BUSINESSWEEK ONLINE : FEBRUARY 14, 2000 ISSUE
COVER STORY Clinton: Why the Good Times Keep On Rolling Whose boom is it, anyway -- and how long will the good times keep rolling? On Feb. 1, Washington Bureau Chief Lee Walczak and News Editor Paula Dwyer met with President Bill Clinton in the Oval Office and got the President's take on the nation's long stretch of prosperity. Clinton was in an effusive mood, sharing credit for the economy with Federal Reserve Chairman Alan Greenspan as well as American workers. And he offered assessments of New Hampshire primary winners Al Gore and Arizona Republican Senator John McCain. Here's an extended, online-only version of the interview that appears in the Feb. 14 issue of Business Week: On the roots of the economic boom: By the early '90s, the trauma that American industry had been through in the '80s resulted in significant restructuring [and] increased competitiveness. Even more important is the increase in productivity caused by the explosion in high tech. A third factor is the extent to which workers came to understand the global economy and didn't make wage demands that would have sparked a new round of inflation. I think that's important. I think that the role of the Fed was very important. [Federal Reserve Board Chairman] Alan Greenspan saw something fundamentally different was happening. When evidence [showed] that we didn't have a lot of inflation, he didn't kill the recovery. But he did something else very important. Because he had such personal credibility, he explained to the country, to the business community, to the Congress, what was going on in a way that continually elevated confidence. On the role Clinton policies played: The policies that we've had for open markets contributed. Anybody that's been responsible for that, Republicans or Democrats, deserves some credit. The importance of the [Administration's] '93 [deficit-reduction] bill is that all the business writers were writing in late '92 about an anemic recovery. We decided we had to do something dramatic to change the psychology. On the national mood today, vs. 1991: People were frustrated. They didn't see a better future. Today, people feel confident and hopeful about the future. They [don't] really believe we've repealed the laws of supply and demand. But they know we've changed something [by] getting rid of the deficit. We doubled our investment in education and training. We continued to invest more in research. That will also give some balance and life to this economic cycle. On continuing income inequality: The government should have policies which help close the gap. What we ought to do is raise the minimum wage and increase the earned income tax credit, increase the child-care tax credit and make it refundable -- do things that put money into the pockets of people in the lower 20% income group. On his proposal for a federal pilot program to bridge the so-called digital divide between rich and poor: All I'm trying to do is create the conditions and give people the incentives, and mobilize civic-minded people in the high-tech community. To say that someday this will be solved, someday Internet access will be as dense as telephone access is today -- most of the people who say that with great confidence are already on the Net. And most of those people's kids have computers in their homes. I've been overwhelmed at the intense interest in this from high-tech executives. There are significant divides in our society over computer access and Internet access, there are income divides, there are also racial divides, and to a slightly lesser extent, there's a gender divide. If you look at the people and places that have been left behind in this economy, one of the quickest ways to catch them up is to make sure that they have access to all the opportunities they can get over the Net. If you look at the kids who have been left behind in this economy, we know that learning gains can be quite rapid if they are both computer-literate and they and their families have [computer] access. So, I just disagree with people who think we ought to wait for the market to solve this. This is a social issue. If we had waited for the market to solve universal telephone access, there would still be places in my home state of Arkansas where people wouldn't have a phone. On the threat to the expansion posed by excessive debt and speculation: If you look out there at what could bring this to an end, we're much more resistant than we were 10 years ago, 20 years ago, to oil-price shocks. The economy can absorb a great deal more. The biggest unanswered question is, to what extent is higher private debt a problem? A lot of people worry [that] if the stock market falls, it will be a horrible thing, and people will be strung out there. My observation is that even though some [lending] may have been questionable, most will contribute to the long-term growth of the economy. Yes, it is a concern. But I think it is not as big a concern as it would be because a) we're paying down the government debt, and b) a lot of the private debt is for investment, which I think will enhance productivity and growth. On whether big projected budget surpluses might end partisan debates over tax cuts vs. debt reduction: You don't have to have an either-or debate. It depends on how big you want your tax cut to be, and it depends on what your formula for saving Social Security is. Running a surplus has given the American people a high level of confidence -- in themselves, their country, and the ability of government to do that which it should properly do. It has freed them to debate what that is. If you don't have to worry about being eaten alive by interest payments, by crime in the street, you can focus on making things better, and you can take the long view. That's one of the things you're seeing in this Presidential debate. You have four major candidates -- [and] substantial differences among them. But no one is saying it's O.K. if we start running deficits again. I think that's a remarkable thing. On Vice-President Gore's remark that a slump might lead him as President to redouble government downsizing efforts: I don't want to get into the campaign. But I think we're talking about two different things. What he doesn't want to do -- and I agree -- is see the country commit itself to a very large tax cut, which would prohibit us from paying the debt off, and if a recession should come along, would put us in a terrible bind. That is different from saying if we were in a severe recession, should we have some stimulative investment. If we pay this debt down for a decade and then, God forbid, some really terrible thing happens, whoever's President says, "My fellow Americans, we've got to do something we did 40 years ago, because things are different now." It would be far more likely to work because we flushed this debt out of the system. On the winners of the New Hampshire primary, Democrat Al Gore and Republican John McCain: [McCain] is a very conservative Republican on most issues, but he's got a couple of progressive stands on tobacco and campaign finance. And Gore is much more of a New Democrat, who has some liberal and some conservative positions -- he was 1 of only 10 Democrats to support the Gulf War. I think what they both have in common is they think for themselves, and they tend to view public service as a place where you're supposed to try to get something done, and not just give a speech. I think the confidence they have about where we've come from means that they would like to have less of the sort of partisan rancor that has infected Washington for at least 20 years, if not more. We'll go more and more in the right direction -- if we can just keep things on track here. So, I think the message is let's keep changing, but let's not give away what brought us to this dance, because it's a pretty good dance. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Boom COVER IMAGE: The Boom How Prosperity Is Reshaping the American Economy CHART: The Longest Boom Is Going Strong... CHART: ...Thanks to Higher Productivity CHART: The Market Soars... CHART: ...Americans Are Wealthier... CHART: ...And So Is Uncle Sam CHART: The Mood Is Upbeat CHART: Society Benefits... CHART: ...Though Not All Is Well TABLE: Origins of the Boom Clinton: Why the Good Times Keep On Rolling (extended) ONLINE ORIGINAL: "This Just May Be the Second or Third Inning" Why the Productivity Revolution Will Spread CHART: The Investment Leaders TABLE: Working the Web ONLINE ORIGINAL: "The Real Killer Legacy Is the Cultural Legacy" Commentary: The Risk That Boom Will Turn to Bust CHART: Unbalanced Growth...Rising Debt... CHART: ...Increased Reliance on Temp Workers...And a Bulging Trade Deficit CHART: Market Values Are Sky-High...And Margin Debt Is Soaring INTERACT E-Mail to Business Week Online

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