QUESTION & ANSWER : Clinton Sketches Scenarios for Easing Urban Problems

The following edited dialogue between Arkansas Gov. Bill Clinton, candidate for the Democratic presidential nomination, and Times staff writer Robert Scheer was drawn from a two-hour interview with Clinton in his office in Little Rock.

Scheer: In the aftermath of the Los Angeles riots, the mayors of large cities proposed a $35-billion fund for urban areas, which they argue have been neglected. Jerry Brown has endorsed this proposal, but I gather you’re not as supportive of this?

Clinton: No, that’s not true. I am very supportive of it. What I’m trying to do is figure out how we’re going to pay for it. You know, a panel of 100 economists recommended a similar proposal--slightly bigger, $50 billion--that they say we should just tack onto the deficit. And I’m concerned about doing that. I think there ought to be a way to increase the infrastructure funding to the cities without doing that. I’m contacting folks in the Congress and others working on the budget to see how we could pay for it.

Q: The week of the riot, Rep. Maxine Waters (one of Clinton’s national chairpersons) gave a speech at the First AME Church in Los Angeles demanding to know why is it so difficult to find money for urban areas. She pointed out we didn’t have any great difficulty finding it for the military budget. We don’t seem to have a great difficulty in bailing out the Russian republics, or the savings and loans. Why is it when it comes to the cities, suddenly it’s so difficult to find this money?

Clinton: Oh, I think we can find the money in the budget in a combination of places. In the S&Ls; we just added to the debt. And we did it because there was a contractual obligation to the depositors. With regards to the Russian proposal, it’s a much smaller proposal in terms of money. And it’s virtually all from loans. Some of it is being given through our food programs, so it’s a different issue. I think the money can be found and the money should be there.

Q: The point Maxine Waters raised, though, was how come when it comes to the cities, when it comes to solving the problems of the poor, suddenly we get fiscally very responsible. We didn’t get so responsible when it came to spending all the military money. Even with the Russian loans--there is some chance the loans won’t be paid back. We are talking about tens of billions of dollars that we’ve committed. . . .

Clinton: On an annual basis you’re looking at a much smaller . . . I mean, what we recommended there is a couple billion bucks, as opposed to $35 billion. But I think we will find the money. But I’m not responsible for what Congress and the President have done for the last 11 years. They have always managed to find the money just by increasing the deficit. The money is there. The money is there in defense reductions, the money is there in controlling health care costs, the money is there in asking upper-income people to pay for entitlements, like Medicare, in return for a comprehensive national health program, the money is there in terms of excessive administrative costs in government, the money is there in terms of asking the very wealthy to pay their fair share again because their incomes went up and their taxes went down in the ‘80s. I’m not looking for an excuse not to do it.

The difference between me and other people is that I agree with Maxine’s rhetorical point. But I’m not a part of that problem, I’m coming at it from the outside. And I want to realign, dramatically, America’s spending priorities. I just want to do it in a way that is responsible.

Q: We did once have the so-called War on Poverty, yet critics charge it with being a bureaucratic program that failed to solve the urban problem.

Clinton: Their rap on the War on Poverty is bogus. The best programs were those that emphasized one-on-one contact and had a grass-roots basis. The Head Start programs, if you look at them even today, the ones that show permanent benefits are those that do the best grass-roots work.

Q: Do you think there was a War on Poverty? Do you really think we spent a significant amount of money?

Clinton: Well there started to be one and then it fell apart in the economic cross fire--President Johnson’s domestic agenda and the Vietnam War and paying for both and the inflation that ensued. And then the reaction to both, which produced Richard Nixon’s victory and later moved us even further to the right.

Q: But the programs tried back then, in the ‘60s in the aftermath of the Watts riot, sound very much like what you have proposed. Or for that matter, what (Housing Secretary Jack) Kemp proposes: local community based, private investment, tax credits. All of these things were tried and they failed in South-Central Los Angeles. And they have been tried by others since. The question is what is going to happen now, in Los Angeles and elsewhere, that is going to be different? Why will it work? And one suggestion, one possibility is maybe we weren’t serious. We didn’t really empower local people, didn’t think through the programs, and soon the money stopped.

Clinton: That’s exactly what happened. We treat these things . . . Americans are too fad-oriented. We don’t want to pay the price of time. And that’s a mistake. I believe very strongly that if in the late 1960s, if there had been a combination of intense public investment that was sustained, and education and job training, and a banking system that would have actually loaned money to people and made deposits in that neighborhood to start a small business economy, there is a very good chance that these riots would not have occurred. There would have been greater domestic ownership, neighborhood ownership of the economy. And there would have been fewer empty storefronts and more thriving businesses. And the ownership would have reflected the rainbow of the community. We didn’t stay after it until we figured out how to do it. What went into that community depended on shifting political winds nationally. And economic pressures . . .

Q: There was much talk about loans and combatting redlining, but evidently the money was insufficient. They weren’t serious.

Clinton: It didn’t last long enough, and it wasn’t serious.

Q: Your welfare reform proposals don’t really seem much different than California Gov. Pete Wilson’s, which among other things would cut AFDC (Aid to Families With Dependent Children) payments to women and children by 25%.

Clinton: Well on the cut . . . the across-the-board cut of the benefits, I know that California’s revenues are running 25% below projections. And I don’t know what else his options are. One of the things that I would want to emphasize is that all these governors and all these legislatures are facing budget cuts because there is a national recession.

Q: You’re saying that you are sympathetic to the idea that the first place to look is in welfare cuts?

Clinton: No. No, that’s exactly what I’m not saying. I haven’t said anything supportive of the across-the-board cut in welfare. What I am in favor of doing is breaking the chain of dependency through putting more people to work. You’re going to have to provide family supports. When a person is on welfare and their youngest child reaches the age of a year, when it can be safe to put in child care, I would provide for education . . .

Q: Why did you decide that it would be better to get a woman who had a 1-year-old child to leave the home?

Clinton: Because more than half of the non-welfare mothers with kids over a year old are in the work force.

Q: Well, isn’t it true that the women on welfare, particularly in the ghetto communities, have a harder problem of parenting and that a little more supervision may be needed?

Clinton: I have no problem with parenting. But I think that over the long run of a child’s life, a mother becomes a better parent when she has a higher level of self-confidence, develops basic learning skills and believes that she can provide for the welfare of her children on her own. So I believe if there is quality child care available, it is not inconsistent with the duties of motherhood to ask people to be in an education and training program, and then to take a job when they can get it.

Q: Right, but the rub in these reform programs, whether it’s yours or Wilson’s, is what happens after two years of training if the woman doesn’t get a job and you cut her and her children off?

Clinton: No, he wants to cut them off. What I want to do is to give people community service jobs in return for income.

Q: So you would guarantee employment?

Clinton: Yeah. Community service . . . . I don’t propose to cut people off of benefits.

Q: One important difference then between your position and Wilson’s is, if I understand you correctly, that to do welfare reform properly, at least in the short run, requires spending more rather than less money. He sees it as a budget saving . . .

Clinton: Yes. But you have to understand that I believe the federal government has a responsibility in that regard too. I think that the present welfare reform act would work much better if the government funded it at an appropriate level and every state embraced it.

Q: But just in the last year, 40 states have either cut or frozen payments to women on welfare with children. And they’re doing it as a cost-cutting thing.

Clinton: Totally unrelated to welfare reform. But let me tell you how it works, and let me tell you why they did it. And I’m neither condemning nor applauding it. But we just went through a budget cutting exercise here (in Arkansas) and bent over backward to avoid cutting AFDC.

Q: What is the AFDC payment in Arkansas? Isn’t it $203 a month for a woman with two children?

Clinton: That’s about right.

Q: How does one live . . .

Clinton: Let me finish the thing. Here’s what happens. Here’s the problem. A lot of this is visited on us by Congress. Congress pays for part of the welfare budget, we pay for part. It’s a matching fund deal. Real welfare benefits in America have been declining since the mid-’70s.

Half the people on welfare get on and get off in a few months. Of the ones that are left, about half of them get off in a few more months. About 25% are more or less permanently dependent. And most all of them are younger women with little children who literally do not have the capacity to earn a good living. So, most welfare reform really worthy of the name should be directed at those people, to try to empower them to support their children and to support themselves and then to require them to move from welfare to work. To do it, you need more money than is now in the act for education, training, transportation and child care.

I think the next step is to develop over the next few years a combination of public and private child support, a uniform child support standard in the country. And then require people who can’t get private sector jobs, after a while to move into public sector employment.

Q: What you are talking about is a very bold program saying the government is going to be the employer of last resort, you’re also going to have national child care standards maintained and financed . . . is that right?

Clinton: The child care standards are all right now, but the program is not properly funded. And in terms of employer of last resort, I don’t see what the difference is when now we’re the unemployer of last resort. Now we are paying people to be idle. I think that after a certain amount of idleness in return for the check, they ought to do community service work.

Q: The proposed California welfare reform would deny extra money to support a child born to a mother on welfare. Do you approve of that particular provision?

Clinton: I have mixed feelings about it. I would permit the states that passed the law to do it, to try it and see if it makes a difference.

Q: You hold up Western European countries as models of a better functioning economy. Yet when we look at Germany and the other countries there is a much stronger social welfare support with a much heavier tax burden than here.

Clinton: They have basic education standards nationally, basic health care systems, basic lifetime retraining for the labor market systems, and a much higher level of cooperation between the public and the private sectors. You have to fashion American solutions to American problems. But I think that when you ignore what other nations with higher productivity rates, higher growth rates, are saying or doing, I think that you do so at your peril.

Q: They provide more of these very same benefits that people here say is such a drag on our economy.

Clinton: They are higher. But they are in the context of a society that basically works, that has a preference for work and a tradition that is organized toward building a high-wage, high-growth country. Unemployment would drop in America and welfare would drop if we adopted an investment-oriented, partnership-oriented, high-wage, high-growth strategy. But we have to change a lot of what we are doing. I think America is very much out of step with the rest of the world in not investing more in its people.

Q: Some now blame the Europeans and Japanese for our problems and call for protectionism. Are you sympathetic to such calls?

Clinton: They have some protectionism. The Germans certainly. The fact is the Europeans now are closing their markets to the 16% limit on cars. And I think we are going to have to look at modulating competition. But to be fair, the biggest problems we have in maintaining the manufacturing base are our failures to work together to achieve high levels of productivity, to control health care costs, to have a tax system which is pro-manufacturing. Our tax system now is anti-manufacturing. And it was all during the Reagan/Bush years. I think, you know, it rewarded money making money and not production, not jobs, not goods and not services.

Q: Well, that’s what we say now. But when the last tax reform package was passed, many Democrats supported it. It was supposed to help production.

Clinton: I never thought it would. I never thought the ’86 tax act would. And the ’81 tax act just fosters too much speculation. You know the elemental principle of taxation should be people should pay according to their ability to pay. And you should have incentives that do specific things. Those ought to be the two driving, in my view, principles of the tax system.

Q: We have these reports now that the wealthiest top 1% got 60% of the tax benefit of the cuts. Is it possible that this middle class has disappeared before our eyes? If the top 1% of the people in this country, according to a recent Federal Reserve report, have assets equal to the bottom 90% . . .

Clinton: For the first time since the ‘20s.

Q: Yeah. So what has happened?

Clinton: Well, what happened is poverty increased in the ‘80s. The number of people in upper-income groups increased and the middle class declined. And taxes were raised on the middle class because Social Security taxes went up seven times, more than offsetting any income tax reductions, especially when consumers lost their interest deductions. And tax rates went down for people at the upper income levels while their incomes went up. So you had increasing unfairness, and we lost growth.

Bush’s theory--and it was the Reagan theory, but Bush interestingly enough has tried to carry beyond where Reagan did--was if you kept taxes low on upper-income people and corporations and loaded the burden off onto the middle class, and in America’s case, onto the deficit, then good investment decisions would be made and jobs would bloom and the economy would grow. The problem was that the system favored money making money rather than money making products, goods, services, jobs.

That is one of the big issues in this race. That is an absolutely flawed way to run an economy. All you’re going to do is make more income inequality. And you won’t have real economic growth. And that is why our productivity rates have been declining and our wage rates have dropped from first to 10th in the world.

Q: So what would be wrong with taxing these wealthy people . . .

Clinton: We should. The Wall Street Journal bags me once a week for advocating taxing. You know, I think you have to raise tax rates, I like the tax bill that (Sen. Lloyd) Bentsen (D-Tex.) and (Rep. Dan) Rostenkowski (D-Ill.) hammered out in the Congress last time. Which had . . . raised marginal rates on incomes roughly above $200,000 to 35% or so and then had a surtax on millionaires of another 10%. Bush vetoed it because it violated his theology of economics, which is under no circumstances should the very wealthy be asked to pay more.

Q: But isn’t there something absurd, that we have all this rhetoric about the poor ripping off the system and so forth? When in fact the money going to the poor has steadily declined. At the same time the top 1% have been getting enormously wealthy?

Clinton: I think so. That’s why I talk about them both. I think what you want for the poor, though, is to restore the ability of them to move into the middle class. In order to do that you have to have a growing economy. I think the most irresponsible people of all in America in the 1980s were the politicians and the executives who conspired to give us a tax system and an economic system that threw wealth way up to the top of the ladder and didn’t increase growth, jobs and incomes for middle-class and poor people.

Q: You have said that Democrats should concede that Bush had acted wisely in the Persian Gulf. Now we have had in the Los Angeles Times detailed investigative stories showing that Bush was much more involved with Saddam Hussein than anyone had thought. We have congressional testimony and so forth. Would you be interested in re-evaluating that statement?

Clinton: Let’s get what I really said. I said that I thought he was right to throw Saddam Hussein out of Kuwait. I did not agree with what he did beforehand nor what he did after. And I mean immediately after. I think they obviously played politics with the war. They left the Kurds and the Shiites to twist, and everything that happened after I think was wrong. They mishandled it, by and large.

And of course we now know, thanks to The Times, a lot more about what happened before than we did. And I’m just appalled by it. If you look at what he did, it’s easy to understand why Saddam Hussein thought he could march into Kuwait or any place else he wanted. I mean we treated him like our last best friend, right up until we bombed him.

And it just makes you wonder what they were thinking about or whether they knew this would happen. I mean it is a bewildering thing. And, yeah, I’m interested in reassessing what I said about what happened leading up to that. It’s even worse than I ever dreamed it was. Even though I still agree that we would be worse off if Saddam Hussein had not been kicked out of Kuwait. But you realize it is almost like a monster we created.

Q: So as President you’re going to . . .

Clinton: . . . make sure we get the facts to make the decision. You can make sure that I’m not going to be out their dancing with guys like that, then setting them up so we can go to war. I won’t do that.

Q: The biggest problem that you’re up against, and I don’t think this is personal to you, is that people just don’t believe politicians. You know that. You say all these things and it sounds like just words. The appeal of Jerry Brown at one point and now Ross Perot is clearly that people say, well, at least these people sound a little different.

Clinton: Yeah, but there is a big difference between me and them. I paid 11 years of my life to get up every day and come to this (governor’s) office and work on these things. And one of the things that really hacks me off is when people only evaluate politicians based on words. You know, anybody can say anything.

Now we got somebody who says, “Vote for me, I was never in office. I don’t know anything about this. I’ll come back in a few months and tell you what I think.” And you know there is a big difference, and by the way, I like a lot of what Ross Perot says. And he says a lot of what I say. But I’ll tell you something and the American people had better recognize this: Change is hard.

It is hard. It does not come overnight. And it does not come through words alone. I ought to have credibility because I have worked at this, I mean worked. Now it doesn’t count for much in this day and age because modern politics is all about images and words and positioning. But work still matters. It will matter who gets elected President and whether the President knows the first thing about any of these problems and has paid the price of time.

Q: Jerry Brown could make the claim that he ran a much tougher state, a much bigger state, for eight years.

Clinton: You look at the difference . . . yeah, he sure did, he was governor in the ‘70s, he had gobs of money and he was widely criticized for not paying attention to the details of his job. The California economy was exploding and growing.

There was no place tougher to govern in America than a poor, rural Southern state in the 1980s, when rural income dropped dramatically. Let me say, I’ve always kind of liked Jerry Brown. He always felt he was great at figuring where the next wave was in political change. And when he came out early in the campaign, I told people he might be the last one here, because the great thing about the 800-number that is even more important than the $100 contribution, is that it empowers people to access the system which seems bureaucratic, remote, unresponsive and broken.

Q: Yes, but he would claim an ideological difference that you represent an effort to take the Democratic Party back toward the Republicans, and he was going to speak to the constituencies that you were ignoring: the poor, the women and so forth. And the people that you have defined as . . .

Clinton: What is the evidence of that? I have said more about the poor. You know, he was in the campaign for eight months before he had as much to say about the poor and the family income as I did. When I announced my candidacy, early on, I said the first thing we ought to do is have a refundable, earned-income tax credit enough to lift the working poor out of poverty. I came out for a housing program that would help. I came out for health care programs that would help. I came out for preschool programs and child care and family leave. That is a bum rap.

Q: So you don’t think there is a philosophical difference between you and Jerry Brown?

Clinton: There is a philosophical difference . . .

Q: I mean in terms of where the party should be headed, in terms of its . . .

Clinton: He always tried to run to the right of everybody in the 1970s. The California teachers put out this statement that I had a better record on education than he did, because all he did was try to cut education. I don’t know what his philosophy is. I just know he’s really . . . he’s bright, and he’s always on the cutting edge of change. But I don’t know, I can’t tell you what his philosophy is. In 1990, when we were capping campaign expenditures in Arkansas, he was taking the caps off in court in California.

I also agree that Brown did some good things. But I mean the way he’s tried to sort of compare Arkansas to South Africa and call it a bush-league state, I think that was way out of line.

Q: He terms this race a battle for the soul of the Democratic Party because you have defined as special interests the very groups that are most vulnerable in the economy and that he wants to support. And he lists them as workers in cities where the plants have closed . . .

Clinton: No, the difference between me and him is I think if you go in and just tell people what they want to hear, then you’re sounding like just another Democratic politician and you’re going down the same road that we’ve been down. I don’t acknowledge that you’ve got to give people the same old rhetoric to win an election.

Tomorrow: An interview with Democratic presidential candidate Edmund G. (Jerry) Brown Jr.