Interview with Ron Insana of CNBC's "Business Center" in Clarksdale, Mississippi

Weekly Compilation of Presidential Documents, July 12, 1999

July 6, 1999

New Markets Initiative

Mr. Insana. Mr. President, this trip and your new markets initiative in some ways have already been compared to Lyndon Johnson's War on Poverty, Bobby Kennedy's swing through Appalachia. How will this program work where some of the other Government programs on poverty have failed in the past?

The President. Well, first of all, I think it's important to recognize that this is different because we don't say the Government can solve all these problems, but we do say the Government can no longer ignore them. And, in fact, we've been working on them for 6 1/2 years, ever since I took office.

This is a classic example, this approach to new markets, of the New Democratic or Third Way philosophy that I articulated back in 1991 and 1992. That is, Government s role is to create the conditions for success, give people the tools they need to succeed, and then, in effect, empower people to make the most of it.

But we recognize if you look at - go back to the War on Poverty, it did a lot of good in terms of giving children preschool and feeding hungry children and giving them access to health care. But in the end, if you want these communities to be self-sustaining, they have to get private-sector capital with private-sector jobs, and they have to prove that they can compete for it, they can win it, and that people can actually make a profit investing in these places and that it will be profitable to put people to work.

And because I believe that very passionately, especially now - you know, there was all this big discussion in business circles and the people that watch your program, there was all this big discussion over the last few weeks about would the Fed raise interest rates or not. And it was like the fifth reincarnation of how much can we grow and how low can unemployment get before we have this big explosion of inflation which then we'll have to clamp down, which will then kill the recovery, so everybody's been trying to avoid it.

Well, I think about that all the time. And it seems to me that the way to keep America's economy growing without inflation is to sell more products overseas and find more consumers and workers at the same time here at home. And there are only - there are a couple of options. You can bring more people from welfare or from the ranks of the disabled into the work force, or you can go to these areas where you invest in them and you get more consumers and more workers at the same time. And I think this is terribly important.

Mr. Insana. What specific items will be included in the legislation to advance those goals? What kind of tax credits?

The President. Well, the big ideas in the legislation are a tax credit of up to 25 percent for people who invest in vehicles that will be creating businesses or expanding businesses in high-unemployment, underdeveloped areas. In addition to that, once you get into those vehicles, then you would be eligible to borrow $2 for every $1 invested and have the money borrowed be subject to a Government loan guarantee, which would mean the interest rates would be much, much lower. So by those two things, you lower the relative risk of investing in these new markets.

But we've seen - you heard the person from Bank of America say today, we heard the gentleman from a local bank in Kentucky yesterday, or the people from Aetna or these other companies say, "These are good investments; we can make money here." So if you lower the relative risk of getting in in the first place and, in effect, try to provide for the whole Nation what now you can find in the empowerment zones that the Vice President's worked so hard to manage over the last 6 years, I think we can get a lot more growth here.

Republican Proposal

Mr. Insana. Now, House Speaker Dennis Hastert sent you a letter over the weekend attacking poverty from a slightly different approach with respect to more tax-cut-type incentives. Do you have common ground with him where you can fashion some -----

The President. Well, I want to have a chance to evaluate it. It would seem to me, though, that we would have - this is something that Democrats and Republicans all agree on. I mean, our approach is a completely private-sector approach. We do have, in addition to the big tax cuts I talked about, we have a venture capital approach where we want to try to do a little more to get real venture capital out there. You heard the lady testify today that she went from being an employer to a business owner, and she had no equity so she had to have venture capital to start. So we do that. And we have a little bit of technical assistance to help communities and businesses that don't have any way of getting the information they need.

But apart from that, I think we ought to be able to find common ground. I can't imagine that Republicans wouldn't want to do this. This has got to be good for Republican businesspeople, to have a better chance to invest in areas where you can have more growth without inflation.

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