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2006-0469-F
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MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Speechwriting
Series/Staff Member:
Michael Waldman
Subseries:
OA/ID Number:
13659
FolderlD:
Folder Title:
[Robert] Reich's "Corporate Welfare" Speech
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S
92
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Remarks prepared for
US. Labor Secretary Robert R Reidt
Democratic Leadersiup Council
Wasiiington, DC
November 22, 1994
The Revolt of the Anxious Qass
The question that has preoccupied Washington over the past two weeks is why
American voters, in the midst of a buoyant recovery, reacted so harshly on Election Day to
the President's party. There are as many answers to the question as there are pundits in this
city, which means that there are well over half a million theories. I offer only one perspective,
that of Secretary of Labor — Secretary of the American workforce - whose job is to pay
special attention to American jobs, and who has spent much of the last 22 months talking
with ordinary American workers across this country.
The great American middle class has not shared in the benefits of this recovery any
more than it shared in the economic growth of the 1980s. True, over five million jobs have
been added since January 1993, most in high-paying occupations, and we are justifiably proud
of that record. But the 110 million existing jobs continue to split between a relative few wellpaying ones, mostly for well-educated professionals and executives, and a much larger
number going nowhere. True, corporate profits soared 45 percent in the last quaner, and
productivity grew at an annual rate of 2.7 percent. But wage growth hasn't matched this pace.
True, inflation has been kept at bay. But rising interest rates are hitting middle class families
with higher payments on cars, mortgages, and credit cards, while those earning over $100,000
a year — who own 60 percent of the nation's bonds and almost one-third of all other interestbearing assets — have much to gain from the rising rates. True, the Administration has
managed, against long odds, to get our economic house in order by shrinking govemment,
cutting spending, and lowering the deficit. But better fiscal management cannot reverse the
long-term decline of America's middle class.
This divergence ~ most of the middle class being left behind while the overclass
breaks away — has been deepening for fifteen years. Last year alone, the top fifth of
American households took home a record 48 percent of the nation's total income, and
pocketed 72 percent of the entire growth in incomes. The top 5 percent in particular America's overclass - widened their lead on the rest of the nation last year, taking home 20
percent of the nation's total income and more than 40 percent of all the growth in incomes.
Other factors influenced the recent election, no doubt. But never underestimate the
political potency of a declining paycheck. Exit polls on November 8th showed that support
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for Democrats dropped most precipitously between Election Day 1992 and Electio^Day 1994
among men who lack college degrees. This group-which includes nearly three out of four
working men-has seen its economic prospects shrivel over the past fifteen years, and has
suffered a 12-percent decline in average real incomes since 1979.
The old middle class has become an anxious class — worried not only about sustaining
their incomes but also about keeping their jobs and their health insurance. Our large
corporations continue to improve productivity by investing in technology and cutting payrolls.
In a recent survey, three out of four employers say their own employees fear losing their jobs.
Meanwhile, 1994 is on track to become history's second biggest year for mergers and
acquisitions. But who wins in this $300 billion derby? Certainly not the average American'
worker. When two industry giants merge, the advantages of the deal often come from layoffs.
Across America, I hear the same refrain: Tve given this company the best years of my life,
and now they dispose of me like a piece of rusty machinery."
What has happened to the men and women who have lost their jobs? Some have
navigated their way to new and better opportunities. But nearly one out of five who Ipst a
full-time job since the start of 1991 is still without work. And among those who have landed
new jobs, almost half — 47 percent - are now earning less than they did before.
In sum, tens of millions of middle-class Americans continue to experience what they
began to face in. the late 1970s: Downward mobility. They know that recoveries are cyclical,
but fear that the underlying trend is permanent. They voted for change in 1994 jiist as they
voted for change in 1992, and they will do it again and again until they feel that their
downward slide is reversing.
What so many Americans find shocking about today's economy is the seeming
randomness of their fates. On a recent national poll, 55 percent of American adults said they
no longer believe that you can build a better life for yourself and your family by working
hard and playing by the rules. Of those without college degrees, fully 68 percent no longer
believe it. Because they have been working hard, and they are still falling behind.
This isn't the way it's supposed to be in America Unlike more fatalistic cultures,
Americans have always had a deep faith that effort will be rewarded, that you reap what you
sow — in other words, that you earn your fate. If you work hard and play by the rules, you'll
get ahead. That was the bargain. For generations, Americans have believed in that bargain,
guided their lives by it, passed it on to their children. It's woven deep into the fabric of our
culture. It sounds like an economic equation, but it's more than that: It's an implicit moral
compact. The conviction that you cam your own fate forms the bedrock for the American
ethic of individual worth and accountability.
In the years after World War Two, America built the biggest middle class in history
on the foundation of that bargain. We turned our hard work into homes and cars, health care
and pensions, the middle class grew, enlarged and enriched still further, as the barriers of
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race and class and gender slowly began to fall. Poverty reached an historic low. And the
sense of possibility grew stronger.
But then something happened. Around 15 years ago, this American dream began to
fade. And as it faded, middle class families tried every means of holding on: Spouses went to
work, both parents worked longer hours or took multiple jobs, they decided to have fewer
kids and have them later, they drew down their savings. But as economist Frank Levy has
pointed out, middle class families have pushed these coping mechanisms about as far as they
can go. And they still feel they are losing the dream.
We are on the way to becoming a two-tiered society composed of a few winners and a
larger group left behind, whose anger and disillusionment is easily manipulated. Once
unbottled, mass resentment can poison the moral integrity of a nation, replacing, ambition with
envy, tolerance with hate. Today the targets of rage arc immigrants, welfare mothers,
government officials, gays, and an ill-defined "counter-culture." As the middle class continues
to erode, who will be the targets tomorrow?
All of which raises the central question: Why is it no longer the case that working
hard and playing by the rules reaps a just reward? Why is the middle class fragmenting?
Simply this: Hard.work is not enough any more, because two emerging forces have rewritten
the rules. The first is technology — largely computer based - which has either eradicated or
devalued every routine job which can be done by a software program, and simultaneously
enriched every job utilizing the problem-solving skills of the human brain. The second force
is global competition, which has reinforced the same trends, imperiling the jobs of those who
must compete with low-wage workers elsewhere on the planet, while rewarding those better
equipped to take advantage of new markets for American insights and skills. And we cannot
overlook labor unions, whose decline accounts for as much as 20 percent of the increase in
wage inequality among American men.
There is another reason, more difficult to quantify but probably no less important: The
breaching of the postwar bargain between companies and their employees. It used to be that
as companies became more productive and more profitable, employees who worked hard and
proved their loyalty could count on steady jobs withrisingpay and better benefits. No more
All Ae old bargains, it seems, have been breached. The economic bargain was that if
you worked hard and your company prospered, you would share the fruits of success. There
was a cultural bargain, too, echoing the same strong themes of responsibility and its rewards:
Live by the norms of your community - take care of your family, obey the law, treat your
neighbors with respect, love your country — and you'd feel secure in the certainty that
everyone else woixld behave the same way.
How can we get it back? How can we reconstruct our basic bargains? How can we
reverse the erosion of the middle class and the meltdown bf our moral core?
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It cannot be done by trying to turn back the tides of history - stopping technological
advances or seceding from the global economy. Even were such a neo-Luddite strategy
possible, it wouldn't rescue those who are falling behind, only drag everyone down with them.
Next week's vote on tiie GATT accords will reveal whether America's postwar consensus
favoring freer trade still endures.
Another choice is conceding that more and more of our wealth will be created by a
shrinking number of economic superstars, and then trying to save the middle class by
redistributing some of the winners' bounty to the also-rans. Nations have pursued this path for
a time, but it is hard to follow forever, and it has never been comfortable for Americans.
Others say the solution is far simpler: Cut taxes and lift the burden of a government
which is stifling die middle class. There is no dispute that taxes should be as low as possible,
and that govemment should not spend a single citizen's dollar more than it must. The
American voter wants a leaner government, to be sure. But let's not delude ourselves or
attempt to delude the nation: Federal income taxes cannot account for the decline of the
middle class. Federal taxes ~ even including the growing social-security burden on average
workers — took 19.8 percent of middle-income families' earnings in 1980, and take 19.6
percent today.
Some argue similarly that massive tax cuts for the rich will somehow restore the
middle class. The claim is that while they may not lift middle-class incomes directly, trickledown tax cuts, even on the sale of assets that investors already own, will ignite an economic
surge that will boost profits and incomes. We have heard this before. In the 1980s, this
country ran one of history's most expensive experiments to test this theory. We learned that
public deficits can spur a temporary boom, at the price of long-term indebtedness. The rich
got richer. Everyone else's income stagnated or declined. And to this day we are paying the
bill. Interest on the debt America accumulated under the prior two Presidents alone accounts
for $162 billion a year. The dead weight of this burden claims 28 cents of every dollar
individuals pay in taxes today. Surely the point has been made. Let's not whip up another
toxic economic potion « a pinch of Laffer, a dash of Darman, the eye of a Newt - that all of
us will pay for in the morning.
The only enduring solution is to equip every American to succeed through hard workunder the new rules. It used to be enough to keep your shoulder to the wheel and be loyal to
your employer. But the rules have changed. Now you need to niake your own way in the
economy, learn new skills throughout your career, be ready to apply them in new ways and in
new settings.
Can you get ahead if you play by these new rules? Absolutely. Do the new rules
define enough good jobs to support a new middle class? Without a doubt. There is no limit to
the ingenuity of Americans, no limit to the, opportunities for creating value. A salesclerk who
taps PCs to monitor sales and replenish inventories, and who advises customers on the variety
of ways to meet the customers' needs, adds substantial value; as does an auto mechanic who
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can repair ihe electronic gadgetry under the hood, or the operator of a desktop publishing
program who devises niew graphic layouts, or the factory worker who reprograms a computercontrolled machine tool for finer tolerances and quicker setups, or the secretary who
orchestrates a sophisticated spreadsheet program. In the emerging economy, every job can
become more valuable; every person, more valued.
Contrary to some theorists, our destinies do hot reside in our genes. Study after study
shows that skills can be learned. Every year of education or job training beyond high school
— whenever it occurs in one's life — increases average future earnings by 6 to 12 percent.
GNP is not simply a, matter of DNA. Most Americans are on a downward slide not because
of some genetic deficiencies, but because they lack the ieamable skills to prosper in an
economy convulsing with change.
We know we cannot resurrect the old middle class of the first decades after World
War Two. The economy has changed forever. What we caa do is clear the way for a new
middle class — a middle class equipped to master the realities of the new economy, at least as
large but more inclusive than the vast middle class of our younger days. A new middle class
with plenty of room for people who play by the rules, without requiring a four-year college
degree as the entry ticket. A new middle class that rests on a refinement of the old American
bargain: You take responsibility for working hard, you get a chance to work smart.
The private sector has a critical role to play in creating this new middle class. It won't
happen unless companies invest heavily in training their workers to use new technologies, and
give them authority to make decisions. This is not a matter of charity. The best companies in
America, large and small — Levi-Strauss, Lincoln Electric, LS-Electro-Galvanizing,
Anheuser-Busch — are treating their.employees as assets to be developed rather than as costs
to be cut. Some are also sharing with their workers the upside gains of the enterprise as well
as the downside risks, converting a portion of wages into ai share of the profits. I have begun
to travel around the country, celebrating the companies and workers that are leading the way
in this new compact.
Mark my words: If American industry fails to forge such a compact with their
workers, it will jeopardize American competitiveness in decades to come. If American
business continues to pursue short-term profits at the price of insecurity and falling living
standards for a large portion of our society, it will sooner or later reap the bitter harvest of
popular rage. The American public is basically pro-business. But that support rests on an
implicit bargain. And business betrays that bargain every time it fires an older worker in order
to hire a younger one at a lower wage, provides goldplated health insurance to top executives
while denying its workers health coverage, labels employees independent contractors in order
to avoid paying them full-time wages and benefits, or discards its workers rather than invest
in them when profits are booming.
:
But it's not realistic ~ it's not even responsible - to expect business to carry the whole
burden. All of us have a stake in rebuilding the middle class, creating ladders into it from the
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underclass, and restoring the reward for working hard and playing by the rules. If the rules
have changed because of advanced technologies and global competitors, then this nation has a
moral obligation to help all Americans who are willing to work hard prosper under the new
rules.
We have made progress on this agenda in the last 22 months - an agenda which Al
From, Will Marshall, Rob Shapiro, and the DLC have championed: The Earned Income Tax
Credit, to help hard-working families stay out of poverty. Low-interest loans to .attend college.
School-to-work apprenticeships to gain job skills. One-stop career centers to link
unemployment insurance to job training. Voluntary skill standards, to know what to train for.
All of these have been bi-partisan efforts (which partly explains why they received so little
coverage in the media). They already have helped real people get new and better jobs.
These initiatives, however important, are only a bare beginning. If this society is to
reverse the long decline in living standards of American workers, a far bolder strategy is
necessary. Incrementalism just won't do; if there was any doubt on that point before
November 8, there can be none today. First, to be sure, let's accelerate the agenda of reform:
Streamline and consolidate the current clutter of adult education and job-training programs,
and pull Ae plug on programs that don't work. But reform is no longer enough ~ we need to
reinvent lifelong learning. Instead of feeding the budgets of bureaucracies ~ federal or state
— let's channel resources directly into the pockets of ordinary Americans so they can get the
skills they need — at the time, in the place, and in the way that makes sense for them. In
other words, let's put people first. Andfinally,let's make sure that Americans have up-to-date
information on what skills are in demand and likely to stay in demand, and where they can
get those skills.
*
"
How to pay for this, on the scale required to reverse the downward slide? The federal
budget is already strained. The DLC's Progressive Policy Institute has suggested at least one
possibility — one that squares with the voters' distaste for halfway approaches. It has
compiled a formidable list of special tax benefits for particular industries, totaling over $111
billion over 5 years. I invite the other great think-tanks of this city the Heritage Foundation
and the Cato Institute, to pick two at random ~ to add to the list their own examples of
business subsidies that don't make sense. Since we are committed to moving the
disadvantaged from welfare to work, why not target corporate welfare as well, and use the
savings to help all Americans get better work? Ending corporate welfare as we know it is a
worthy goal, made all the worthier if it frees funds for investments in workers. "Welfare to
work," in the fullest meaning of this phrase - including cuts-in corporate welfare td pave the
way to better work - offers a powerful theme for the 104th Congress.
What America must do, fundamentally, is to empower every man and woman to earn
their way into the new middle class. This is the Administration's central mission; we must
not be distracted by secondary concerns or entangled in partisan wrangling. We are eager to
cooperate with the new leadership in Congress on how best to rebuild the middle class. But
there will be no compromise in our commitment to this mission. Because America's real
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choice for the coming decades is between strenuous measures to restore our middle class
tradition, and equally strenuous — but infinitely sadder — efforts to accommodate ourselves to
its disappearance.
TOTAL P.08
�
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Title
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Michael Waldman
Description
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<p>Michael Waldman was Assistant to the President and Director of Speechwriting from 1995-1999. His responsibilities were writing and editing nearly 2,000 speeches, which included four State of the Union speeches and two Inaugural Addresses. From 1993 -1995 he served as Special Assistant to the President for Policy Coordination.</p>
<p>The collection generally consists of copies of speeches and speech drafts, talking points, memoranda, background material, correspondence, reports, handwritten notes, articles, clippings, and presidential schedules. A large volume of this collection was for the State of the Union speeches. Many of the speech drafts are heavily annotated with additions or deletions. There are a lot of articles and clippings in this collection.</p>
<p>Due to the size of this collection it has been divided into two segments. Use links below for access to the individual segments:<br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+1">Segment One</a><br /><a href="http://clinton.presidentiallibraries.us/items/browse?advanced%5B0%5D%5Belement_id%5D=43&advanced%5B0%5D%5Btype%5D=is+exactly&advanced%5B0%5D%5Bterms%5D=2006-0469-F+Segment+2">Segment Two</a></p>
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Michael Waldman
Office of Speechwriting
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1993-1999
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2006-0469-F
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Segment One contains 1071 folders in 72 boxes.
Segment Two contains 868 folders in 66 boxes.
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Clinton Presidential Records: White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
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paper
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[Robert] Reich's "Corporate Welfare" Speech
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Office of Speechwriting
Michael Waldman
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Box 35
<a href="http://clinton.presidentiallibraries.us/items/show/36403"> Collection Finding Aid</a>
<a href="https://catalog.archives.gov/id/7763296">National Archives Catalog Description</a>
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2006-0469-F Segment 1
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White House Staff and Office Files
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William J. Clinton Presidential Library & Museum
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Adobe Acrobat Document
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Preservation-Reproduction-Reference
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6/3/2015
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7763296
42-t-7763296-20060469F-Seg1-035-011-2015