguished
4 American executive on the subject of competing, on the matter
5 of winning and losing. We are going to discuss the summary
6 reports from the five governors who chaired the task forces
7 on bringing down the barriers. We will consider proposed
8 policy statements and elect the executive committee for the
9 coming year.
10 I would like to ask everyone to please take your
11 seats. We need quiet in the back. We are going to have a
12 speech here that the governors want to hear, and all the rest
13 of you should too.
14 Our guest this morning is the chairman of Ford
15 Motor Company, Donald Petersen. He is going to be introduced
16 by his governor, Jim Blanchard. But before I calIon
17 Governor Blanchard, I just want to say a personal word of
18 thanks to Mr. Petersen for joining us here. Last year, when
19 I was writing the report on leadership for the Education
20 Commission to the States, I tried to make arrangements to
21 interview a few distinguished Americans about leadership and
22 effectiveness. Last December in Arizona Mr. Petersen was
23 kind enough to take about an hour of his time to visit with
24 me about that subject. I think anyone who has witnessed the
25 stunning effects of his company or driven the cars which
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1 produced that success, knows that he has a lot to tell
2 America's governors and America's business community. I am
3 very grateful that he has come to be with us today. I want
4 to ask Governor Blanchard to come forward now and introduce
5 him.
6 GOVERNOR BLANCHARD: Thank you very much, Governor
7 Clinton.
8 Our next guest is another proud resident of
9 Michigan. He was born in Pipestone, Minnesota; was educated
10 at the University of Washington and Stanford.
11 He happens to be chairman of the Ford Motor
12 Company, but what I like about him most of all is that for a
13 number of years he has paid careful attention to the
14 importance of education at all levels. On the skills of our
15 workforce and the brain power of our country. He also serves
16 as a member of my Governor's Commission on Jobs and Economic
17 Development, and presides over, without any doubt,
18 overwhelmingly, the most profitable automobile company in
19 America today. He is a classic example of how it is that
20 nice guys finish first.
21 Don Petersen, chairman of Ford Motor Company.
22 (Applause. )
23 MR. PETERSEN: Well, thank you very, very much,
24 Jim, for that most friendly introduction.
25 Good morning, ladies and gentlemen. I am honored
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1 to have this opportunity to address the 79th annual meeting
2 of the National Governors Association, and it's a pleasure to
3 be meeting with you in my home state of Michigan. When I
4 received the invitation to be here, I simply could not
5 refuse. Just think of it, a chance to speak to and meet with
6 most of the 50 governors, that's almost as many people as are
7 running for president.
8 But what really drew me here today was the theme
9 of your conference, and your recognition that international
10 competitiveness is mandatory today for the success of our
11 nation and the wellbeing of our people. The need for
12 international competitiveness dominates my business. It's a
13 24 hour a day, seven days a week concern. I think I even
14 dream about it. That is, when it isn't keeping me up
15 nights.
16 But if I lose a little sleep, that's okay. I
17 think a lot of us are going to have to lose a little sleep
18 and work a little harder and a little smarter if we are going
19 to have a competitive edge in the worldwide economy. I don't
20 think we have an option on this. We must have that edge.
21 The United States cannot allow its economic leadership to
22 falter.
23 I think Governor Booth Gardner quite plainly told
24 us why, in his state of the state address this year, and I
25 quote him:
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1 "Our standard of living, our quality of life, our
2 status as a leader in this world, all depend on our ability
3 to meet the dramatic challenge faced by the changing world
4 economy. "
5 I think we as a nation are finally understanding
6 this. I think Americans may be accepting the unpleasant
7 possibility that we could lose. Competition among economies
8 is like competition in anything else. There will be winners
9 and there will be losers. It's more than a question of
10 simply playing the game. Thinking about what I would say
11 here, I also had on my mind a series of events that have
12 occurred or are occurring at Ford in July.
13 For example, this morning, Ford enters national
14 negotiations with United Auto Workers. These may be
15 difficult negotiations because the issues are difficult. But
16 this is not a time for confrontation. It is a time to pull
17 together as a team against all corners. It is a critical time
18 to find new and innovative ways to work together.
19 Running through every issue, we will face at the
20 bargaining table, is the central theme of competing. How do
21 we compete and at the sarne time assure our employees a decent
22 standard of living and some degree of security. Tough
23 questions.
24 The answers won't corne from one side of the table
25 or the other, only from both sides working together.
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1 Another event occurred at Ford last Thursday, when
2 we announced record earnings at a time of increased
3 competition in markets here and abroad.
4 Those earnings were more than nice. They were
5 important to the company and its employees, because they
6 allow us to reinvest in future product programs and
7 manufacturing and other technologies required to face the
8 competition.
9 Investments, such as the more than half a billion
10 dollars for a new line of light trucks announced two weeks
11 ago. Governor Collins shared in announcing that $260 million
12 of investment, which will go towards expanding and retooling
13 our Louisville assembly plant. It will create 300 new jobs
14 and help secure 700 existing jobs at that plant. For
15 investments such as the $900 million investment that we
16 announced just yesterday, almost $400 million of that will go
17 towards converting our Romeo, Michigan facility, to a state
18 of the art engine plant. That is something we will need to
19 compete with the newest engine technologies of the '90s.
20 Investments such as these, in high quality products and new
21 manufacturing processes, do payoff.
22 I would like to think that similar efforts in the
23 past have a lot to do with Ford's car market share being up
24 2.6 percentage points this past quarter.
25 NOw, I have to tell you that talking about how a
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1 business has to compete is not very hard; it's actually doing
2 it that is difficult.
3 But the formula is simple. You have to get your
4 product right, because in any business, you have to appeal to
5 the customer with quality, with value and attractive design.
6 You must keep your costs down. At Ford we have
7 taken $5 billion a year out of our ongoing costs and
8 continued with the effort. You have to apply the best
9 technology to help insure a state of the art system; and you
10 have to apply it at the right pace. Finally, you have to
11 help people involved with training and allow them to fully
12 participate in the work that they do with their ideas and
13 commitment.
14 The final judgment as to whether a business is
15 competing is in the bottom line. Earnings to reinvest in the
16 business allover again, in projects such as those in
17 Louisville and Romeo and a lot of other places. I won't
18 mention all the states where we are planning investment,
19 because I don't want to start a free-for-all among you here
20 this morning.
21 But last year, we invested about $3.5 billion into
22 our products, our plants and our people. That amount can
23 only go up in the future. So I guarantee you, Ford is
24 competing. But like any other business, we know we have to
25 compete even more intensively.
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1 But I haven't come here simply to regale you with
2 stories of Ford. Much of American industry in the past few
3 years has come to the same conclusion and has been compelled
4 to take similar actions. Compelled not only to play the game
5 but play to win. We are competing in a new era; and I think
6 understanding this is a key to the future. But there is more
7 than one lock to be opened.
8 While the primary responsibility for international
9 competitiveness remains with us, the businesses and
10 industries of America, we have to accept that government
11 policies matter also.
12 There is simply no denying this in today's
13 environmental I am sorry, international economic
14 environment. It certainly isn't denied in other countries
15 and other economies. Much of our foreign competition is
16 aided directly by coordinated government policy in their home
17 countries. If we are to compete here in the United States,
18 then we need a similar relationship. We need a policy
19 environment consciously supportive of our international
20 competitiveness. Everything that American business and
21 industry does to compete will work only if government abides
22 by a basic ethic, and that is the belief and the need for a
23 sound environment in which commerce can compete and
24 flourish.
25 The welfare of the people, a fundamental
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1 responsibility of the governments we create, includes their
2 being able to work, strive, achieve and take pride in being
3 productive members of society. Since the start of this
4 decade, I and many of my colleagues in industry have spoken
5 often of the government's role; of the need for appropriately
6 valued and stable currencies; of the need for opposing
7 adversarial trade, that is trade and export strategies that
8 create serious dislocations in the importing country; of the
9 need for responsible economic policy in our country and in
10 those of our trading partners; and of the need for
11 responsible tax and regulatory policy.
12 Most of these actions can't be taken in
13 isolation. They require the cooperation of our trading
14 partners. If the goal is correcting world imbalances, yet
15 some nations have expressed complete indifference to the
16 problems in our international trading system.
17 Just a week ago I sat and listened rather
18 incredulously to a Japanese business leader who questioned
19 why Japan should import American goods when the same goods
20 are manufactured in Japan. This leader couldn't understand,
21 or chose not to, that u.S. manufacturers, using that
22 argument, could take the same position, a position which, if
23 practiced, could cause massive damage to the Japanese economy
24 or any other export-based economy.
25 But we don't take that position. Anyone can come
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1 to our market with goods to sell, and most do. The results
2 are that about 1/3 of all goods sold in America are
3 imported. Many of our basic industries are under immense
4 pressure, and some even for their survival.
5 I would like to think that I am a free trader at
6 heart. Yet I am frustrated that we are competing in a world
7 where there is little free trade and certainly less fair
8 trade than there is restricted trade. The frustration is
9 heightened when the restrictions and adversarial trading
10 practices come from those who proclaim the merit in the free
11 movement of goods and those who most benefit from the
12 wide-open markets of the u.s.
13 The trade bill moving through Congress right now
14 is a realization of the problems in our world trading
15 system. It is an attempt to put our trading partners on
16 notice; an attempt to say that the U.s. will deal with the
17 situations that threaten our economic wellbeing.
18 I hope that Congress and the administration can
19 work out an accommodation on the more important issues and
20 provide a law which promotes a fair competitive international
21 environment for U.s. businesses and industries. It is clear
22 that the action that Congress is taking reflects the mood of
23 the American people. Many of our national leaders are
24 recognizing that, to a large degree, America's competitive
25 ability is determined by the international and national
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1 environments the government provides.
2 Not the least of this recognition has occurred in
3 the individual states, and with good reason. When the United
4 States isn't competitive, it shows up in Washington as
5 numbers in a government publication. It shows up in
6 corporate America as red ink on the ledger sheets. But in
7 your states and local communities, it shows up in
8 unemploYment or under emploYment, an eroded tax base,
9 foreclosures and business failings. That gives the states a
10 mighty big stake in the competitive ability of this country
11 and its ability to retain and hopefully expand our
12 manufacturing base and the jobs that result.
13 I know that you realize this. While
14 competitiveness is an issue relatively new at the federal
15 level, states have long been involved in programs and
16 strategies to strengthen their own competitive position. In
17 recent years, these strategies have become quite
18 sophisticated. Changing Alliances, a recently published
19 Harvard study on the auto industry and the American economy,
20 says, and I quote, "Even though the relationship between the
21 Federal Government and the auto industry appears to be mired
22 in preglobal orthodoxies, at the level of state governments
23 across the country, a new model is emerging, one that
24 emphasizes the value of government as a competent partner, a
25 catalyst for competitiveness."
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1 Exchange rates, budget deficits and unfair trading
2 practices may be in the purview of the Federal Government.
3 But whether the products from a particular plant are
4 internationally competitive can also be affected by what a
5 state does or doesn't do. There is a wide array of
6 incentives offered by states to lure industries and help keep
7 them. There are, of course, tax incentives, highway
8 improvements, state financing programs and many more.
9 But I don't want to dwell on those types of
10 specifics today. Don't get me wrong, those incentives and
11 assistance programs are very important to us. They lower our
12 investment and operating costs, and cost is a major factor in
13 being competitive.
14 But there is a much broader viewpoint demanded by
15 today's world. We need to foster a total environment for
16 competitiveness; and, in many respects, state governments
17 will be in the forefront of promoting such an environment.
18 There needs to be a commitment to the importance of
19 cooperation. I think this is well demonstrated in my own
20 state of Michigan.
21 The auto in Michigan project, set up by Governor
22 Blanchard's administration, formally recognizes that the auto
23 industry and Michigan have common interests. The project
24 pulls together representatives from the industry, government
25 and labor, to assess trends and develop options for dealing
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1 with a changing, but still very important part of the state
2 economy. It is, in a very real sense, a partnership.
3 More and more evidence of this cooperative spirit
4 is springing up throughout the states, foreseeing more state
5 support for research and development. And much of this R&D
6 is being tailored to the state s' major industries, or their
7 economic development plans. We are seeing states assist in
8 the commercialization of new technology, by linking research
9 centers with potential commercial users of new technology,
10 and even with direct financial assistance for businesses and
11 entrepreneurs seeking to bring new products to the market.
12 But there is another area where a cooperative
13 spirit is needed, and it starts much further back in the
14 process. I truly believe that one of the most critical
15 factors in our future competitive ability will be our people,
16 their skills and determination to succeed.
17 I have no doubt of their determination, but they
18 must have the skills as well if we are to compete. Your
19 report notes that the vast majority of people who will be
20 working in the next two decades are already in the labor
21 force. To succeed, these people must receive the training
22 and retraining they will need to work in a world of
23 ever-increasing technological complexity.
24 Ford recognizes industry's role in this effort,
25 providing our employees with the training and new knowledge
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1 they need to do the best job possible, is a critical element
2 of our push to be competitive. Employee education and
3 training must be a life-long commitment. The ability to
4 adapt and keep our knowledge current is crucial.
5 Still, long before the workforce welcomes a new
6 member, the education system will have left its mark. If we
7 are to compete on into the next century, our education system
8 must be much better. The dropout rate, undereducated or even
9 illiterate graduates, curricula insufficient to prepare for
10 an increasingly technical and changing world. Too few
11 students taking up the sciences and mathematics. These are
12 more than depressing observations. They are dangerous
13 trends.
14 Governor Clinton, you and the other governors are
15 leading this nation's effort in a monumental task. But if
16 some of the statistics and trends are frightening, many of
17 the state actions thus far are encouraging.
18 Just a few of numerous examples, Indiana has
19 recently passed the most comprehensive education program in
20 its history. A critical feature provides for bonus funding
21 to schools that improve student attendance and improve math
22 and reading skills.
23 South Carolina has approved money for a math and
24 science high school. It will bring together the state's top
25 juniors and seniors for two years of intense study in those
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1 disciplines. In Minnesota, students can enter technical
2 institutes to study curricula designed in concert with
3 industry representatives. The students graduate when they
4 demonstrate mastery of the course of study. I applaud all of
5 these efforts, but much more will be needed.
6 David Kearns, the chief executive officer of Xerox
7 has suggested that we need to rethink our education system
8 from the ground up. We need to reorganize it, as we have our
9 businesses, for high quality an productivity, because we
10 can't remain a world-class nation otherwise. And I agree.
11 I believe that accomplishing this most critical
12 task will require the commitment of us all, including
13 American business.
14 Funding, beyond the judicious use of tax dollars,
15 will remain an important area of support. Already,
16 educational gifts are the largest category of corporate
17 giving, but our commitment must be even broader.
18 A recent survey of public school officials by
19 proeducation magazine found the following: 87 percent of
20 respondents thought more communication was needed between
21 schools and the business community concerning each other's
22 needs. 75 percent felt that the business community should
23 lend support in developing relevant curriculum. 59 percent
24 said that business should playa role in student motivation.
25 Clearly, the involvement of American business can
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1 and should take many forms. It's a big investment, but it's
2 the best investment we can make. A schoolhouse has been
3 described as four walls with the future inside. In today's
4 world, that future has to be international competitiveness.
5 Rather than think in terms of trade deficits or
6 productivity or market share, I sometimes find it easier to
7 focus on the importance of competitiveness by taking a more
8 personal perspective. And that is this, the American dream
9 has always centered on the next generation believing they can
10 aspire to something better than the previous generation; and
11 that previous generation has always helped pave the way to
12 those aspirations. Whether it was the Founding Fathers
13 forming a new nation or the pioneers of expanding a nation,
14 or in this century, the generation that fought for an ideal
15 or way of life, Americans have always passed something on. I
16 don't want to be in that generation that leaves something
17 less for those coming behind us.
18 Competing is a matter of winning or losing. We
19 have a lot to lose. But together, we can win. We can pass
20 on a stronger America and be proud of what we leave behind.
21 Thank you very much.
22 (Applause. )
23 CHAIRMAN CLINTON: Mr. Petersen is going to take a
24 few questions beginning, I think, with Governor Sununu.
25 GOVERNOR SUNUNU: Mr. Petersen, thank you again
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1 very much for taking the time to come and address us and
2 giving us a chance to discuss some of these issues with you.
3 One issue that I think a lot of us are concerned
4 with, and certainly you have addressed the issue of training
5 and education and the refocusing of our external resources in
6 this country. But one issue that I am concerned with is the
7 question of corporate philosophy and the fact that for a long
8 time in this country it seemed that the private sector was
9 content to make products that met our own domestic market
10 needs and hoped that they might be able to sell those abroad
11 without very much of an effort to tailor those products to
12 the desire of foreign markets.
13 In appliances, we were content to change the plug
14 to fit their electric system and never worried about the size
15 or cycle of our washers. The automobile industry built
16 automobiles for a large size in our domestic consumption and
17 was reluctant to down size for foreign markets.
18 Certainly there's been significant change in this
19 direction, certainly in your industry and others. But still,
20 I don't feel the trend has gone far enough. Could you
21 comment a little bit on what you see the reason for
22 continuing reluctance to tailor-make our products for foreign
23 markets.
24 MR. PETERSEN: I think the first observation I
25 would make is that the u.S. market is such a huge one that in
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1 many cases many companies find -- have thought in the past
2 that if they could get a good chunk of the American market,
3 that that was a very adequate effort on their part. Also, I
4 think until relatively recently, competition tended to be
5 much more localized, geographically, than it is now. I think
6 we have seen a true internationalizing of competition in the
7 last decade or so.
8 The very current problem that American industry
9 faces is that we had a prolonged period in the first part of
10 '80s, '80 to '85, especially when it became almost hopeless
11 to try to compete in any external markets because of the
12 extraordinary imbalance in our currency. The dollar just
13 made it absolutely impossible for most anyone, unless they
14 had a product that was unique, to be able to compete.
15 I think we saw many of the nation's companies and
16 industries virtually close up their export efforts, export
17 departments, in the first half of the '80s, because there was
18 no business. I believe many are now taking a look at the
19 sharp change in the other direction in currency
20 relationships. And as they believe, come to believe, that
21 those sharp changes are going to be relatively permanent, I
22 think what we are going to need and will see in this country
23 is a gearing back up, industry by industry, and company by
24 company, of efforts to export.
25 The largest -- one last comment I might make --
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1 the largest multinationals in this country have not had any
2 reduction in any significant percentage terms, in the total
3 amount of export those companies do worldwide. This is true
4 for the Ford Motor Company. All that has happened is that we
5 have changed -- Ford has, and all the other majors have
6 changed the countries from which we export. We couldn't
7 export from here, so we exported from elsewhere.
8 Our percentage of our total business that is
9 exported from one country to another, to repeat, is
10 absolutely the same level that was in the '70s or the '60s,
11 when this country traditionally ran tremendous surpluses.
12 It's been a movement from this country, which was
13 inhospitable to exports, to countries that were hospitable
14 that has occurred in so many cases.
15 CHAIRMAN CLINTON: Other questions?
16 Governor Thompson, then Governor Orr.
17 MR. THOMASIAN: On that pOint, Mr. Chairman, do
18 you agree with Lee Iacocca when he says the current tax bill
19 is unfair to American manufacturers and that it encourages
20 exports from offshore operations like Canada and Mexico
21 instead of exports of automobiles, for example, from u.s.
22 factories?
23 MR. PETERSEN: I didn't hear that particular part
24 of Lee's speech, so I am not exactly sure what he said. The
25 last Federal tax law did reduce the competitiveness of
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1 America's manufacturing base somewhat by reducing some of the
2 tax incentives for capital investment. I would hope -- now,
3 the trade-off that I saw on that for the manufacturing sector
4 was the hope that the reduction in income taxes would
5 generate sufficient additional strength in the economy to
6 offset.
7 But as far as incentive to invest, incentive to --
8 in new capital equipment, I would hope the next round of tax
9 policy or tax action remembers that there was this action
10 taken, the previous occasion.
11 As far as thinking there was anything in the tax
12 law that unduly favored other countries, specifically, I
13 can't think of anything that I would comment on. In that
14 respect, the one concern that certainly I have for the auto
15 industry is the practice that is occurring now in Canada of
16 permitting foreign manufacturers with very modest investment
17 activity in Canada to have access to the American market
18 outside of the auto trade pact. This is clearly working to
19 the significant disadvantage of the American auto sector.
20 CHAIRMAN CLINTON: Governor Orr.
21 GOVERNOR ORR: Mr. Petersen, most governors are
22 spending a great deal of time on ventures overseas attempting
23 to hustle business, either encourage businesses elsewhere to
24 take a look at our perspective states; or I think in an
25 increasing way nowadays , encouraging businesses from our
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1 states to export to other parts of the world.
2 One of those things that I have noticed, and I
3 think many other governors, is that while, yes, the major
4 multinationals, many of them, but by far not all of them, are
5 very active in foreign markets, that you don't see very many
6 American salesmen out hustling business for their companies,
7 anywhere in foreign areas. This is particularly true, I
8 believe, in the areas across the Pacific.
9 Admittedly, Ford is doing an extremely good job
10 internationally. But I am wondering if there isn't a need
11 for top business leadership in this country to encourage the
12 smaller companies, where growth is more apt to take place
13 than perhaps anywhere, to get with it, to get over there.
14 We do lower, from time to time, barriers. But
15 what happens is that the Japanese rush in and sell those
16 products, like automotive components parts, for example.
17 Right now in Korea, there is a major opportunity for the
18 manufacturers of component parts, but you don't see salesmen
19 over there.
20 Do you have any suggestions that you can give to
21 all of us as to how we can bring that about?
22 MR. PETERSEN: You certainly touch on a
23 characteristic, I think, of Americans. We certainly don't
24 have as great a tendency to go over to the other person's
25 country and to work on that aspect of business as others do.
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11 Again, I think it's the size of this country. We tend to I 2 grow up in a rather insular environment, that's been our
3 history.
4 There definitely is a huge need and huge potential
5 for this country if we can between us and among us find ways
6 to motivate both our business and government sectors as well
7 as our individual citizens and workers and employees to have
8 an interest in going overseas and living overseas, working
9 there.
10 I think you touch on the area where it would be
11 far most useful, and that is among the smaller size, medium
12 size companies. As you get into the larger-size companies,
13 we tend to be positioned in the countries overseas, and you
14 don't see us as Americans because we aren't.
15 We are now starting in Korea. As you look for us
16 in Korea, you will find us as Koreans, and so on all around
17 the world. There are just a few hundred of us Americans in
18 Ford's empire of 23 nations, I think it is, where we are
19 manufacturing today. There are just a few hundred of us.
20 We believe that we should become part of the
21 nation and develop jobs in that nation, if we want to be an
22 important participant in that nation.
23 It's gotten us around this dilemma of how in the
24 world do you get Americans willing, especially I can touch on
25 a key problem, willing to live in Asia? Because, in my mind,
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1 there is no question but what we are entering an era that I
2 think of as the Asian era. This will remain true now for
3 decades.
4 I think that it's a very fortunate fact for the
5 United States that we are positioned as we are geographically
6 where we can simply refocus ourselves across the Pacific,
7 where we have until now lived with such a dominant focus
8 across the Atlantic. If we can only do that and bring
9 ourselves to realize that's absolutely what we must do, I
10 think we have every opportunity to remain one of the vital
11 focal points in international trade.
12 How to do it, how to generate the interest, I
13 guess I would start right in the schools. I talked about how
14 business certainly has to be more active than it has been in
15 working in the school environment. We could be helping to
16 generate interest in living overseas, in the tremendous
17 environment that can provide a stimulation, stimulating
18 environment that it can provide. Our people who do go
19 overseas invariably consider it among the highlight periods
20 in their lives.
21 So I think there are many things that we ought to
22 be able to do to generate more interest among Americans in
23 outreach, if you will. I certainly hope so, because I think
24 it's a very important element.
25 CHAIRMAN CLINTON: Governor Bryan. This will have
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1 to be the last question.
2 GOVERNOR BRYAN: Mr. Petersen, many of the
3 commentators who have compared American business philosophy
4 with Japanese business philosophy make the comparison that
5 Japan has a long-term focus, that they are prepared to accept
6 some short-term losses for long-term advantages.
7 Just the opposite seems to be the American
8 corporate philosophy. That is, we are so anxious to see what
9 the bottom line is this year that we have often lost sight of
10 the long-term advantage and market share that might be gained
11 from that new product that initially involves enormous
12 expense with no apparent short-term benefit.
13 Could you comment on that observation.
14 MR. PETERSEN: I think there's an element of truth
15 in it. In some respects, I think it's been even more true in
16 these past years, in the '80s, when -- you are never quite
17 sure when the next raider is going to be attempting to take
18 over your company.
19 It's a little bit hard to be long-term in your
20 view if you are facing some very, very serious questions
21 about whether you are going to survive as an entity. It's
22 also a truism that we live with the dynamics of Wall Street
23 as part of our ongoing lives. That has its effect on the
24 American psyche, business psyche.
25 So I do believe there is an element of a problem
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1 for a business person in the United States to work with and
2 to develop the right balance of short- and long-term
3 objectives, vis-a-vis some of the other societies. Again, I
4 think we are talking particularly the Asian societies.
5 perhaps the difficulties of the past, close on to
6 10 years, has done its job and has been sufficiently
7 therapeutic to cause more and more businesses to realize that
8 the long-term stability of the enterprise is obviously the
9 most paramount issue that any chief executive of any major
10 group of management individuals must face.
11 Certainly it's an institutionalized feeling in my
12 own company. And I sense, as I talk with other chief
13 executives, other people in business, that there is a growing
14 awareness of the importance of this, and a determination to
15 inject more thrust as far as long-term objectives into the
16 overall strategy that a company has for the future.
17 It's an ongoing problem, and there are some
18 built-in institutional reasons why it's there and it's going
19 to continue to be there.
20 CHAIRMAN CLINTON: Thank you very much,
21 Mr. Petersen.
22 (Applause. )
23 CHAIRMAN CLINTON: We are about ready to start the
24 final report of the Barriers Task Force, which I hope will be
25 interesting to you.
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1 Governor Baliles has asked to be recognized for
2 just a moment. I want him to make a brief comment, and then
3 we will go on to the report of the Barriers Task Force.
4 GOVERNOR BALILES: Mr. Chairman, I think it's
5 clear from this conference that in state after state many
6 good ideas are finding their way to the surface, offering the
7 debate for risk and models for action by other states. Time
8 and time again, whether we are talking about education, human
9 resources or economic development, the NGA has been a
10 catalyst for change in action in the national debate.
11 But during this conference, several comments have
12 been made, some from our speakers, that disturb me, because
13 it's been inferred that with all of our problems in the area
14 of economic development and trade, that our greatest
15 challenge is figuring out what to do about the Japanese.
16 The fact is, if you take the Japanese and the West
17 Germans together, they account for only 22 percent of
18 American trade. Canada, with whom we do not seem to have
19 many problems, accounts for almost 21 percent of the trade.
20 If you take south Korea, Brazil and some of the other
21 countries, they being for about 11 percent of the trade. So
22 it seems to me that while we need to keep the pressure on and
23 talk about two-way trade and removal of barriers, I think it
24 would be a mistake for anyone to associate disassociation as
25 engaging in the bashing of one country over another.
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1 The fact is that international trade is a way of
2 life; it has been going on for years. 25 years ago, when
3 Kennedy was president, I think the numbers that I saw the
4 other day, less than 10 percent of our GNP was tied up in
5 foreign trade. Today, it's 1/4. By 1990 it will be 1/3. 25
6 years ago, only 1/4 of our company faced foreign
7 competition. Today, it's 70 percent. So whether we like it
8 or not, foreign trade, international trade, will be a fact of
9 life for all of us to consider.
10 In the words of that immortal professor, Harold
11 Hill, much of the trouble, at any rate, is right here in
12 River City. The NGA report that Governor Clinton directed us
13 to consider and develop is aimed at healing ourselves, making
14 us competitive, so that when the streets are open, the
15 barriers are down, we have the able to hustle and compete in
16 world markets. I think it's important for us to recognize
17 that the importance of this report that the governors have
18 developed is to provide us with the ability to compete and
19 survive in an international marketplace that I think is here
20 forever.
21 CHAIRMAN CLINTON: Thank you very much, Governor
22 Baliles. I would just like to say in support of that, a
23 couple of brief remarks. All the studies I have seen
24 indicate that of the $60 billion trade deficit we had with
25 Japan last year, only about 20 percent of it was attributable
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11 to restrictive markets in that country. By contrast -- which
2 is about 6 percent of our total deficit by contrast, 19
3 percent of our trade deficit last year was due to the
4 depression in Latin America, which exceeds the conditions
5 which prevailed in the '30s. And if the growth rates of the
6 '70s had prevailed there, our trade deficit would have been
7 20 percent lower, and the farmers in the middle of the
8 country would have been much better off.
9 I think there's much we have to do with the
10 Japanese, not only with regard to markets, but in helping
11 them reduce the Third World debt. I think it's important to
12 do it in the context of always recognizing that we have a
13 responsibility to order our own house first.
14 Now, I would like to ask you to direct your
15 attention to the screens behind me. We will begin the final
16 report of the Bringing Down the Barriers Task Force.
17 (Presentation of "Bringing Down the Barriers"
18 film. )
19 CHAIRMAN CLINTON: When I became chairman of the
20 National Governors Association last year, the governors had
21 been working hard for four years on education reform. One of
22 the most fundamental issues of our time. Our association had
23 just issued a report on what governors should be doing for
24 the next five years to get the reform band-wagon rolling and
25 keep our schools improving.
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1 But I assumed the chairmanship with a haunting
2 sense that as important as these education reforms were, much
3 more needed to be done. I established this welfare
4 prevention project, the Barriers Project, composed of five
5 task forces dealing with most widespread and crippling
6 barriers facing our country today, welfare dependency, school
7 dropouts, teen pregnancy, adult illiteracy and alcohol and
8 drug abuse.
9 The plans developed by these task forces
10 emphasized prevention and are designed to enhance the ability
11 of our people to live up to their God-given capacities. And
12 in so dOing, to provide the contributions we need from them,
13 I am grateful to the governor of Delaware, Governor Castle,
14 to Governor Perpich of Minnesota, Governor Thompson of
15 Illinois, Governor Ashcroft of Missouri and Governor Collins
16 of Kentucky for their work in chairing these tasks forces.
17 Their work is found in the Bringing Down the Barriers Report,
18 which will now be presented by them.
19 Since March of 1986, Governor Castle and I have
20 worked as a team on the important subject of welfare
21 prevention. The National Governors Association will be proud
22 of the role we played in this welfare reform prevention
23 movement.
24 Governor Castle.
25 GOVERNOR CASTLE: Thank you very much,
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11 Mr. Chairman.
2 The task force of which I am chair came into
3 existence in February 1986, to take up the question of
4 welfare reform. It is significant that one of the first acts
5 of the task force was to rename itself from Welfare Reform
6 Task Force to Welfare Prevention Task Force. We could have
7 easily called it the Human Opportunity Task Force, because
8 that is the real issue the members of the task force and
9 every governor in this organization has addressed. Dignity
10 and hope and opportunity.
11 Over the past year and a half, the Welfare
12 Prevention Task Force has focused on the issue of redesigning
13 the welfare program as we know it, changing the emphasis from
14 income maintenance with a minor work training component, to
15 employment training with a minor income maintenance
16 component.
17 The work of the task force has taken two paths.
18 First, was the development of a welfare reform policy that
19 would support a major shift to emphasizing employment and
20 training opportunities for people already on welfare. Once
21 that policy was in place, we turned our attention to the
22 development of prevention strategies to end the generation
23 after generation of dependency the current system
24 encourages.
25 This would complement the work of the other task
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1 forces addressing the issues of teen pregnancy, substance
2 abuse, school dropouts and adult literacy. This effort was
3 not unlike the search for the single spring that represents
4 the beginning of a great river. To arrive at the root causes
5 of welfare dependency requires a long journey. And, for the
6 most part, the origins of that dependency are found at the
7 beginning of the recipient's life and even before.
8 It's almost like predestination. In many cases, a
9 24-year-old single mother on welfare today was born into
10 welfare. Her mother did not receive proper medical care
11 during pregnancy. As a baby, she received inadequate care.
12 The factors that put her at risk were not identified early
13 enough or were ignored. If we are to truly prevent welfare
14 and even work toward eliminating it, then we must concern
15 ourselves with intervening early on.
16 The question always before us was, what
17 interventions can be made and at what points in the person's
18 lifetime should they be made to maximize every individual's
19 chance to be healthy, productive and independent.
20 Because our original charge was a welfare reform
21 policy, we applied the question first to current adult
22 welfare recipients. We looked at the historical mission and
23 structure of the Aid to Families with Dependent Children
24 program. We talked to clients. We read the available
25 research on both the characteristics of AFDC clients and the
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11 impact of AFDC on their lives. We concluded that the current
2 welfare system requires people to choose between security
3 without pride or pride without security.
4 The welfare reform policy, adopted by the
5 governors in February, would change that. Adopted by
6 Congress and signed into law by the president, it would turn
7 the welfare system into a system capable of repairing damaged
8 and unproductive lives and would allow this nation to make
9 good on its promise of opportunity for every citizen.
10 We believe in a strong child support system, one
11 that ensures that each parent lives up to the responsibility
12 to support the children he has brought into the world. We
13 support a flexible emploYment program, combined services,
14 ranging from remedial education and training to child care.
15 We recognize the need for a case management
16 component that ensures its services reflect an individual
17 client's needs, resources and family circumstances. We
18 support a contract between client and agency which clarifies
19 the responsibilities of each. We believe that government can
20 help remove disincentives to work and can smooth the
21 transition to self-sufficient by providing key support
22 service like child care and healthcare coverage.
23 Finally, we support a revised income assistance
24 program, a family living standard based on state specific
25 costs of living, to provide fair and adequate support to
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1 families moving towards independence, as well as to families
2 that may never become totally free of the need for the
3 community's help and to nourish and sustain children
4 regardless of where they live.
5 With our welfare reform policy adopted and moving
6 towards Congressional action, we turn again to the question
7 of strategic points of intervention in a person's life that
8 would reduce the risk of the eventual dependency. We asked
9 ourselves what could we do for the children, the 7 million
10 children who live on AFDC and the 5 million children not
11 serving by the welfare system, who live in poverty in our
12 country.
13 The information emerging from the other task
14 forces about the interrelated natures of the problem of teen
15 pregnancy, substance abuse, school dropouts and adult
16 literacy and their common basis in low academic achievement,
17 low self esteem and restricted life options, haunted us as we
18 searched for the key elements of a strategy for children. A
19 simple yet profound truth emerged. By investing in some very
20 basic protections for our children, we can reduce the risks
21 they face; the risk of dependency, the risk of failing in
22 school, the risk of unhealthy lives, their risk that they
23 will give up on life convinced that life has given up on
24 them.
25 Comprehensive prenatal care, preventive
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11 healthcare, a healthy diet, child care that enhances a
2 child's educational and social development. Family resource
3 centers to nurture and support parents' efforts to raise
1 4 healthy children and recreation opportunities which
5 positively engage children's energy. These are the things in
6 which we must invest.
7 How can governors direct this change?
8 As it happens, the steps involved in developing an
9 action agenda for welfare recipients are little different
10 from the steps involved in developing an agenda to prevent
11 dependency in succeeding generations of children. There are
12 four critical factors: Leadership in the governors office,
13 creative reallocation of existing funds and pooling of funds
14 from multiple sources, broad interagency collaboration and
15 development of the public/private partnership at the
16 community level.
17 We believe that our best contribution to the
18 welfare debate has been to reshape the way we see the
19 problem. We can all look at the streams of discouraging
20 statistics and see a large and hopeless mess. Or we can look
21 at the statistics and see opportunity, opportunity to change
22 the way we do business, to invest wisely, systematically and
23 substantially in prevention.
24 The question before us all is how to bring down
25 the barriers to productive lives, invest in our human capital
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1 and make America competitive in a global economy. We must
2 act in concert; governors, Congress, county commissioners,
3 mayors, state legislatures, citizen advocates, communities,
4 churches. We must act deliberately and thoughtfully,
5 implementing investment strategies based on tested ideas and
6 at the same time open to innovative approaches. Our problems
7 are complex, but they are solvable. We cannot afford not to
8 solve them. Our very survival as a nation of compassion,
9 creativity and strength depends on it.
10 Thank you.
11 (Applause. )
12 CHAIRMAN CLINTON: More than 4 million teenage
13 girls in this country become pregnant each year, a teen
14 pregnancy rate that surpasses all other western developed
15 nations.
16 Governor Thompson.
17 MR. THOMASIAN: Thank you, Mr. Chairman.
18 The work of this task force just may be the most
19 important item on our agenda today. I say that because we
20 are attempting to call attention to the nationwide problem of
21 children giving birth to children. It's not a population
22 explosion, but it carries significant problems today and for
23 the future of our states, for the future of those very young
24 mothers and fathers and their babies. We are all aware of
25 the effects that teen pregnancies have in our own states, in
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11 our schools, our welfare departments, our child protection
2 agencies.
3 But consider the impact nationwide. Here are just
4 a few of the statistics gathered during the course of this
5 task force's work.
6 Point one, more than 1 million teenage girls in
7 America become pregnant each year. Often forgotten are the
8 teenage boys and young men who become fathers each year.
9 That astounding and unacceptable teen pregnancy rate places
10 the United States first among all western developed nations
11 in its rates of teen pregnancy, abortion and births. Not a
12 record for us to point to with pride.
13 Point two, because these child mothers often
14 receive medical care late in the pregnancy, the probability
15 increases for low birth weight babies with complex and
16 expensive health problems. The likelihood increases that
17 their babies will die in the first year of life.
18 Point three, the future for these young mothers
19 and fathers is at risk. Teen pregnancy is the number 1
20 reason for females to terminate their education prematurely.
21 Without an income or job skills, these young parents will
22 turn to the government for assistance. Too many will never
23 know anything but a life on welfare.
24 Point four, the welfare, food stamp and Medicaid
25 cost of teenage childbearing last year was $18 billion. That
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11 conservative estimate exceeds the entire budgets of all but
21 four of the 50 states.
3 Those are only statistics, cold numbers. They may
1 4 describe the impact on a government budget document, but the
5 children have their own stories. In Illinois, our
6 parents-too-soon program has launched a media campaign to let
7 teens talk about the consequences of teen sexuality, about
8 the harsh realities of being a parent too soon.
9 (Film continued.)
10 MR. THOMASIAN: The task force examined the
11 parents-too-soon program in Illinois, efforts of the
12 governors on the task force and throughout the country. We
13 found much to be commended to all of you. We have completed
14 a report containing a full set of recommendations directed
15 towards the responsible approach by state government.
16 Through a careful analysis of successful programs
17 throughout the nation, the task forces developed a guide with
18 an eight-step process that states will find useful in
19 developing or building on their own programs. We recognize
20 that every governor in every state must tailor his own
21 system. We recognize that every governor must act.
22 In Illinois, we are paying attention to the
23 children of teenagers as well as their parents. As one
24 method of breaking the cycle of children having children, we
25 have adopted the class of '99. If we don't take special care
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1 of those four-year-olds today, we will compound problems for
2 both society and those children at the turn of the century.
3 Through that adoption, we are setting goals for state
4 government to work with volunteers and the private sector to
5 guide those children away from early pregnancies, away from
6 alcohol and drugs, away from gangs and prison. If we lose
7 the child, we lose the adult. By current statistics, at
8 least one of every seven females in the class of '99 will
9 have, as children themselves, become pregnant. We aim to
10 reverse that trend.
11 For the short-term, we turn to our community-based
12 parents-too-soon program, which receives its strength from
13 its diversity. We recognize that what works in Chicago may
14 not be best for rural Illinois. And what works in my state
15 may not be the answer for your state.
16 There are, I believe, three recommendations that
17 apply to all states and need to be highlighted in our brief
18 remaining time today.
19 First, our recommendations begin with ourselves.
20 While many of the programs will be adopted and implemented at
21 the local level, leadership by governors is critical.
22 Second, coordination among the many agencies and
23 volunteer groups serving youngsters is an important element
24 of the successful program. The more comprehensive approach,
25 the more better are our chances of reducing the number of
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1 pregnancies. Early sexual activity and early pregnancy are
2 linked to problems associated with low school achievements,
3 school dropouts, juvenile delinquency, teen unemplOYment and
4 alcohol and drug use. Programs aimed at combatting those
5 programs are directed at the same people we are trying to
6 reach. We will get our best results by coordinating the
7 response.
8 Third, the task force urges all states to increase
9 the awareness and the accountability of the fathers. Equal
10 attention should be focused on young males, both for
11 pregnancy prevention and to prepare them for the
12 responsibilities of being a parent.
13 In Illinois, we will increase our efforts in this
14 area next fall when we join with the United Way and the Urban
15 League for a summit on male responsibilities. Too often,
16 young males assume they can walk away, and they do walk
17 away. Males should be part of the solution. It means
18 encouraging males to postpone sexual activity and letting
19 them know the realities of child support enforcement. It
20 means including the fathers in parent education courses,
21 regardless of whether they have married the mother of their
22 children. It means reaching out to parents, instructing them
23 on their responsibilities for their son's sexual behavior and
24 its consequences. It means targeting, training and
25 emplOYment programs to young, unemployed fathers so they can
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11 provide for their new families and recognize the
2 responsibilities of raising a family.
3 The governors and their staff members assisting
4 this task force have done a very good job. Many of us think
5 that we have excellent programs in our own states to serve as
6 models. But in reality, there is much more to be done. We
7 cannot outlaw teen pregnancies through legislation, require
8 bureaucratic permits or taxing out of existence. We can only
9 commit to working on all fronts, to supporting our
10 communities and social service workers in the field. We
11 cannot sit back and do nothing. The price of inaction is too I
12 high. The governors of this nation should be prepared to
13 act.
14 Thank you.
15 (Applause. )
16 CHAIRMAN CLINTON: Governor Ashcroft chaired our
17 Task Force on Adult Literacy. Regretfully, he cannot be here
18 with us today. He has asked me to read his report and
19 present it for him.
20 Literacy may be the most important issue of our
21 time. It is fundamental to everything else, our system of
22 education, our work, the efficiency and productivity of our
23 society. It's fundamental to human fulfillment and to the
24 appreciation of world culture on western civilization. It's
25 fundamental to the future of our democratic republic. The
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1 literacy task for has benefitted from the exemplary work of
2 the United States Department of Education's national
3 assessment of educational progress. NAPH has published
4 several notable reports dealing with literacy.
5 Literacy has has received attention in the
6 publishing arena. Books by David Harmon and E.E. Hirsh Jr.
7 have received widespread attention and have elevated and
8 enlightened the national discussion of literacy.
9 But nothing has done more to bring public
10 attention to literacy than has the cooperative effort between
11 the Public Broadcasting Service, PBS, and Capital Cities,
12 ABC, Project Literacy U.S., or PLUS. ABC and PBS have
13 recently announced that they will continue PLUS for another
14 year. Both networks have major literacy programming events
15 in development in many everyday of every week PLUS
16 advertisements aired throughout the country.
17 In addition, the PLUS initiative has launched a
18 new literacy effort with America's theme parks entitled "Read
19 America, Win America." One of America's foremost
20 entertainers and theme park entrepreneurs, Dolly Parton has
21 agreed to chair this creative effort.
22 This task force worked with PBS, ABC and the
23 Education Commission of the States to sponsor a national
24 literacy summit in St. Louis in March. In the room on that
25 day, were many of the key players in the literacy efforts in
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11 our country, including President Frank Newman of ECS, Jim I 2 Duffy, president of Capital Cities, ABC communications
3 network. Margo Woodwell of PBS station WQED in Pittsburgh
1 4 and Harold McGraw, chairman of the board of McGraw-Hill and
5 founder of the Business Council for Effective Literacy. I 6 Other guests included foundation executives, scholars,
7 business leaders, association officers, political leaders and
8 educators.
9 The members of the task force are very encouraged
10 about the serious interest in literacy displayed by leading
11 America corporations. The number of companies sponsors
12 literacy initiatives and organizing in-house efforts
13 continues to expand. Governor Ashcroft and his task force
14 are pleased to note that several companies, McGraw-Hill and
15 General Dynamics, among others, have made significant
16 contributions to supporting the National Literacy Hotline,
17 the basic referral agency used in the PLUS campaign and by
18 state literacy coalitions in many of your states.
19 The burgeoning literacy movement in America has
20 received a tremendous boost from leading civic, political and
21 entertainment personalities. Their efforts to bring
22 increased public awareness to the issue and to recruit new
23 tutors and learners is accomplishing much to make easier our
24 jobs at the state level.
25 The task force has identified seven key components
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1 of an effective state literacy strategy to be led by
2 governors, that makes sense for our times. It's strategy
3 that calls for gubernatorial leadership. Let me share with
4 you its seven crucial themes.
5 First, a state literacy strategy that can bring
6 down the barriers to employment must focus on the needs of
7 adult learners. Adults learn differently than children do.
8 Their motivations are different; usually to enhance their
9 chances for increased work responsibilities and pay, to keep
10 up with changes in the nature of work or in anticipation of
11 new employment. Learning for adults is contextual,
12 functional and relevant to their needs in life. Those of us
13 who make state policy must acknowledge the circumstances in
14 which adults learn, and shape programs and services to meet
15 those special considerations.
16 A second component of the state successful
17 literacy strategy is to find ways to enhance literacy
18 training in the workplace. Because adults are best motivated
19 to learn in the work setting, state governments should take
20 advantage of that motivation to promote literacy programs in
21 conjunction with business and labor.
22 Related to promoting workplace literacy is the
23 need to foster cooperation among state agencies for private
24 sector and volunteer groups that deal with literacy. The
25 problem of adult literacy is staggering. We cannot afford to
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waste anything through inefficiency. 11I
2 I have already mentioned some of the corporate
3 leaders in literacy. Let me mention now some of the
1 4 volunteer groups that have labored in this field for years
5 without receiving the recognition they richly deserve. The
6 Lawback Literacy International, International Reading
7 Association, Literacy Volunteers of America, public
8 libraries, church groups and many others. These volunteers
9 have given time, money and dedication in the struggle to make
10 our citizenry more literate and productive.
11 As governors, we need to assure that business,
12 labor and volunteer groups are fully incorporated in our
13 literacy strategies.
14 The fourth component of a good literacy strategy
15 is to further program productivity and accountability. One
16 of the common themes shared during the task force meetings
17 was a need to ensure that literacy programs supported with
18 public funds are really working, and that they make a real
19 difference in the lives of adult learners.
20 Literacy programs need to be accountable for the
21 public funds they spend. We owe this to the taxpayers and to
22 the adults who come to the program as tutors and learners.
23 The fifth idea is this. We need to facilitate
24 means by which parents and children can jOintly enhance their
25 own literacy skills. Parents who foster an environment
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conducive to reading and learning in the horne will be doing 11I I 2 much to promote good literacy skills among their children.
3 In Missouri, Governor Ashcroft developed a program
1 4 called Parents as Teachers to help parents learn how they can
5 become their children's first and best teachers. This helps I 6 parents know when the child is ready to learn and what kinds
7 of learning are appropriate as the child develops. We need
8 to break the intergenerational cycle of illiteracy. I cannot
9 think of a better or more logical place to start in the than
10 in the horne. Our schools must be in the front line.
11 Although the task force recognizes an intervention
12 strategy necessary to address the problem of adult literacy,
13 a prevention strategy based in our schools is just as
14 important. Thus, we suggest that all governors follow
15 through with existing reform elements in elementary and
16 secondary education as a way to best prevent adult
17 illiteracy.
18 Many of us are heavily involved in implementing
19 education reforms that we sponsored in the last several
20 years. We must continue. We must work to prevent adult
21 illiteracy by enhancing the educational opportunities and
22 achievements of children in our schools.
23 Seventh and finally, a suggestion for effective
24 state literacy strategy is this. We need to formalize plans
25 to help welfare recipients receive basic literacy skills that
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Ii I will help them to find productive employment. Providing 2 basic literacy training to those on welfare who need it is
3 essential to an effective welfare reform effort.
4 Finally, I want to mention the cooperative
5 relationship that task forces had with the Council of State,
6 Planning and Policy Agencies, one of NGA's affiliated
7 agencies. CSPA sponsored a state policy academy for
8 increasing literacy for jobs and productivity, June 1st
9 through 5th in Excelsior Springs, Missouri.
10 Teens from 10 states were selected to participate
11 in the academy which helped to clarify state literacy needs
12 and to develop policy to address those needs effectively. In
13 addition, CSPA has developed a literacy policy guide which
14 the task force helped to shape. Each of you will receive a
15 copy of that at this conference.
16 The task force appreciates this opportunity to
17 share with the governors the seven components of an effective
18 literacy strategy and to present information on the broader
19 literacy movement in America.
20 (Applause. )
21 CHAIRMAN CLINTON: At our February meeting, the
22 Task Force on Alcohol and Drug Abuse Prevention brought us
23 Amy Freeman and her parents. Amy is a teenage alcoholic and
24 drug addict who told us of her 16-month struggle to become
25 drug and alcohol free. We were all touched; we all yearned
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1 to reach out and help young people and adults like Amy.
2 Governor Martha Lane Collins.
3 GOVERNOR COLLINS: First of all, I would like to
4 thank all of the governors on this task force and their
5 staffs for the wonderful cooperation and job that they did.
6 I hope that all of the governors have seen the bags that have
7 been stuffed with information from about 12 different
8 states. I hope that you will take them home and share them
9 with your staff.
10 For nearly a year the Task Force on Alcohol and
11 Drug Abuse Prevention has been working to develop a
12 comprehensive plan for fighting substance abuse that can be
13 adapted to our states. Today, on behalf of the members of
14 that task force, I would like to present our agenda for state
15 action.
16 Our recommendations are not costly, and they will
17 work. They can be suited to the particular circumstances in
18 any state. The keystone around which they are built is an
19 effort to prevent abuse in the first place. But education
20 and prevention by themselves are not enough. They must work
21 in concert with other measures. The four steps of our action
22 plan are; one, lay the ground work; two, find a program that
23 works; three, find funding for the plan; and, then, four,
24 rally support for that plan.
25 Now, I would like to give you a more in-depth look
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1 at these steps and offer you some concrete examples of how an
2 action plan can be implemented. To lay the ground work for a
3 broad-based prevention and education program, states must
4 first assess the scope of the problem then develop individual
5 strategies. In the early planning stages, states need to
6 establish a clearinghouse for information, such as a task
7 force or a statewide action group. The clearinghouse would
8 report directly to the governor and would be instrumental in
9 developing the final action plan.
10 Develop a centralized system where substance abuse
11 data and statistics are collected. This enables states to
12 determine the scope of their substance abuse problem and will
13 help in targeting programs.
14 Review existing services. States should closely
15 examine current programs before deciding what areas need more
16 attention or where changes need to be made, and then
17 I coordinate state agencies that deal directly with drug and
18 alcohol abuse. In Kentucky, we have organized our state
19 agencies and other key groups under the umbrella of Champions
20 against Drugs. The division of Substance Abuse and the
21 Cabinet of Human Resources helps direct and plan the
22 Champion's efforts.
23 Several other states have undertaken similar
24 coordinated approaches, such as New Jersey Governor Kean's
25 Alliance for a Drug-Free New Jersey. Under the Alliance,
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1 Governor Kean is working to establish a drug-free program
2 against substance abuse in all of New Jersey's 567 cities and
3 towns.
4 Missouri's governor, John Ashcroft, recently
5 announced a six-part drug and alcohol abuse initiative
6 entitled "Mo Says No to Drug and Alcohol Abuse."
7 The Governors Alliance Against Drugs, spearheaded
8 by Massachusetts Governor Michael Dukakis is a nationally
9 acclaimed program which began in 18 communities in 1984 and
10 has grown to over 300 communities. Programs such as these
11 enable states to better focus responsibility and encourages
12 cooperation on both the state and local levels.
13 After laying the groundwork for a comprehensive
14 plan, states must find a program that works, which includes
15 addressing the areas of prevention and education, training
16 and professional development, intervention and treatment and
17 interdiction in law enforcement.
18 Prevention and education continue to be our most
19 effective weapons in the fight against substance abuse.
20 These programs are aimed at discouraging individuals from
21 ever using drugs and alcohol. Kentucky's Champions program
22 enlists the help of the well known sports figures and other
23 celbrities in spreading the message that drugs and alcohol
24 are dangerous. The members of our Council of Champions
25 volunteered to participate in rallies and other events that
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11 promote drug-free environments.
2 In designing an effective education and prevents
3 program, anti substance abuse messages must be tailored to
4 different age groups. In Kentucky, we have recently
5 introduced a very exciting program into several of our
6 schools' curriculum. project Dare, which originated in
7 California, gears messages to kindergarten and elementary-age
8 young people. One of of the unique aspects of Project Dare
9 is that a uniformed policeman serves as an instructor. This,
10 we have found, teaches children respect for law enforcement
11 officials, and we are already in the process of expanding the
12 program.
13 Training and professional development for those
14 involved in a fight against alcohol and drugs are also
15 essential ingredients for successful action plan. The
16 purpose of training and professional development is to
17 sharpen the abilities of teachers, judges, social workers and
18 others in detecting individuals with substance abuse
19 problems.
20 Intervention and treatment are vital components in
21 any broad-based state program. Schools and communities
22 across this country have already taken the initiative and
23 established substance abuse centers to help our citizens
24 triumph over drug and alcohol problems. Peer groups in
25 several states are using positive peer pressure in an effort
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11 to keep individuals from forming drug and alcohol abuse
2 habits, or help those with problems conquer it.
3 Amy Freeman, the young woman who testified during
1 4 NGA's February meeting, was a participant in such a peer
5 problem called Kids Helping Kids. Finding programs that
6 work, states must control not only the demand for but also
7 the supply of dangerous substances. States must make a
8 concerted effort to reduce the supply through increased law
9 enforcement and more stringent regulations.
10 In Kentucky, we've stepped up our efforts to stop
11 the supply of illegal substances. Last October, the National
12 Guard in Kentucky joined forces with Kentucky state police in
13 the "green-gray sweep," an operation to locate and destroy
14 marijuana fields across the Commonwealth. Our enforcement
15 efforts enabled us to confiscate and destroy $949 million
16 worth of marijuana last year alone, more than any other state
17 in the nation.
18 In October 1986, Iowa, under the leadership of
19 Governor Terry Branstad, took an innovative step in opening
20 eight correctional facilities for individuals convicted of
21 driving while intoxicated. These facilities combined
22 treatment programs, supervised living and emploYment
23 opportunities.
24 Once a program course has been charted, the next
25 step, the third step in our proposal, is find funding for the
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11 plan. Funding can come in many forms from several sources. I 2 In addition to state and federal money, states should not
3 forget to look to businesses, community organizations,
1 4 individuals, banks, corporations and even the media for
5 support. The key is to be -- is to determine long- and I 6 short-range goals and fund those programs that have proven to
7 be good investments or have the potential for being highly
8 successful. It is also important to once again survey
9 current expenditures and consider redirecting funds, if
10 necessary.
11 After states have formulated a comprehensive
12 strategy and have found funding for their programs, the final
13 and most important step is rally support for the plan. As
14 state leaders, governors can and must playa vital role in
15 garnering support for and implementing a successful program.
16 I have cited just a few examples of states that
17 have already begun coordinating and instituting substance
18 abuse programs. Many more states have begun exploring ways
19 to fight the drug and alcohol problem that plagues our
20 nation.
21 Our four-step proposal is meant to be used as a
22 guideline for mapping out individual action plans. Our
23 recommendations are far-reaching, comprehensive and
24 practical. It's imperative that we act on them, taking any
25 necessary initiatives strengthening existing programs. The
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1 frightening numbers tell us why. Too many dreams are being
2 destroyed, too many lives are being devastated. And we know
3 they are being devastated in every quarter of society.
4 As compelling as the numbers themselves are, even
5 more compelling are the faces of the young people. I ask you
6 to recall Amy Freeman's story of pain and anguish in her
7 struggle to overcome her addiction. Hers is not a unique
8 experience. Thousands are suffering and struggling every
9 day. Their tragedy should spur us to act, and their triumphs
10 tell us we can succeed.
11 Thank you.
12 (Applause. )
13 CHAIRMAN CLINTON: Between 14 and 25 percent of our
14 young people are dropping out of school. The Task Force on
15 School Dropouts has stated every state dollar invested in
16 educating potential dropouts returns an estimated $9.
17 The governor with the lowest school dropout rate
18 in America, Governor Rudy Perpich.
19 GOVERNOR PERPICH: It's been a privilege to study
20 an issue of great importance to this nation. Success in
21 school has great social and economic implications for
22 individuals and for society as a whole.
23 I belong to a generation that believed education
24 could be a passport from poverty to a life of productivity
25 and opportunity. As a first generation American, I could not
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1 speak a word of English when I entered school at the age of
2 5. But thanks to dedicated teachers, I learned to read and
3 write English, prepare for higher education, a profession and
4 a career in public service.
5 Today, with nearly 1/4 the students in this nation
6 dropping out of school, we must rekindle the expectations
7 that many of our parents around grand parents had for us. We
8 must rekindle the expectation in America that our children,
9 all of our children, will do well.
10 I would like to briefly describe some of the major
11 findings of our task force. I will highlight some of the
12 actions states can take to provide opportunities for many
13 more young people to succeed. We found that a strong
14 correlation exists today between success in school and
15 success in later life. In the future, it will be even more
16 vital for students to succeed in school in order to lead
17 productive lives.
18 In Minnesota, we are fortunate to have a good high
19 school completion rate. It is no accident that we also have
20 the nation's second lowest rate of incarceration. We can see
21 this relationship when we look at the few people who are
22 incarcerated in Minnesota. 60 percent of those individuals
23 never finished high school. Nationally, 2/3 of the people in
24 our nation's prisons are functionally illiterate.
25 The relationship between success in school and
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1 success in later life also shows up when we look at the
2 welfare roles. Half of the long-term users of public
3 assistance in my state are high school dropouts. The cost of
4 this failure is high, both for the individual and for society
5 as a whole.
6 Public assistance paYments may amount to a minimal
7 income for apparent and child. But collectively, these
8 paYments add up to a substantial cost for society. And the
9 costs of our correctional system are even more staggering.
10 In Minnesota, it costs $23,490 to incarcerate an adult male
11 for one year. Far less than that amount, we could support an
12 individual through a year of study at Harvard University.
13 The choices are clear, we can invest in our young people
14 today or pay the consequences later. Governors are in an
15 excellent position to point to the solutions.
16 First, we can help shape public opinion. We can
17 convey the importance of keeping our young people in school,
18 and the certainty that we can accomplish this objective. We
19 can rekindle the expectation that all of our children will do
20 well.
21 Second, as governors, we can move forward with
22 education reform that will increase opportunities for
23 students to learn.
24 Finally, we can make a strong and highly visible
25 commitment to education through our budget priorities.
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1 In what types of efforts should we invest? We
2 have time today to highlight only a few of many different
3 options. Our task force finds that there is no single
4 isolated prevention or intervention effort that works. A
5 range of services must be provided from the prenatal care for
6 mothers to second chance programs for young adults who have
7 dropped out of school.
8 The two main strategies that I would highlight
9 today are these: Provide a variety of alternatives for
10 parental involvement, and utilize technology to teach basic
11 skills.
12 First, I would like to address the role of
13 technology in helping students to succeed. Our task force
14 learned that inadequate basic skills are the strongest
15 predictor of school failure. Many states have found that the
16 skills can be taught more cost effectively, using
17 technology. Using computers, interactive video disk and
18 other devices also give students a sense of mastery and
19 higher self esteem. The Northern Carolina Governors Program
20 allows low-achieving students to work at their own pace at
21 computer terminals with programs designed to meet their
22 individual needs.
23 In Minnesota, I had the opportunity to work with a
24 PALS literacy system developed by IBM. The system has proved
25 to teach reading and writing skills to more students more
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2 conventional classroom setting. Technology has the great
3 potential to reach more students and motivate them to stay in
1 4 school.
5 The other major points I want to stress today deal I 6 with parental involvement. Many studies have shown that
7 children do better when their parents play a role in their
8 education. States promote many avenues for this involvement.
9 One such avenue is early childhood health and
10 developmental screening. Through this testing process,
11 parents can obtain an early understanding of the expectations
12 for their children. Minnesota was in the forefront in
13 beginning the screening in 197; and today, of course, many of
14 the other states have this program. Screening helps parents
15 to know their children's strengths and weaknesses, and so
16 that they may place a child where he or she will enjoy the
17 greatest success.
18 Another way of encouraging parental involvement
19 and monitoring the progress of our children is to make child
20 care available at places where parents work and where parents
21 go to school.
22 We have additional funding in Minnesota this year
23 to provide child care facilities on-site at all of our
24 vocational training centers. This encourages parents,
25 specially single mothers, to get the education they need in
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1 order to get jobs to support their families. We will make a
2 similar push to increase the number of child care centers in
3 our inner-city high schools.
4 For teenage parents, there's a dual benefit to
5 providing child care on-site at schools. It's reported that
6 1 in 4 teenage girls who drops out of school does so because
7 of pregnancy. If child care services are provided, teen
8 parents will be encouraged to complete school. Meanwhile,
9 early prevention and intervention efforts will be provided
10 for the children of these teen parents, offering greater hope
11 for their futures.
12 Finally, states must provide dropouts as potential
13 dropouts with choices with every opportunity to succeed. We
14 cannot afford to lose even one of America's young people if
15 we are to meet the challenges of the future. This year in
16 Minnesota, we enacted what we call High School Graduation
17 Incentives Program. This frees students between the ages of
18 12 and 21 to find learning environments in which they can
19 succeed. A student can select from any secondary school in
20 the state or any schools offering alternative programs.
21 Under legislation passed in 1985, the opportunity also exists
22 for these students to complete their education at post
23 secondary institutions and receive both high school and
24 college credits. We call this the Post Secondary Enrollment
25 Options Program.
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In the first year of this program, 6 percent of
the students participating had earlier dropped out of school.
So we have found that choice empowers students, empowers parents, generates greater parental involvement, promotes better support for schools. Most important, choice promotes better schools and better opportunities for the young people.
All of these are means to greater success for
individual students. There are many other activities states and local school districts can undertake to promote students'
success. Ultimately, however, an individual student must have the will and the desire to learn.
A student must be helped to see the benefits of education, as many of us were helped to see the benefits of education when we were very young. As we heard from individuals at our February meeting and on the video recap of that meeting presented today, students wanted to learn, once they saw the importance of getting a good education and once they saw some hope. They were eager to do something to be somebody.
In Minnesota we have a program that provides that motivation. Our marketing strategy, "be somebody, a star," provides tools to encourage students to adopt positive attitudes and set education and career goals. This is a program that a state, local district or community can use to
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1 help young people succeed.
2 Before you, or they are now distributing a black
3 box containing some of tools of this program, please review
4 them at your leisure and feel free to use them to develop
5 plans for your own state. As governors, we must make sure
6 that there is a commitment to helping every young person to
7 succeed. We owe each of these young people a chance to be
8 somebody, a star.
9 Thank you.
10 (Applause. )
11 (Film played.)
12 (Applause. )
13 GOVERNOR PERPICH: Our marketing program, "be
14 somebody, a star," awards the superstar an Oscar and we
15 believe -- we in Minnesota, at least, believe that you and
16 Hillary, is Hillary here? Where is Hillary? Well, you and
17 Hillary really deserve an Oscar for the good work, very hard
18 work, dedication on behalf of the children and the young
19 people of the nation. This Oscar is presented to you.
20 Hillary is not here, but the two of you together are
21 undoubtedly the superstars in this nation in what you are
22 doing for young people. I am very, very proud to be able to
23 present this to you, to what I believe is the best governor
24 the United States.
25 (Applause. )
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1 CHAIRMAN CLINTON: Thank you very much. Thank you
2 very much, Governor Perpich and all the other task force
3 chairs.
4 Because of Governor perpich's efforts in education
5 and the efforts of the other governors who are working to
6 bring down the barriers, I am pleased to announce today that
7 the council of state planning agencies has provided $180,000
8 to establish a state policy academy for 10 states and
9 Minnesota to teach officials of the states to combat the
10 problem of school dropout. I will congratulate Governor
11 Perpich and all the others of the task force who did such
12 good work.
13 This final report of the Barriers Task Force is a
14 powerful testament to the work that lies ahead of us. It is
15 clear today as it was when we started this effort that
16 America won't work if Americans can't work or learn or
17 believe in the promise of tomorrow. Governors have seen in
18 stark, permanent terms the cost of these barriers not only to
19 those that live in their shadow but to the rest of us as
20 well. We must work to break down those barriers because our
21 capacity to promote economic opportunity, even to preserve
22 our national security, is limited by the incapacity of our
23 fellow citizens. We are all in this together.
24 One of our speakers said that he was raised with
25 the idea that the obligation of our generation was to pass on
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1 to the next a better opportunity than we had, and we do face
2 that prospect that we won't be able to do that. I think what
3 is important to recognize today is that today the opportunity
1 4 of the next generation depends upon, or is the precondition
5 of our own continued opportunity. I 6 In my daughter's public school, they permit the
7 parents to come to lunch everyday and sit at the guest
8 table. I was there the other day having lunch with Chelsea
9 right before the end of the school with a lot of her fellow
10 classmates, some of whom are desperately poor. I was looking
11 at them and thinking, I hope they do better than I have done
12 economically. If you are governor of Arkansas, that's not
13 too tough. But I was also thinking I want them to do well
14 not just for them but for me as well and for all the people
15 of our generation. If they don't learn, not just those who
16 are well born, not just those who have parents who are well
17 educated but all the others as well, we are never going to be I
18 able to be what we ought to be. We will never be able to
19 compete, no matter what else we do.
20 As much as we have to do, it has become clear to
21 me also during this year that government can accomplish
22 little without a reciprocal effort on the part of those in
23 need. Government cannot replace or control that moving force
24 within each individual which causes them to abuse drugs or
25 get pregnant, drop out of school or remain illiterate or on
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t 11 welfare.
2 So government cannot be a savior, but government
3 cannot be a spectator either. We need a government that can
1 4 be a catalyst. One that offers people the right to
5 participate in the American dream in return for their I 6 willingness to assume the responsibilities of citizenship. I
7 believe most of our people are ready do their part to build a
8 new politics based on this very old idea, a social contract
9 between government and the people in which no right can be
10 asserted without a citizen being willing to assume a
11 corresponding responsibility.
12 That idea is at the heart of our welfare reform
13 proposal which requires a person to return for the right to
14 receive benefits to assume the responsibility to move toward
15 independence. It is at the heart of our best education
16 reforms, which require teachers more accountability in return
17 for higher pay; students, more effort in return for more
18 opportunity.
19 The American people want us to work together to
20 take responsibility for our future. They know we share a
21 common commitment to solving these problems. They know that
22 government cannot solve them alone or leave them alone. They
23 know they must do their part. We are making progress, our
24 schools are better, our children are learning more.
25 Manufacturing productivity is up.
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11 But we still have a long, long way go. Our nation
2 remains deeply divided by region, race, age, sex and income.
3 We simply cannot have another five or 10 years in which 40
4 percent of our people grow poorer as 40 percent grow
5 wealthier, in which both prosperity and poverty have a
6 distinct geographical aspect.
7 The states are going to do their part, but we also
8 need an agenda of national unity, committed to these new
9 partnerships which embody neither the uncritical generosity
10 of our past nor the penurious neglect of the president. The
11 principles when have guided the governors in developing the
12 Making America Work Project should be a part of that national
13 agenda of unity.
14 For example, I would argue that the national
15 interest would be served in the area of adult literacy by
16 increasing, not decreasing, student loans, but by requiring
17 at the same time those who have a right to receive them to
18 assume the responsibility of helping adult illiterates to
19 learn to read.
20 I would argue if our Japanese and European friends
21 want us to maintain our economy in a more consumer-oriented
22 manner than theirs, they, in turn, should be willing to spend
23 the vast sums of money they have accumulated on trade to help
24 us refinance the debt of the Latin American countries whose
25 depressed condition accounted for nearly 20 percent of our
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1 trade deficit last year.
2 I close my work on this project with a call to
3 you, all of you, my colleagues, Republicans and Democrats, to
4 get your political parties to address our agenda and its
5 fundamental principles. If we believe the New York
6 stockbroker and the California defense contractor has an
7 interest in common with the pain and promise of farmer in
8 Iowa or unemployed auto worker in Michigan or a poor black
9 southern school child, surely we must believe that what needs
10 to be done is a national question, without any necessary
11 partisan element. If we believe our prosperity and security
12 are threatened by the divisions among us, we must believe in
13 a national unity effort to heal them.
14 So I ask you to unite in a commitment to the
15 future of every individual child in this country whose mind
16 and strength and spirit will determine the way America will
17 walk into the future. I thank you for giving me the chance
18 to work with you this last year to reaffirm my commitment to
19 this country's fundamental principles to have renewed my
20 commitment and faith in the governors and what they can do
21 and to feel very good at the end about the promise of
22 America's future.
23 Thank you very much.
24 (Applause. )
25 CHAIRMAN CLINTON: Believe it or not, I lost my
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1 agenda. Hard to move around in the dark without losing
2 something. Some people think that's the story of my adult
3 life.
4 We now move to the consideration of the proposed
5 policy positions. We will have discussion and votes on the
6 revised and new committee policy provisions that were sent to
7 you on July 10th. You have before you these statements plus
8 any amendments made by the standing committees at this
9 conference and any proposals offered under suspension of the
10 rules.
11 To expedite matters, we will vote en bloc on
12 proposals of each committee except where a request is made to
13 consider a proposal on an individual basis. We will proceed
14 in alphabetical order by committee beginning with the
15 Agricultural Committee.
16 Will the standing committee chairman please
17 summarize and move adoption of policy postitions, beginning
18 with Governor Branstad, chairman of the Committee on
19 Agriculture.
20 GOVERNOR BRANSTAD: Governor Clinton, thank you
21 very much. The first thing that I would note is a name
22 change of the committee to Agriculture and Rural
23 Development. We have some changes in policy positions, G-l
24 on global agricultural, trade and development; G-2, strategic
25 management and investment for rural vitality; G-3 is an
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1 update of our agricultural finance policy; G-4, an
2 agricultural research technology and innovation, discussing
3 the opportunities for adding value to the agriculture
4 commodities that we produce in this country; G-5, on a
5 natural resource conservation and management; and G-7 is on
6 agricultural natural disaster management.
7 And I don't think there's a great deal of
8 controversy with this. We have another one that was not
9 recommended out of the committee. I would move the adoption
10 of the proposed policy changes by the Committee on
11 Agriculture and Rural Development.
12 GOVERNOR CLINTON: Is there
13 GOVERNOR CARRUTHERS: Second.
14 CHAIRMAN CLINTON: The motion has been made and
15 seconded.
16 All in favor?
17 (Chorus of ayes.)
18 CHAIRMAN CLINTON: Opposed?
19 The ayes have it. The policy is adopted.
20 Governor Deukmejian, the chair of the Committee on
21 Criminal Justice and Public Protection.
22 GOVERNOR DEUKMEJIAN: Mr. Chairman, the Committee
23 on Criminal Justice and Public Protection met on Sunday
24 afternoon. We discussed the issues of prison overcrowding
25 and the status of the National Guard on overseas training.
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1 The committee also reviewed its policies pursuant
2 to the directive from this body at its winter meeting. All
3 policies of this committee are current and do not need any
4 revision at this time.
5 Governor Sinner submitted a policy proposal which
6 the committee discussed but decided not to move forward on at
7 this time until further information is obtained.
8 That's the report of our committee. Thank you,
9 Mr. Chairman.
10 CHAIRMAN CLINTON: Thank you very much.
11 Governor Dukakis, chair of the Committee on
12 Economic Development and Technological Innovation.
13 GOVERNOR DEUKMEJIAN: Mr. Chairman, our committee
14 has also a series of developments that I don't think are
15 controversial, deal with housing issues, especially modular
16 housing, and how we deal with those issues and make modular
17 housing work for decent, affordable housing for families of
18 low or moderate income especially.
19 We have a proposed amendment submitted by Governor
20 Thompson of Wisconsin on rural development which jives very
21 nicely with the work of the Agriculture Committee.
22 We have a proposed amendment urged and supported
23 by Governor Celeste and the entire Committee on Technological
24 Innovation, and especially the role of governors in states in
25 working with the administration, working with the Congress,
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11 as we now embark on what clearly will be a major new national I 2 investment in technology.
3 Principally through the National Science
1 4 Foundation, but also through the Department of Defense and
5 the National Institutes of Health. I can't emphasize too
6 much how important it is for the National Governors
7 Association to work closely with the administration, with the
8 NSF and with the Congress on these issues. The President has
9 recommended a 17 percent increase in the National Science
10 Foundation budget, has signed off on a doubling of the NSF
11 budget for the next five years from $1 billion 7 to $3.27
12 billion. We are talking about a lot of money and a lot of
13 investment in a national network of engineering research
14 centers and centers for technological excellence.
15 While I know many of you are deeply involved in
16 making proposals for the supercollider and superconductor
17 project, don't forget that there's a lot of federal
18 investment that will now be coming down the road in
19 technology generally. We are going to try to establish a
20 clearinghouse with the administration, with the Federal
21 Government, where governors in states will be actively
22 involved in helping to plan, share, take advantage of these
23 opportunities, especially those states with serious economic
24 problems. This resolution deals with that and commits the
25 NGA to working closely with the Administration and the
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1 Congress as we embark on what could well be a whole new
2 chapter in public investment and new technology.
3 Finally, 10 is simply an administrative transfer
4 of responsibility from no-fault insurance to our committee,
5 and one which I do not think is controversial.
6 I would move adoption of all of these policy
7 resolutions, Mr. Chairman.
8 GOVERNOR CARRUTHERS: Second.
9 CHAIRMAN CLINTON: Motion has been made and
10 seconded.
11 All in favor?
12 (Chorus of ayes.)
13 CHAIRMAN CLINTON: Opposed?
14 Adopted.
15 Governor Moore, Committee of Energy and
16 Environment.
17 GOVERNOR MOORE: Mr. Chairman, the Committee on
18 Energy and Environment has one more position. These include
19 amendment to our electricity policy, D-15, reflecting the
20 recommendations of our Task Force on Electricity
21 Transmission. This important addition to our policy charts
22 actions that the states can take to ease the development of
23 new electricity transmission lines in order to take advantage
24 of important opportunities for sales of inexpensive
25 electricity from areas like the Midwest where we have a
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1 surplus capacity and to areas in need in our country.
2 Our policies also touch upon other recommendations
3 and changes in the following areas. An amendment to our
4 nuclear energy policy. This amendment reflects the hard work
5 of the Task Force on Nuclear Safety, and I am placed to
6 report to the plenary session, the task force developed total
7 unanimity on the policy position advanced here today.
8 In addition to that, an amendment to our policy on
9 oil and gas to reflect recent changes in the federal law.
10 And thirdly, an amendment to our policy on solid and
11 hazardous waste, making recommendation to the Congress and to
12 EPA on these important programs.
13 We embarked upon a new area of consideration to
14 and perhaps emphasis and concern more importantly to coastal
15 states. But nevertheless, the governors and your committee
16 have advanced for your consideration, new policy on ocean and
17 coastal pollution reflecting the importance of this resource
18 today.
19 And in wanting to keep current the addition we
20 undertook a review of the President's policy positions within
21 the breast of the Energy and Environment Committee. We are
22 recommending several consolidations and deletions of existing
23 policy in the form of technical changes and updates without
24 changes in substance.
25 Mr. Chairman, I move the adoption of these
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11 additions and/or changes of policy en banco
I 2 CHAIRMAN CLINTON: Is there a second?
3 GOVERNOR CARRUTHERS: Second.
1 4 CHAIRMAN CLINTON: All in favor?
5 (Chorus of ayes.)
6 CHAIRMAN CLINTON: Opposed?
7 They are adopted.
8 Governor Castle, chairman of the Committee on
9 Human Resources.
10 GOVERNOR CASTLE: Thank you, Mr. Chairman. The
11 Committee on Human Resources has covered many important
12 topics this year, from worker adjustment to focus on the
13 first 60 months. I hope you the all got that booklets on
14 that, from education to health to welfare reform.
15 Mr. Chairman let me say I have enjoyed working with you. I
16 feel very good about our accomplishments. Welfare reform
17 will continue to be a priority issue for us, as you all
18 know. And I believe that the governors working together can
19 continue to be the honest brokers of welfare reform.
20 I would like to move policies C-2 and 18 to the
21 committee resolution and a policy update on education and a
22 committee resolution on AIDS, which is a matter of great
23 importance to all of us. Before we make the actual motion, I
24 would ask that Governors Dukakis and DiPrete be recognized
25 for the outstanding work that they have done. I believe they
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1 both want to comment on this after the motion is made.
2 Governor Celeste would also like to comment on the AIDS
3 position. This is not, as we all know, a very easy subject
4 to handle, but it is a subject in which the country has taken
5 a great deal of interest, particularly in more recent months,
6 as the problems have spread in greater on the problems that's
7 come into being.
8 We fortunately have had governors who are thinking
9 in advance of that and are ready to develop and have
10 developed a policy for us which will address this particular
11 issue. With that, I would move the policy en bloc and yield
12 to the others who are the actual authors of the policy.
13 CHAIRMAN CLINTON: Thank you very much.
14 Governor Dukakis.
15 GOVERNOR DUKAKIS: Mr. Chairman, thanks to Mike
16 Castle's leadership, and with the very strong leadership of
17 Ed DiPrete and help of Dick Celeste and Tom Kean and other
18 members of the committee, we have produced through the
19 working group on AIDS, which we established over a year ago,
20 what I think is a very strong and very comprehensive
21 resolution. I think Governor DiPrete wants to comment in
22 some detail on it and its importance, and I would defer to
23 him. But I simply want to express my appreciation to the
24 members of the Human Resources Committee, to members of the
25 working group and the staff who worked so hard to produce
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I 11 what is a very strong and, I believe, a very positive
2 governors' position on aids.
3 We have much to do. As all of us know, this is 1 4 the most serious threat to the public health we have had
5 probably in our lifetimes. It is very important that we
6 establish a real partnership with our federal counterparts,
7 with the public health community and the citizens generally
8 with a very strong emphasis of education and
9 confidentiality. That is what the resolution attempts to do,
10 and I know Governor DiPrete, who has been so deeply involved
11 in this, has some comments on his own and I would defer to
12 him.
13 CHAIRMAN CLINTON: Governor DiPrete.
14 GOVERNOR 01 PRETE: Thank you, Mr. Chairman.
15 This policy that we are considering at the moment
16 is certainly a very strong policy and breaks new ground, I
17 believe, for governors, in this particular area. However,
18 the question of AIDS, and AIDS, as we all know, is always a
19 fatal disease. AIDS recognizes no borders, and I believe
20 this policy, which is -- I would be pleased to say, is an
21 improvement over the one that I first presented in February,
22 working with Governor Dukakis and the other governors and
23 staff individuals. I believe this policy we are considering
24 is comprehensive in scope, I will say it's very strong, will
25 affect not only high risk groups but, as I had suggested
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11 several months ago, I think it was important that we consider
2 the general population, and I believe the policy does exactly
3 that with an emphasis on education and the prevention of
1 4 AIDS. I would certainly encourage approval by my colleagues
5 here today.
6 Thank you, Mr. Chairman.
7 CHAIRMAN CLINTON: Governor Celeste.
8 GOVERNOR CELESTE: Thank you, Mr. Chairman.
9 I would like to express my appreciation to
10 Governor DiPrete, who raised this concern at our last meeting
11 and persued it to Governor Dukakis, who chaired a task force
12 on what is an urgent and often controversial subject.
13 I support the policy which was approved yesterday
14 in the Human Resources Committee. I would call attention to
15 my colleagues to one omission in that policy, which I think
16 needs to be a concern of each of us as we confront this
17 matter in our states. And that is the issue of under what
18 ground rules testing occurs. We do not, and I think it's
19 very difficult to come to a consensus on the matter of the
20 need for particularly a focus on voluntary testing, to make
21 that voluntary testing readily available in reliable
22 circumstances through our citizens and to avoid getting drawn
23 into undue controversy about those appropriate circumstances
24 where mandatory testing should occur.
25 I would simply underscore the fact that not only
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1 American Medical Association, Surgeon General, Center for
2 Disease Control, these who are involved professionally in
3 addressing this problem, encourage expanding voluntary
4 testing problems, recognizing the importance of
5 confidentiality, which is underscored in this resolution,
6 ensuring that the screening or testing is not so much used on
7 large general population groups who are at low risk, but
8 targeted to those who are at high risk and where necessary
9 subsidizing the cost of the tests for individuals who can't
10 afford it. I believe that the demand for the expectation for
11 reliable screening is growing. That is going to present a
12 challenge to all of us. We will have our hands full if we
13 run the right kinds of testing programs that are available
14 for people on a voluntary basis.
15 CHAIRMAN CLINTON: Thank you very much.
16 Is there a second to Governor Castle's motion?
17 All in favor?
18 (Chorus of ayes.)
19 CHAIRMAN CLINTON: Opposed?
20 It's adopted.
21 I want to say a word of personal thanks to the
22 chair to Governor Dukakis and task force and a special word
23 of thanks to Governor DiPrete who raised this issue for all
24 of us in February and insisted that we needed to move on it.
25 I would also like to thank all of the physicians and other
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I 11 people from around the country who contributed to the work
2 that resulted in our policy statement. Thank you,
3 especially, Governor DiPrete and Governor Dukakis.
1 4 Governor Baliles, chair of the Committee on Trade
5 and Foreign Relations.
6 GOVERNOR BALILES: Mr. Chairman, the committee
7 proposes three minor amendments to existing policy statements
8 of this association. The first one deals with the promotion
9 and expansion of international trade, minor amendment, simply
10 highlights the importance of the federal role in providing
11 leadership in the world's financial system, highlighting the
12 need to stabilize exchange rates, coordinate monetary and
13 fiscal policy.
14 The second amendment deals with H-6 and simply
15 expresses the strong support of this association for the work
16 and funding of U.S. Travel and Tourism Administration. The
17 third deals with a minor amendment to policy H-l,
18 substituting the most recent statistics on U.S. Trade as it
19 relates to Gross National Product. The Committee's
20 deliberations and recommendations were unanimous and I move
21 that the amendments be adopted.
22 CHAIRMAN CLINTON: Second?
23 GOVERNOR CARRUTHERS: Second.
24 CHAIRMAN CLINTON: Comment? Governor Sinner.
25 GOVERNOR SINNER: Mr. Chairman, I want to commend
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1 the committee for including this reference to the federal
2 rule in the exchange rate issue. I am sort of appalled by
3 the fact that speaker after speaker after speaker at this
4 conference has alluded to the difficulty that American
5 production products have had in the world market as a result
6 of the exchange rate problem that has existed for seven
7 years, and yet nothing that I read anywhere suggests a
8 solution. Everyone goes on, the free trade talks go on with
9 Canada, not even addressing the exchange rate problem.
10 I think it may fall, again, to the governors to
11 undertake a special effort to highlight and direct the
12 Federal Government in this area. I hope that in our future
13 work, the Committee on International Trade and Foreign
14 Relations, if it must, will take a look at specific answer to
15 this problem.
16 CHAIRMAN CLINTON: Thank you very much. I agree
17 with that.
18 Anybody else have anything to say about this
19 proposed policy?
20 All in favor?
21 (Chorus of ayes.)
22 CHAIRMAN CLINTON: Opposed?
23 It's adopted.
24 Governor O'Neill, the chair of the Committee on
25 Transportation, Commerce and Communications.
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1 GOVERNOR O'NEILL: Thank you, Mr. Chairman.
2 We dealt with a number of items on the
3 Transportation Committee. One particular under air
4 transportation led by Governor Jim Thompson, calls for the
5 reauthorization of legislation in Washington as it expires
6 September 30, and proposes diversion of trust fund monies for
7 other purposes, and it supports continuation of essential air
8 services in the country. Under motor carrier safety results
9 of hearings held in Nebraska by Governor Kay Orr and myself
10 in Connecticut, we had six components to effect a national
11 policy of truck safety in the United States. A number of
12 items in those policies called for one driver'S license, of
13 course, and also motor vehicle inspections. Also under motor
14 carrier taxation to promote procedural uniformity across the
15 United States as far as a tax base.
16 That's basically the report, and I therefore move
17 the policy issues collectively.
18 CHAIRMAN CLINTON: Is there a second?
19 MR. THOMASIAN: Second.
20 CHAIRMAN CLINTON: All in favor?
21 (Chorus of ayes.)
22 CHAIRMAN CLINTON: Opposed?
23 They are adopted.
24 Governor Orr, what are the Executive Committee
25 policies and updates?
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1 GOVERNOR ORR: Mr. Chairman, there were six policy
2 matters taken up by the Executive Committee; A-4, A-26, A-27,
3 A-28, A-29. And policy updates and technical revisions, a
4 number of policy measures. I would move that all of those be
5 enacted en bloc.
6 GOVERNOR SCHWINDEN: Second.
7 CHAIRMAN CLINTON: It's been seconded. All in
8 favor?
9 (Chorus of ayes.)
10 CHAIRMAN CLINTON: Opposed?
11 They are adopted.
12 I would now to like to call on Governor Kean for a
13 1991 update on education. Governor Kean.
14 GOVERNOR KEAN: A year ago, we gave each other
15 advice on education. Did we take it? We certainly did. The
16 report is called Results on Education, 1987. In a very real
17 sense, everybody in this room around this table wrote it,
18 just as surely as they are writing the nation's education
19 policy every day that goes by. You can't read this report
20 without thinking of people you want to talk about, people
21 around this table who are doing exciting things. You can
22 call Terry Branstad if you are ready for a bold performance
23 in investment in teacher pay. You can talk about Bob Orr
24 about what it takes to lead a comprehensive education reform
25 package. You can look to Rudy Perpich if you really want to
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1 put pressure on schools to perform for young people at risk
2 of failure. Bill Clinton can tell you what it will be like
3 to rethink the school leadership role. If you are ready to
4 go after schools year after year, just fail to teach kids to
5 even read or write, then you can call me.
6 Some people say the American political process is
7 shortsighted, but we don't see that here. What governors are
8 doing for the schools is a compelling expression of faith in
9 the future of America and the future of American children.
10 Governors make the difference, no matter if it's a Democrat
11 or Republican. Governors have made courageous decisions,
12 they've risked political capital, taken on powerful interest
13 groups. And they have done it for the children of this
14 country. Believe me, people notice. They remember, also.
15 Bob Orr, you have proved that in many so ways.
16 Would you like to make a comment?
17 GOVERNOR ORR: Yes, I would, Governor Kean. Let
18 me say quickly that in 1987, Indiana enacted it's A-plus
19 program for educational excellence, which was the most
20 comprehensive education reform package in our history. I do
21 believe the most comprehensive in the nation this year.
22 Really, it was six years of continuing effort, session by
23 session, which was climaxed in 1987.
24 My state of the state message, which was delivered
25 over statewide television in the evening, had the theme that
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1 was essentially the same as the one for this NGA conference,
2 meaning the international competition. I gave out books by
3 David Halverstam to all members and quoted one passage which
4 I will quote now.
5 "In some ways, as America faced the future and
6 prepared to find its place, it was still remarkably blessed.
7 There were, however, two real respects in which America was
8 ill prepared for the new world economy. One was the public
9 school system and the low level of literacy. The other was
10 in terms of expectations. Few Americans were discussing how
11 to marshall the nation's abundant resources for survival in a
12 harsh, unforgiving new world. II
13 To increase our school year from 170 days to 180
14 days was perhaps one of the most difficult accomplishments,
15 and we did do that. We accomplished change and overall
16 change in our educational system to make it accountable to
17 taxpayers who expect better results. Performance of all
18 individuals and schools must be effectively evaluated and
19 rewarded. I believe that we have accomplished that.
20 One use we made of television, really, to scare
21 people, to cause them to awaken with the competition in the
22 world. I would now like to ask it to be shown.
23 (Film showed.)
24 GOVERNOR ORR: That was shown week after week
25 toward the end of the session. We did obtain an increase of
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1 $640 million above an already sizable budget. And if those
2 of you are a bit frightened by the prospect of doing
3 something of that kind, let me simply make the pOint that
4 it's politically wise. During that period, my job approval
5 rating went up 10 percent. Education is popular with the
6 public.
7 GOVERNOR KEAN: Thank you very, very much,
8 Governor Orr.
9 I would like to ask now for Chairman Clinton to
10 make a comment.
11 CHAIRMAN CLINTON: Thank you very much, Governor
12 Kean. I will be exceedingly brief.
13 I have concluded, after two years of studying the
14 whole question of leadership in the schools, that it is still
15 one of the most neglected but most significant issues in the
16 whole matter of educational improvement. We recommend in the
17 1991 report several specific strategies designed to deal with
18 the people who are running the schools, how do we select
19 them, how do we train them, how do we support them, how do we
20 evaluate them. The report reveals that the states have made
21 a great deal of progress in that regard.
22 There is now a second major issue which has to be
23 faced, which is even if you get good people in the schools,
24 what will be the rules for them. Will the state be a problem
25 to them or will the state be an asset? What kind of
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2 leaders and will they work with their teachers in an
3 atmosphere of shared leadership.
4 I wrote this report for the Education Commission
5 of the States, which I released a couple of weeks ago in
6 Denver. If any of you are interested in it, we are going to
7 send it to all of you chief state school officers. I commend
8 it to you, not because it's my work but because it has a
9 whole series of specific examples from across the country
10 documented of schools where leadership is succeeding in
11 stunning fashion because of the rules that have been
12 changed. One of them in Governor Gardner's home state that
13 we deal with quite extensively.
14 I would commend that to you and I would urge you
15 to make sure that in your states you are paying close
16 attention to the issue of leadership, how do you get them,
17 how do you train them, how do you support them, how do you
18 evaluate them. Then how do you give them the environment
19 they need to succeed.
20 Thank you.
21 GOVERNOR KEAN: Thank you, Governor. As I say in
22 the preface to our report, we didn't write this report to
23 celebrate. We are doing well as governors, but we still have
24 a long way to go.
25 Where should we put our energy now? Well, I think
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11 we as governors have to, as we said in our report, get behind I
2 the National Board of Teaching Standards. Governors should
3 lead the way in defining the results, what do we really want
4 our children to know, and how do we get there state by
5 state. Governors should go after schools that fail to
6 educate year after year in spite of reform. Governors should
7 champion programs to educate all Americans to a far higher
8 standard than we do today. These are some of the best bets.
9 But there's a special opportunity, I think, that
10 we have before us right now. I first saw it last winter on
11 the Education Subcommittee, as we translated our experience
12 into a sit of principles to try to guide the United States
13 Congress as it reauthorized Chapter 1. We are now making
14 education policy, we are, as governors; that's where it is
15 happening. State leadership isn't enough. Our economic
16 competitors are acting in exactly the same agenda we follow,
17 but they don't have the muscle we have. They don't have our
18 constitution. They don't have our potential strength and
19 diversity of our people.
20 But to use this competitive advantage, to work
21 together on it, we need each other. Federal action is
22 limited by the deficit. The economies of nearly 1/3 of our
23 states that are here are weak at the moment. Some local
24 school districts have abundant money and ideas but don't know
25 where to go. They all need help.
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I Ii I We all have limits, but we can share a strength
2 that was born of a common purpose. We must join those
31 willing to link the energies of the states and localities to 4 the actions of the Federal Government.
5 We have concentrated our experience into a set of I 6 principles, respecting the states' responsibilities to set
7 high standards and then to follow through. Supporting the
8 focus on schools as a place where results can really count,
9 concentrating on the schools with the greatest needs,
10 supporting and nourishing teachers, rewarding performance and
11 so on.
12 On your behalf, I have asked the Congress to apply
13 those principles in a straightforward manner. We have allies
14 in the Congress who are very willing to work on education
15 matters with the governors. Congress is now asking hard
16 questions on major education programs. Let's try to work
17 with them this fall as they wrestle with these ideas. Let's
18 talk about those districts with the highest proportion of
19 poor and low achieving students.
20 That's where our nation's future lies, for good or
21 for real. In the United States of America, there is no place
22 for an underclass. Over time, we need to concentrate our
23 funds and our energy. That doesn't mean rewarding past
24 failure with more money. We need to combine more money with
25 better tools and absolutely better controls and measurement
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1 on performance. I would offer performance grants only to
2 those low achieving schools that start to get results.
3 Let's start to reward success in education for a
4 change and not reward failure. Let the others who fail try
5 to explain to their people why in spite of more money and
6 more help they weren't able to succeed. I want somebody
7 beside the children to pay the penalty for increased
8 educational failure.
9 This nation has some thinking to do before it's
10 ready to invest in a major way in education at the national
11 level. Invest we must; governors are setting the terms of
12 that discussion, governors are leading the way. Governors
13 are not going to walk away from the schools.
14 I am turning over this chairmanship to Governor
15 John Ashcroft of Missouri. Governor Ashcroft couldn't be
16 here today, but he wanted me to tell you that he will
17 continue to work with you in every way. He asked me to tell
18 you that he will continue forward with time for results, and
19 he is particularly interested in the area of parental
20 involvement. He wants to pursue that more. He wrote me. He
21 said we need to reconnect our families to the schoolhouse.
22 Also, we need to reconnect neighborhoods and
23 communities to the schools. I firmly believe that we cannot
24 enjoy the success we so earnestly desire for education reform
25 unless we gets parents, grandparents and citizens involved
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2 learning for their children.
3 More than 100 years ago, Abraham Lincoln said, on
4 the subject of education, "I can only say that I view it as
5 the most important subject that we as a people can be
6 enjoined in." We believe that today as governors. Nothing
7 is more important. Nothing that we are doing, certainly
8 nothing that Washington is doing, is more important than the
9 education of our children. Because if we fail in that
10 regard, we fail in all other regards also.
11 I congratulate you, the governors of the United
12 States, on what you have done already. I commend you for
13 what you are about in the future. That's my report. Thank
14 you.
15 (Applause.)
16 CHAIRMAN CLINTON: Thank you very much, Governor
17 Kean, for the kind of excellent presentation we have almost
18 come to take for granted from you. I would like to take care
19 of a couple of preliminary matters now. First, Governor
20 Sinner has asked me to announce that there will be a 1:15
21 meeting of the Canadian premieres and the governors. We hope
22 all the governors will make every effort to be there on time,
23 because the agenda is tight.
24 Secondly, I would like to propose for unanimous
25 consent a tribute to Secretary of Commerce Malcolm Baldridge,
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1 recognizing that we mourn his passing, that he worked
2 tirelessly to benefit our country and our competitive
3 position which we are dealing with at this conference. He
4 was a great patriot with a high degree of integrity. We will
5 all miss him. If there is no objection, this will be
6 presented to the Baldridge family and Department of Commerce
7 as unanimous resolution of the NGA.
8 NOW, I would like to alter the agenda for a
9 minute. As governors, we don't always have the opportunity
10 to recognize personally individuals who have rendered
11 outstanding service to us as staff. Today, on behalf of my
12 colleagues and the nation's governors, we would like to
13 recognize and honor such an individual. As of this past
14 April, he has served the interests of state government and
15 represented all the 50 states and five territories and the
16 commonwealths that constitute the NGA for 20 years. He came
17 to NGA in April of 1967 as the associate director of the
18 Washington office, the Council of State Governments, and
19 deputy director of the office of State and Federal relations
20 of the National Governors Conference. In March of 1976, he
21 became director of state and local relations. And in 1979,
22 he assumed the responsibility of staff coordinator for state,
23 city and county public interest groups for the Academy of
24 Contemporary Problems. Two years later he returned to the
25 NGA in his current capacity as director of state and federal
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1 relations.
2 On the occasion of the 79th annual meeting of the
3 nation's governors, we want to take this opportunity to
4 express our sincere appreciation for the many years of
5 devoted professional and personal service in fostering,
6 advocating and tirelessly representing policy and legislation
7 which advances the quality of life for the citizens of our
8 country.
9 Therefore, it's with deep gratitude and public
10 recognition that we honor today Jim Martin, NGA's director of
11 State and Federal relations, and Parliamentarian and resident
12 historian, liasison to Washington state and local interest
13 groups, and the only person who has lived in Washington, D.C.
14 for 20 years who still thinks governors are the best public
15 officials in America.
16 Through the years, Jim has brought to his
17 responsibilities a keen sense of understanding and concern
18 for the programs and legislation which protect and provide
19 the best opportunities for human development and dignity
20 through the office of governor. His sense of loyalty,
21 direction and purpose have earned him the respect of all of
22 our chief executives and his peers as well.
23 We just want to say thanks, Jim, for your sense of
24 service which you rendered to all of us for the last 20 years
25 as the charter NGA staff member whose historical perspective
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1 has earned respect and affection. We salute you and thank
2 you for a job well done. And your staying power and love of
31 your fellow man is a real inspiration to all of us. And 4 besides, you have got a good sense of humor.
5 Congratulations.
6 GOVERNOR MARTIN: Mr. Chairman, as the other Jim
7 Martin, I would like to motion my second to the real Jim
8 Martin.
9 CHAIRMAN CLINTON: Mr. Martin has never given a
10 speech here because if he even opens his mouth, he will run
11 afoul of these rules he has hung us up all these years, which
12 has thoroughly prevented us from doing anything interesting
13 at these plenary sessions. You have to say at least two
14 sentences.
15 MR. MARTIN: I fully believe that the basic policy
16 of the National Governors Association is a governor is a
17 governor is a governor. I really appreciate the privilege of
18 working with the governors of the United States, and that
19 is -- it grows year after year. I am absolutely convinced
20 with your 2/3 rule requiring your votes on policy, that when
21 2/3 of the nations's governors agree on an issue, that that
22 is the next best step for the nation. It's a privilege to
23 work for you in that regard. Thank you very much.
24 (Applause.)
25 CHAIRMAN CLINTON: I would now like to calIon
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I 1i I Governor Celeste for a brief word about our next summer's
2 meeting in Cincinatti.
3 GOVERNOR CELESTE: Thank you, very much.
4 Mr. Chairman, I think Michigan and Traverse City have been
5 fabulous, I know you will say more about that. Governor
6 Blanchard, you have been terrific. It will take me quite a
7 while to recover from the Motown Review, but hopefully by
8 next year this time I will be fully recovered and in
9 Cincinatti to greet all of you at what will be the 80th, I
10 don't know whether it will be the 80th, but the next annual
11 meeting when we have family all together, be prepared for
12 chili five ways, as Cincinatti only can do it, Pete Rose and
13 all that goes with it. It's going to be a good time for the
14 governors and for your families. I will give you detailed
15 instructions on how to take full advantage of our meeting in
16 Cincinatti at the winter meeting. I will look forward to
17 seeing you.
18 GOVERNOR CARRUTHERS: Mr. Chairman, did he say
19 chili five ways? New Mexico over here. Did he say something
20 about chili five ways?
21 GOVERNOR CELESTE: You have got to come,
22 Governor.
23 GOVERNOR CARRUTHERS: I will challenge that, man,
24 we will bring our chili cooks to Cincinatti. We will give
25 you seven ways.
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1 GOVERNOR CELESTE: Please do.
2 CHAIRMAN CLINTON: Maybe we should have a chili
3 cookoff in Cincinatti.
4 I have three minutes to make, in this little
5 agenda, to make my concluding remarks. I have already said
6 substantively what I would like to say. I would like to say
7 a few things in a very personal way about what has been one
8 of the most rewarding years of my life. First of all, when
9 it's all said and done and I look back on the years I spent
10 in public service, I think that knowing so many governors and
11 understanding what they are trying to do and how deeply
12 committed they are to doing what is best for the people of
13 the country is one thing that I will always count as one of
14 the richest experiences I have ever had.
15 Second thing I would like to do is thank you for
16 taking these issues seriously. I noticed that our making
17 America work report made the front page of one of our
18 country's distinguished newspapers, something that would not
19 have happened a few years ago. I went up to the reporter and
20 I thanked him for taking this business as seriously as all of
21 you do. I am grateful for that. I appreciate it. I know
22 you all have other things to do, yet you come here
23 consistently year in and year out to try to make a
24 difference.
25 I would like to think Governor Sununu for being
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1 such a good vice chairman. When we got on this boat
2 together, people made all kinds of cracks. I made a few
3 jokes at the opening conference, we were as different as
4 night and day.
5 I am Democrat, he is Republican. He's got eight
6 kids and I have one. I have taxes and he has liquor and
7 lottery. People said we would never see the same facts the
8 same way. You can never assume people will see the same set
9 of facts the same way. The Motown Review last night reminded
10 me of the story I heard about two dogs who were watching a
11 bunch of kids break dancing. One of the dogs looked at the
12 kids and said, you know, if we did that they would worm us.
13 You can never assume things will come out the same.
14 (Laughter. )
15 CHAIRMAN CLINTON: But he has been so good to me
16 and good for our association. I really look forward to being
17 a good soldier during his year as chairman.
18 I would like to thank the NGA staff. I gave them
19 a whole lot of extra work to do, and they did it without
20 complaining, at least within my hearing. I would like to
21 thank my staff. They sure had a lot of work to do. We had
22 an election, Education Commission of the States, two
23 legislative sessions. They did a good job. I appreciate all
24 of that.
25 Let me just say in closing that, to follow up on
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11 something Jim Martin said, we do have this 2/3 rule. We also
2 have practical people who without regard of party have to
3 deal with the stark and you human problems of our people and
4 the exhilarating possibilities. I meant what I said, I think
5 we should try to put these issues that we have worked so hard
6 to work through, on education, human development, economic
7 development, on the national agenda.
8 It would be good for the country if they wound up
9 on the national agenda of both parties. Because when I was a
10 kid growing up in the '50s, we were all dealing with the cold
11 war. A lot of you will remember this. The common parlance.
12 was that politics had to stop at the water's edge. One of
13 the most difficult things about the path we steered with the
14 Vietnam war was dealing with that first question about
15 whether it was all right for anybody ever to criticize the
16 foreign policy of the country. Because in those early years
17 after World War II, we perceived that our security was so
18 caught up in dealing with the cold war that all the political
19 discussion and differences and partisan differences had to be
20 concentrated on domestic issues.
21 Today it seems to me that our security is so
22 dependent on our ability to compete in the world by
23 developing the abilities of our people. None of us should be
24 ashamed to say it would be a good thing for our country if
25 both parties adopted the positions that we have advocated and
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1 enshrined the values that we have tried to hold up. I hope
2 that all of you will do that.
3 I hope you will give me the chance, whenever I
4 can, to make up to you for the opportunity you have given to
5 me to have one of the best, most enjoyable years of my life.
6 And finally I would like to say a special word of thanks to
7 Governor Blanchard. Governor Dukakis may go to the White
8 House, but last night with Junior Walker and the Four Tops, I
9 was just one step from heaven.
10 (Applause. )
11 CHAIRMAN CLINTON: I have to call now on Governor
12 Moore for the report of the Nominating Committee and the
13 election of the officers and the Executive Committee.
14 GOVERNOR MOORE: Mr. Chairman, for and on behalf
15 of the Nominating Committee, Governor Branstad of Iowa,
16 Governor Harris of Georgia, Governor Bryan of Nevada and
17 Governor Martin of North Carolina, we submit this following
18 report and move its adoption, that the nominations for the
19 1987-88 executive committee be as follows: Governor Bill
20 Clinton with saxaphone in hand from Arkansas; Governor Robert
21 Orr of Indiana; Governor James Blanchard of Michigan;
22 Governor Ted Schwinden of Montana; Governor Tom Kean of New
23 Jersey; Governor Norman Bangerter of Utah; Governor Madeleine
24 Kunin of Vermont. As the new and incoming vice chairman,
25 Governor Gerald Baliles of Virginia, and as the new chairman
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1 of the NGA, Governor John H. Sununu of New Hampshire.
2 I move the adoption of the report of the
3 nominating committee, Mr. Chairman.
4 CHAIRMAN CLINTON: Is there a second?
5 GOVERNOR CELESTE: Second.
6 CHAIRMAN CLINTON: All in favor?
7 (Chorus of ayes.)
8 CHAIRMAN CLINTON: Opposed?
9 The committee's recommendations are unanimously
10 accepted.
11 It is my pleasure now to present to you your new
12 chairman of the National Governors' Association,
13 distinguished Governor of New Hampshire, John Sununu.
14 (Applause. )
15 GOVERNOR SUNUNU: Stay here a minute, Bill.
16 Certainly what has been accomplished this past year is a very
17 important result for the governors of the country. It comes
18 about not by accident but because somebody led them well.
19 There's been a lot said today about your effectiveness. I
20 would also like to stress that one of the aspects I have
21 admired and certainly I think serves as a model has been a
22 style and a capacity of dealing with colleagues to get
23 results. I want to commend you for that.
24 I would be remiss if I didn't note that your seven
25 colleagues in the party that you represent should feel very
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1 happy and comfortable that you have chosen to relax in 1988.
2 I guarantee you both the style and effectiveness that you
3 carry would have played very well in New Hampshire.
4 On behalf of all of the governors, having said
5 that, I would like to present this plaque to you as something
6 that will remind you that your colleagues appreciate what you
7 have done, recognize what you have done as a model to be
8 emulated, and certainly wish you and your family nothing but
9 the best -- but the best and the West.
10 (Applause. )
11 GOVERNOR SUNUNU: Before I get into any formal
12 remarks, I must add my thanks to Governor Blanchard and
13 everyone here, not just in Traverse City, but Governor
14 Blanchard's staff and all the citizens of Michigan, both for
15 their hospitality and really for the quality of this
16 experience, which I think for all of us, as governors, and as
17 governors with families, has been really one of the nice,
18 nice events that I have had the opportunity and all the other
19 governors have had the opportunity to share with our
20 colleagues. We appreciate it. Last night was a high point,
21 but the whole event has done professionally. We do
22 appreciate what you have done, Jim.
23 I have also been asked to recognize Governor
24 Collins of Kentucky for a few minutes before we go into any
25 formal acceptance. Governor Collins.
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I 11 GOVERNOR COLLINS: Thank you. I just want to take
2 this opportunity to tell all of you, I guess an official
3 goodbye, to tell you how proud I am of this group and how
1 4 proud I am to have been a part of this group. I wish
5 everyone the best and the future.
6 This is my last NGA meeting, because in Kentucky
7 you can't succeed yourself. So you will be having a new
8 governor from the Commonwealth of Kentucky at your next
9 meeting.
10 I want to commend all of you all, of course
11 Governor Clinton and everyone who has worked so hard in
12 giving me the opportunity to work with you for the betterment
13 of our people.
14 Thank you and God bless you all.
15 (Applause. )
16 GOVERNOR SUNUNU: Thank you, Governor Collins. As
17 Governor Clinton indicated the other day, we suspect you
18 might be back as a member of his renowned phoenix club of
19 governors who go out, come back after missing a little bit of
20 a beat.
21 I would like to tell you all how much I
22 appreciate, how much I am honored to accept this chairman of
23 the National Governors' Association. I want you to know that
24 I accept it with sincere appreciation to each and everyone
25 of you for providing an opportunity that I think is unique
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11 and certainly one that, I guarantee you, I accept with an
2 enthusiasm particular commitment to reflect the positive and
3 constructive bipartisan approach that I think has been the
4 hallmark of this association.
5 As all of you do, I love my job as governor. I
6 can't think of anything I would rather do than be governor of
7 the state of New Hampshire. In that role, one of the most
8 gratifying and rewarding experiences, the most satisfying
9 experiences, has been the shared activities I have had as
10 governor with my fellow governors. Any success that anyone
11 might anticipate in accepting the responsibilities of a
12 chairmanship to an organization has to be built on the
13 foundation established by predecessors. I am very mindful of
14 the significant contributions made by those chairmen that I
15 have had an opportunity to serve with and to serve under in
16 the past. Governor Mathison, Governor Thompson, Governor
17 Carlin, Governor Alexander, and in particular, I want to
18 reiterate my acknowledgement of the understanding
19 contribution and the leadership role played by Governor Bill
20 Clinton this past year.
21 His leadership has focused the examination of our
22 national capacity to compete, and that leadership has
23 produced a very significant set of proposals and guidelines
24 for addressing how best we as a nation can use the resources
25 of our great population. Under Bill Clinton's direction, we
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2 move the less advantaged of our society from a role of
3 dependency to one where they can be productive, contributing
4 members. I do believe that the successes of this
5 organization under his leadership and those contributions
6 contained in the reports and the activities of governors
7 across the country will be major contributions to our shared
8 commitment to keep America great.
9 Over the next year, our country will be
10 celebrating the 200th anniversary of the writing and the
11 ratification of our constitution. As our citizens
12 participate in that celebration, I think we have an
13 opportunity to review and to reconsider, and, in fact, to
14 renew the fundamental principles that framed the debates that
15 created that constitution. We will have an opportunity to
16 examine the give-and-take of the delicate compromise that
17 established a unique governing structure and unique set of
18 relationships that have served the nation and our states well
19 over the past 200 years.
20 As those historic discussions are reviewed, I
21 anticipate, at least from the perspective of a governor, that
22 one clear and critical balance that was very carefully
23 crafted in that constitution will stand out. There was a
24 very careful effort to provide some strength in a central
25 government, while retaining effective authority and
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1 preservation of rights within the states. And that debate
2 occupied a great deal of the difficult exchanges in
3 Philadelphia in 1787. It was a sensitive compromise and that
4 compromise was specifically reaffirmed in the Bill of Rights
5 and the 10th Amendment.
6 The other evening we as governors were eating
7 dinner at a very nice setting on the lake. Governor
8 Blanchard spoke, and he noted that as governors with our
9 legislatures, we do make sure that we have programs which
10 actually determine the quality of life and the constructive
11 destiny of our citizens. We work hard to make sure that
12 those programs work well. He noted that issues such as
13 education, economic development, job creation and job
14 training, quality of health service and even our social and
15 welfare assurance programs, are all made more effective by
16 and within our own states.
17 Paradoxically, at the same time that we are
18 becoming aware of a heightened role and responsibility for
19 our states, I think we as governors, and I think more and
20 more our citizens, are becoming well aware and sensitive to
21 the fact that there has been a long-term and drastic erosion
22 of the basic state authority. We carry responsibility to
23 govern our states, and with our state legislators we fulfill
24 specific duties to our citizens.
25 But unfortunately, the carefully crafted and the
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! 11 planned balance between the states and the Federal Government
2 that came out of Philadelphia has, over the years, been
3 tilted to a drastic overcentralization of power in
4 Washington. The fundamental federalism structure as
5 understood by the framers of our constitution was based on a
6 clear recognition that the authority of the Federal
7 Government, the national government extended to only a few
8 enumerated powers. That authority not delegated by the
9 states to the Federal Government were explicitly denied to
10 the states by the constitution was reserved to the states,
11 from the very first days following the ratification of our
12 Constitution. There's been a constant erosion, steadily
13 nibbling, if you will, by the Federal Government, through
14 Congress and the federal courts, that that delicate
15 relationship which was so careful framed and so carefully
16 balanced.
17 That drift in a sense, that change in the basic
18 character of our federalism structure reached a point wherein
19 the Supreme Court's decision excluding the authority of both
20 the municipality and the state in the Garcia case, made clear
21 that there remains virtually no rights reserved to the
22 states.
23 In fact, the decision in the Garcia case was, in
24 effect, a complete rescission or a completion of the
25 rescission process of the 10th Amendment separation of
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I 11 powers. That loss represents not only fundamental change,
2 but what I believe is a rejection of one of the basic
3 ingredients that made our system so effective. The resulting
4 exclusive concentration of authority and power does not serve
5 this country well.
6 Many of our efforts in the National Governors
7 Association in recent years have been directed to influence a
8 restoration of an appropriate federalism balance. They have
9 not always been successful. However, any frustration that we
10 might feel of the limited impact of past attempts should not
11 keep us from continuing our efforts and focusing some
12 resources in that direction. Therefore, the focus that I
13 have selected for the coming year will be to try and build on
14 what I hope will be the increased citizen sensitivity and
15 awareness to our constitutional heritage.
16 That understanding should make it clear that it is
17 in the nation's interest to restore a balanced separation of
18 powers and return to the states the rights and authority
19 originally envisioned in our constitution.
20 You all will be receiving correspondence outlining
21 the details of a broad agenda based on three parallel efforts
22 to restore that balance. The first effort includes a call to
23 each governor to identify specific changes in federal rules
24 and regulations which would allow us within the states to
25 improve the quality of service and the efficiency and the
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1 effectiveness of what we do for our citizens.
2 That effort, which will probably be based on
3 interaction with our departments and agencies, is intended to
4 be a more intense examination of the initial recommendations
5 we gave to the Federal Government last year and which, in
6 fact, the Administration did give us a quick and constructive
7 response about 2/3 of the requests that we made have been, in
8 general, acceded to.
9 In concert with that effort, I will ask our
10 standing committee structure to examine in detail the
11 existing federal legislation in each of the areas of
12 responsibilities to the standing committees and to identify
13 very specific changes in federal legislation which could
14 improve our capacity to serve our citizens.
15 Finally, the third segment will be undertaken by a
16 task force on federalism, which will be charged to examine
17 and, if appropriate, to develop a bold, direct, overall
18 approach at restoration of the balance.
19 I assume that this task force will examine a range
20 of alternatives, including umbrella legislation at the
21 federal level or even suggesting a federal constitutional
22 amendment.
23 I am confident that a significant bipartisan
24 effort on our part can make an impact on this basic
25 federalism issue.
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1 As we all know, that impact, that shifting of
2 authority and capacity back to the states, would have a real
3 long-term significant benefit to the people of this country.
4 A couple of nights ago, at that same dinner on the
5 lake, Roger Smith, the chairman of General Motors
6 Corporation, quoted James Madison on what was the intention
7 of the constitutional compromise. Madison said: "The powers
8 delegated by the proposed constitution to the Federal
9 Government are few and defined. Those which are to remain in
10 the state governments are numerous and indefinite. The
11 former will be exercised principally on external objects as
12 war, peace, negotiation and foreign commerce. The powers
13 reserved to the several states will extend to all objects
14 which in the ordinary course of affairs concern the lives,
15 liberties and properties of the people and the internal
16 improvement and prosperity of the states."
17 Those distinctions are why we as governors are on
18 the firing line. We meet with our citizens daily, we see
19 them daily, their problems are our problems and we must make
20 on a daily basis difficult and decisive decisions.
21 As Madison noted, "on those issues critical to our
22 citizens the most responsive government is the one closer to
23 the people."
24 We, and our constituents, have always recognized
25 the capacity of states to serve the most effective role of
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1 all our government institutions. Once again, I believe we
2 governors must take the lead in addressing that challenge.
3 I have a feeling that this time, with your help,
4 we can and will succeed. Thank you all very much for this
5 opportunity to serve.
6 (Applause.)
7 GOVERNOR 5UNUNU: Thank you. I have a couple of
8 announcements to complete the formality of this meeting. The
9 first is to communicate to you the committee assignments. We
10 have tried very hard, and with the help and cooperation of
11 incoming Chairman Baliles, and I hope that Jerry and I
12 continue the great chemistry that Bill Clinton and I have put
13 together, I am sure it's going to happen that way. We have a
14 copy of the committee structures, which we will give you
15 before you leave. I hope you understand that in an effort to
16 get something to you now today, we had to trade-off a little
17 bit in terms of time and finality of these assignments.
18 50 what we have given you is, in essence, a 99
19 percent sure, but not absolutely final structure, but
20 something we can begin to work with. Let me announce a few
21 of them, so that you will have some point of reference to
22 leave with.
23 There will be the Task Force on Federalism, which
24 I will, as chairman, continue to chair. The Task Force on
25 Rural Development will be chaired by Governor Branstad of
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1 Iowa. The lead governors on welfare reform will be Governor
2 Bill Clinton and Governor Mike Castle of Delaware. The lead
3 governors for out-of-state sales tax collections will be
4 Governor Thompson of Illinois.
5 The Committee on Agriculture and Rural Development
6 will be chaired by Governor Sinner of North Dakota and
7 Governor Ashcroft of Missouri. The Committee on Criminal
8 Justice and Public Protection will be chaired by Governor
9 Deukmejian of California; Governor Casey of Pennsylvania will
10 be the vice chairman. Committee on Economic Development and
11 Technological Innovation will be chaired by Governor DiPrete
12 of Rhode Island, and vice chair will be Governor Romer of
13 Colorado.
14 The Committee on Energy and Environment will be
15 chaired by Governor Moore of West Virginia, and vice chairman
16 will be Governor Joe Frank Harris of Georgia. The Committee
17 on Human Resources will be Governor Castle of Delaware, with
18 Governor Celeste of Ohio as vice chairman. The Committee on
19 International Trade and Foreign Relations will be chaired by
20 Governor Gardner of Washington, and Governor Martin of North
21 Carolina will be the vice chairman. The Committee on
22 Transportation, Commerce and Communications will be chaired
23 by Governor O'Neill of Connecticut, and Governor Kay Orr of
24 Nebraska will be the vice chairman.
25 One point on the committee assignments, which is
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1 included in the cover letter, but I would like to stress
2 here. All the assignments were based primarily on first and
3 second choices as expressed by the governors. You will
4 notice that one committee, the Committee on Economic
5 Development and Technological Information, is extremely large
~ 6 on that basis. I would just ask that those of you that might
7 have sought that assignment might take a look at it. If you
8 feel comfortable, you might indicate to us a preference for
9 reassignment to one of the other committees which is a
10 little -- which may be a little bit smaller and might address
11 specific interests that you have.
12 Having said that, the last announcement is that
13 the executive committee will be meeting after the press
14 conference in room Peninsula B, and with that, Governor Orr.
15 GOVERNOR ORR: Mr. Chairman, a little noted
16 element of this morning's proceedings is the departure from
17 the Executive Committee of one of the governors who has
18 served in that capacity for nine years.
19 I refer to our colleague, Jim Thompson. It seemed
20 appropriate to me to call everyone's attention to the fact
21 that he has declined to continue to serve on that important
22 committee, and we should recognize his great service, his
23 important, strong efforts for all things good that that
24 organization has accomplished over that nine years of his
25 service.
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1 (Applause.)
2 GOVERNOR SUNUNU: Governor, obviously all of us
3 agree to that. I assure you we will try to take full
4 advantage of Governor Thompson's long, long, long years of
5 service as governor and As a member of this organization.
6 Is there anything else anyone cares to bring up
7 before adjournment? If not, he will entertain a motion to
8 adjourn.
9 Seconded?
10 Thank you very much. We look forward to seeing
11 you in Washington in February and Cincinatti next summer.
12 (Whereupon, at 12:50 p.m., the meeting was
13 adjourned. )
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