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

Weekly Compilation of Presidential Documents, July 12, 1999

Mr. Insana. Now, last week, some congressional Democrats led by Barney Frank came out and suggested that if the Fed raised interest rates, something you mentioned a minute ago, that it would hurt the poor, people you've been visiting here over the last couple of days. Is that what the Fed's doing, or is the Fed extending a noninflationary economic environment by tapping on the brakes a little bit?

The President. Well, I think that plainly that's what the Fed is trying to do. And I've made a real practice of trying not to comment on interest rate changes and trying to let Chairman Greenspan and the Fed do their work, and I would do mine.

But again I say, look - look at what we've done here. I think if you just look at Chairman Greenspan's own testimony, we've all been somewhat surprised that we could grow as much as we have, have unemployment as low as we've had, and have virtually no inflation. And it's a tribute to the productivity of the American businesspeople and the explosion of technology, and it's rifling through every sector of the economy and giving us more high productivity-driven growth without inflation than anyone dreamed.

The trick is if to go back to what Barney Frank said what he wants is to keep the economy going, to keep the growth going until middle and lower middle income working people can get their wages up to overcome the stagnation of 20 previous years and until we can get more people caught up in the areas where the recovery hasn't occurred. That's why, it seems to me, the most important thing to do is to have initiatives like this which give you concrete examples of how you can have growth without inflation.

Tax Cuts

Mr. Insana. Now, Republicans would argue that one other way to extend the recovery here would be to cut taxes even further. And you hinted last week in USA Today that if you got what you wanted on Medicare reform and prescription drug benefit subsidies, that you might go along with an expanded list of tax breaks. Can you elaborate on that? What would you accept in exchange for a Medicare deal?

The President. Let me make it clear. What I said was that, obviously, we would be working together on all the appropriations issues and expenditure of money, if we did first things first. But I think that it's quite important that the Republicans say how they're going to pay for all these things. You know, they say they want even larger increases for defense than I do, and I've proposed substantial increases. Then they want huge increases in tax cuts. Do they propose to keep us in debt? Do they propose to basically eviscerate the education and health and environment budgets of the country? What is their proposal?

Of course, we will negotiate, but we ought to think about first things first. Let me just say this: I think we proved in '93, when we didn't have a single Republican vote and the Vice President had to break the tie in the Senate, that we were right and they were not right about what would be the best economics for their constituents. That is, when we passed that '93 economic plan, there is no question that it sparked a huge drop in interest rates, a huge increase in investment, and an explosion in economic activity. And it had a lot more positive impact on the markets and on business investment and on job creation than a tax cut which perpetuated a deficit would have had.