August 22, 1992 RESPONSE TO CLINTON CHARGES IN DETROIT SPEECH I. Response to Clinton on th

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August 22, 1992 RESPONSE TO CLINTON CHARGES IN DETROIT SPEECH I. Response to Clinton on the Bush Record Deficits and Debt: "The ten largest deficits in the history of the United States occurred during the last two presidents." o As a percentage of GDP, Carter's 1980 deficit was larger than Reagan's first deficit, and the 1975 deficit was larger than those in 1981 and 1987-1989. "Quadrupled the national debt . . ." o Clinton has doubled the state's debt burden since 1983 to $1.74 billion in 1990. Clinton's economic plan would increase the national debt by $1.2 trillion. Growth: "We've had the slowest years of growth in 50 years, the slowest income growth, the slowest job growth in 50 years." o The slowest growth over the last 50 years occurred under President Truman's first term. This remains true even if one excludes the 1946 recession caused by the transition from a wartime economy. "The old economic ideas of the last two decades did not produce growth, did not create upward mobility, and most important, didn't prepare millions and millions and millions of our people to compete." o The economic ideas of the 70's -- largely Democratic ideas -- were clearly failures. The 1980's, however, were a different story. -- Growth: GDP increased 2.8% for the decade including the Carter recession. Since 1982, GDP jumped 3.7%. -- Upward mobility: During the 1980s, 5.3 million families left the middle class by earning a lot more money and moving up. The percentage of households with high incomes rose. -- Competitiveness: The U.S. regained its position as the world's leading exporter, beating out Japan and Germany, and in the process creating 1.8 million jobs. Housing: "In spite of low interest rates, housing starts have dropped off." o In the past two months, housing starts have declined slightly. However, this reflects unusually strong growth in housing starts during the first five months of 1992, (when housing starts were 28% higher than in the same period of 1991). Investment: "[Bush has] reduced our public investment in the future." o Government R&D investment (in current and constant dollars) have increased each year of the Bush Administration. Under President Bush, government spending on R&D has reached its highest level in U.S. history. (FY93 Budget historical tables) o Funding for the Education Department will have increased by 43% -- more than for any other Cabinet agency -- if the President's FY 93 budget request is approved. Poverty: "There has been a stunning 50 percent increase in the percentage of our workforce, people who get up and go to work every day, who are in poverty." o The number of families below the poverty level has declined from 12.3% in 1983 to 10.7% in 1990. (Economic Report of the President, p. 330) Productivity: "Last year, Germany and Japan has productivity growth rates that were three and four times ours because they educate their people better, they invest more in their future, and they organize their economies for global competition while we don't." o During 1991, industrial productivity growth in the U.S. and Germany was exactly the same, and productivity in Japan declined three times faster than productivity in the U.S. (Economist, 1/4/92) o Total U.S. productivity is about 10% greater than Germany's and 30% higher than Japan's. (Treasury Department) Taxes: "[Bush again promised a] short-term capital gains cut." o The President's capital gains tax cut will support both short- and long-term investment, with the capital gains exclusion increasing from 15% to 45% the longer an asset has been held. o Small business owners cite a cut in the capital gains rate as the number one tax relief measure to increase growth and create jobs. "He said, `Read my lips' then signed the second-biggest tax increase in history." o The President admits it was a mistake to trust Democrats to cut spending even though he agreed to raise taxes once. The Democrats broke their word. The President proved he would not sign any new tax hikes when he vetoed the Democrats $100 billion tax hike this March -- a tax hike now cited by Clinton as his favorite economic growth plan to emerge from Democrats in Congress." Unemployment: "Just last week, we had the highest application increase for unemployment benefits in over a decade." o The increase in unemployment applications was due to GM's temporary layoff of workers for their summer retooling of plants. Last month the unemployment rate declined to 7.7%. (BLS) o Since December, almost 850,000 more Americans are working. (Treasury Department) "In the last four years we've lost a million manufacturing jobs." o Under President Bush, 1.5 million private sector jobs were created. U.S. manufacturing has become more competitive, not less, during the 1980's and early 1990's. U.S. exports of manufactured goods grew by a remarkable 90 percent between 1986 and 1992, compared with 25 percent for other industrialized nations. (CATO Institute) Wages: "Ten years ago, our nation had the highest wages in the world. Now we're 13th and falling." o The Labor Department, which produced the data Clinton is using, explicitly warns that it is misleading to use its data the way Clinton does. Clinton's data only includes manufacturing production workers, excludes fringe benefits (pension, health, leave) which are a large component of workers' overall pay, and does not adjust for the distortions of market exchange rates. o Adjusting for the factors Clinton excludes, the U.S. was first in the world in worker compensation in every year since 1985. "People who have jobs are working harder for lower pay." o From 1982 to 1990, per capital labor compensation outpaced inflation leading to annual real increase of 0.5%. At the same time, average weekly hours worked by private non-agricultural remained unchanged. o "Wages" is a misleading measure of returns to work because it excludes fringe benefits. Benefits grew 50% faster than cash wages from 1988 to 1991. II. Response on the Clinton Record Education: "In Arkansas, we raised graduation rates from 35th to 18th in the country; raised the college graduation rate from dead last to the national average . . ." o Clinton's statistic is unreliable: Just 18% of Arkansas school districts report dropout statistics to the state government. o During the 1980's, Arkansas fell from 47th to 49th in percentage of adults with high school diplomas. Seventy-seven percent of Arkansas high school graduates require remedial instruction when the get to college -- twice the national average. o Arkansas still ranks 50th in percentage of adults with a college degree. Manufacturing employment: "In Arkansas, we have created manufacturing jobs as ten times the national average." o Under Clinton Arkansas's manufacturing job growth has been cut in half (from 2.2% annual growth in the 1970's to 1.1% in the 1980's). And, those manufacturing jobs that Clinton has created have been low pay jobs. Under Clinton, average hourly manufacturing earnings in Arkansas remained unchanged at 78% of the national average. o Total civilian employment in Arkansas grew almost one-third slower than the national average between 1981 and 1989. Taxes: "Arkansas has the second-lowest state and local tax burden in the United States." o In taxes as a percentage of personal income -- the only measure of individual tax burden that matters -- Arkansas is the 20th highest. o Clinton's claim of the "2nd lowest tax burden" is based on the fact that overall tax revenue in Arkansas is so low -- proof that Arkansans have been kept poor under Clinton. Welfare: "We've moved 17,000 people from welfare to work." o State records show that despite Clinton's welfare reforms, Arkansas' total welfare caseload has increased -- up ten percent by August 1991, and 12 percent by this April. (Arkansas Gazette, 6/24/91; U.S. News World Report, 4/20/92) III. Response on Clinton/Bush Proposals Taxes: "Mr. Bush says I proposed the largest tax increase in history. The Journal told the truth. It's one-third the size of the one he already signed." o Estimates by both executive and legislative branch agencies show that Clinton's $150 billion tax hike would be larger in history, and at least $23 billion more over four years than the 1990 Budget Agreement. (Budgets of the U.S.; Congressional Research Service) o The estimated $150 billion price tag on Clinton's tax hike excludes $80 billion in payroll taxes required by his play-or-pay health plan -- tax hikes even Clinton now admits will be required. (CBO; USA Today interview with Clinton, 8/14/92) o If Clinton's tax hike were to total just $45 billion -- which he claims -- his proposed $220 billion in new spending would result in a massive increase in the federal deficit. "The richest two percent of Americans would be asked to pay their fair share." o Payroll taxes required by Clinton's play-or-pay health plan would take money out of the paychecks of every working American -- at least $1700 a year less out of the average worker's wages. (OMB) o Clinton's individual income tax and payroll hikes would hit over 800,000 small businesses -- hurting in addition to the owners of these businesses, there employees and the employees' families. (Joint Committee on Taxation) Proposals by Clinton already proposed or done under Bush: o Tougher child support enforcement (collections doubled under the Bush Administration) o Cuts in congressional staff o Line-item veto o Limiting the influence of PAC's o Permanent investment tax credit (proposed as a investment tax allowance under the President's plan) o Fully fund Head Start (now being blocked by Democrats in Congress) o Increased funding for adult education o Health care plan to contain health care costs o Regulatory reform to reduce paperwork costs o Increased per pupil spending on education (doubled under Reagan-Bush; Time magazine ranks Arkansas spending per pupil as having declined from 45th in 1983 to 50th in 1989).

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