From mkuhn@hopper.unh.edu Mon Dec 11 16:42:15 1995 Date: Mon, 11 Dec 1995 12:39:05 -0500 (EST) From: Mark S Kuhn To: information@unh.edu Subject: SF12-7.HTML Forbes Stump Speech:12-7-95 

Steve Forbes: "Stump Speech"
December 7, 1995
Speaking to a luncheon meeting of the Portsmouth Rotary Club
Yokens Restaurant, Portsmouth, NH
Rotary official estimated an audience of 260, an increase from the
usual 150 that attends a luncheon meeting.
Recorded and transcribed from audiotape by Mark Kuhn



  Mr. Forbes:  Thank you very much that's a very nice introduction. 
It's a great pleasure to be here today.  I know that economists
tell us, that's one reason I like being here today, that the
economists tell us you can't get a free lunch.  So I'd like to
prove them wrong once in a while.
 [laughter]
  And I'd rather pay in kind than in cash.  But it is a great
pleasure to be here and I appreciate your taking time out of your
schedules to be here today.  
  What I'd like to do is make a few remarks about the ninety-six
campaign.  What I think are the opportunities for getting America
moving ahead.  And then we'll open it up for questions and
discussion.
  But in terms of the 1996 campaign, I think that this will be one of
the most important elections in American history, certainly in this
century.  I say that not just because in the last couple of months
I suddenly have a personal vested interest in what happens in this
campaign.  But this really is, despite the cliche, a crossroads
election.  This will determine what kind of country we are, what
direction we'll take both at home and overseas.  It is a post Cold
War election.  The first time in eighty years we don't face a major
external threat.  We also sense that we are entering a new era,
whether you call it the high-tech age the information age or the
micro-chip age, it will alter the way we live and the way we work. 
  In 1996 we do, I think have an opportunity in these, in this new
era to to remove obstacles and barriers that stand in the way of
our moving ahead.  As you know many Americans today are frustrated. 
They don't understand, for example, why is it that if we won the
Cold War, we're the most powerful nation on earth, the most
powerful nation in history, why is it that we aren't doing better
here at home.   Why is it, for example, that two incomes in a
family can't seem to do the job that one income could in previous
generations?  Why is it that many young people feel they won't have
the opportunities that their parents and grandparents had for
getting ahead?  And why is it that the quality of life in America 
seems to have come under assault in the last thirty years whether
in our schools, in our streets, or for our families?
  Before I get to a discussion of what I see are some of the
fundamental strengths of America and then some of the obstacles and
barriers that stand in the way of realizing our full potential, I
would like to make one observation.  That is, that despite what a
lot of pundits and writers would have us believe, in America the
difference between values and economics  is largely a false one.  
  By values I mean hard work, thrift, faith, trust, a belief in
individual  opportunity and responsibility, a belief in progress,
and a belief that we're on this earth and in this land for a higher
purpose.   What I'd like to do is make a few observations now on
some of our fundamental strengths, and then I think we can better
understand the unique opportunities that we have to remove the
barriers, to get an election mandate to remove the barriers that
stand in our way in 1996.  
  On the economic side we are now the strongest nation in the
world.  We've had an investment boom in America since the early
1980's.  That was only briefly interrupted nationwide by the 1990-
92 recession.  In manufacturing, America is now the strongest
nation in the world.  The travails we've been through in recent
years have not been in vain.  We're now ahead of Japan, we're ahead
of Germany.  
  The best example is the automobile industry.  Five years ago, for
example, the Chrysler Corporation was on the financial ropes. 
Today, last year, last year Chrysler alone made more money than all
the Japanese auto manufacturers put together.  In productivity we
are now ahead of the rest of the world.  Capital availability, we 
have plenty of capital available in America today.  We have become
the premier trading nation in the world.  And in terms of higher
technology we are far ahead of the rest of the world, whether
software, fibre optics, digital technology, internet technology, or
micro-processors.  
  Moreover this new era that we are entering into, will be a benign
one and an inclusive one.  We should think of the micro-chip age
this way.  And that is  microchip is extending the reach of the
human brain the way machines extended the reach of human muscle in
the last century.  [word inaudible], for example, if you learned to
drive a tractor, you could literally do in a day the physical labor
that a hundred yeoman plowman couldn't do a hundred years ago,  so
too the microchip is going to make us all smarter.  It's going to
enable us all to have a higher standard of living and a more varied
life.  
  All you have to do is look at the early fruits of the microchip
or information age.  And we quickly realize a truism of the
American economy.  Just remember economy and markets are people,
markets are people.  If you look at the American economy, our
history, you quickly realize that you don't succeed unless you make
a product or service that people find simple to use.  
  For example, you don't have to be an engineer to drive an
automobile.  You don't have to be a carpenter to buy and live in
house.  You don't have to know anything about aerodynamics to buy
an airplane ticket and ride on airplane.  So too, in this high tech
age you don't have to necessarily know anything about nips or bips
or lips, or any of that other kind of stuff to participate in the
age.  
  Just for example look at one of the early proofs, and that is the
calculator.  Calculators today are very cheap, easy to use,
everyone has one.  And thus tens of millions of us today can now do
in a matter of seconds or minutes, the kind of mathematical
computations that would have taken math wizzes hours or days to do,
forty or fifty years ago.  Some of us growing up, may not have
learned our spelling lessons too well, not to worry, spell check
can help you out even has even has a feature now, where if words
sound the same, it'll make note of it.  So you won't make the there
their kind of mistakes anymore.
  Some people fear that this new age will mean that people will be
left behind in the labor force.  Again it's not true.  All you have
to do, for example, is go to the super market.  I guarantee you nw
that most Presidential candidates make it a point to visit
supermarkets.  And what you, what you quickly discover, when you
look at the checkout line, is very sophisticated means of inventory
equipment that's revolutionized retailing in America.  But
virtually anyone can use that kind of equipment, whether it's the
laser kind or the wand kind.  So no one need be left behind. 
Everyone will have a chance to get ahead.
  So in this new age on the economic side we do have fundamental
strengths.  And we are far ahead of the rest of the world.  This of
course leads to, what about America's social problems.  Well again,
I think that what you're going to be seeing arising in the next few
years, you can begin to see it already, and that is a very
traditional strength and characteristic of America.  And that is
the people, when they see problems come together voluntarily to do
something about those problems.  
  Just to give you an example.  We know today that we have a
serious substance abuse problem in America.  Especially among young
people drug abuse has increased dramatically in the last three
years.  But it's not the first time in our history that we've had
these kind of problems.  Go back, for example to the 1820's.  In
the 1820's we had alcohol consumption per person in America four to
five times what it is today.  Everyone took a swig from the jug,
they called it cider then, but it had nothing to do, I hope with
what you buy at the supermarket, and everyone took a swig from the
jug.  Kids did it.  Preachers did it.  Teachers did it. Adults did
it.  
  So that by the late 1820's in America, by noontime much of the
nation was in a kind of a haze.  
 [laughter]
  Now, now, while we chuckle today, it did have, that kind of
drinking, did have a predictable social consequences.  So there
arose a movement in America, that said if you're going to have a
self-governing nation, it must be inhabited by self-governing
individuals.  So the first public health movement in America was
not a government program it was the temperance movement.  Despite
the lack of sophisticated communications, within a generation,
alcohol consumption in America fell by more than half.  
  Moreover the 1830's saw the rise of a series of religious
movements, called the second great awakening.  It also saw the rise
of the abolition movement against slavery.  So we've had these
movements before.  I think we're about to have a series of
movements, the likes of which, the scope of which we haven't had in
America since the turn of the century, which was called the
Progressive Era and epitomized by Teddy Roosevelt.
  You see signs of it already, whether it's church and temple
attendance, even in the New York metropolitan area.  You see it
with the Promise Keepers in the stadiums.  You see it with the
literature of the self-help, self-improvement, getting together to
deal with problems.  You see it in the reaction to violent crime,
people are saying we're not going to tolerate this anymore.  So
even in New York City they have a more pro-active approach, which
has cut the murder rate 40% in two years.  
  You see it too in the tone of the welfare debate, where the
emphasis is not on money, but it is on, it is on the fact that this
system destroys the very people it is supposed to help.  The
current system punishes you if you work, it punishes you if you
save, it punishes you if you get married, kind of a crazy
destructive system.  
  You see it too on the political side with the term limits
movement.  You see it too on the economic side with the flat tax
movement.  So there are a series of movements that are arising in
a very American way to deal with these problems.
  And now let me touch on what I think are the chief obstacles that
we must start to remove to realize our full potential as a nation
in this new era.  And what I think really you should understand is
that all of these changes that I'm talking about, all have a common
thread and theme of giving individuals more opportunity, more
responsibility, more power and control over their lives.  
  And this gets to one of the essences of the American experiment,
and that is this, seemingly ordinary people can achieve
extraordinary deeds when allowed and encouraged to take
responsibility for themselves, for their families, and for their
communities. 
  Let me now touch on the barriers that I think we need an
electoral mandate to start removing, with this upcoming election. 
I think we have to start, we have to start with the tax code.  No
one outside of Washington could have devised something more
complex, more un-understandable, more corrupting, more anti-family
or anti-growth, and anti anything else you'd like than the tax code
we have today.  Just to put it in perspective, the American
Declaration of Independence was thirteen hundred words, the Bible
is seven hundred and seventy three thousand words,  and the federal
income tax code is seven million words and rising.  That puts it,
that puts it in perspective.
  There's only one thing to do with it.  You can't reform it, can't
trim it around the edges.  The only thing to do with it is scrap
it, drive a stake through its heart, bury it, and hope it never
rises again.  
 [applause]
  I'd replace this monstrosity with a simple flat tax, that is also
a tax cut.  It's not a big tax cut.  People say, "Why do you
combine it with a tax cut?"  I do it for this reason.  Washington,
in Washington they always say, including even one of my opponents
who's supposed to be a conservative, Pat Buchanan, they all say, "A
tax change should be revenue neutral.  My response is, "Why?"  If
something is good for the nation shouldn't Washington adjust to
needs of the nation, rather than the nation adjust to the appetites
of Washington?  
  I want to make a point, we've got to break the culture in
Washington.  Under a simple flat tax, you'd have generous
exemptions for individuals and for children.  So that, for example,
a family of four,  a family of four would pay no tax on their first
thirty six thousand dollars of income.  Anything above that thirty
six thousand dollar level would be taxed at the low rate flat rate
of seventeen percent.  There'd be no tax on personal savings no tax
on pensions, no tax on social security, no tax on capital gains, no
tax on inheritances.  On the business side you'd also have a flat
seventeen percent rate.  On profits, you could write off
investments in year one.  No more, ever-changing, complicated,
depreciation schedules.  It makes no sense in this high tech age to
have the government define the useful age of an asset.  That should
be in business peoples' hands, not the IRS.  
  The virtues of a flat tax I think are several fold.  One, it is
simple.  You can literally fill it out on a postcard.  It is
honest.  This is very important to understand, it will remove, it
will remove the principle source of political pollution and
corruption in Washington.  
  As you know from history, the power to tax is the power to
destroy.  It is the principle source of power in Washington.  If
we're going to change the culture of Washington, take away its
principle source of power.  It is also, it is also fair because it
removes millions of people from the tax rolls.  It'll get our
country moving again, because it allows you the people to keep more
of what you earn and it reduces barriers to job creating
investments.  
  And finally, it is good for productivity.  Do you realize that as
a nation today we spend up to six billion hours a year filling out
tax forms?  And for what?  It's a dead weight activity.  So if we
get rid of the tax code, replace it with a simple flat tax, around
April, certainly you'd have more time for yourself.  You could use
it productively, or non-productively.  Your choice.  But also it
would be good for the quality of life.  I mean you'd be less likely
to yell at your spouse, less likely to kick the dog, throw
furniture, or other things you do when you try to cope with the tax
code.  
  So get rid of it.  And that is just for starters.  That is a
means to an end, with the flat tax.  Other reforms include term
limits, which would allow individual citizens to participate in
politics, achieve a degree of effectiveness in politics without
spending a lifetime in politics.  I think that would be a good
change, term limits for Congress.  
  Other reforms include lower interest rates.  The dollar should be
a fixed measure.  When it was before the late 1960's, we had low
interest rates in America, before the politicians got their hands
on the value of the dollar.  The dollar should be worth a dollar
and not change.  Just as you look at your watch, you have sixty
minutes in an hour.  That doesn't fluctuate or float each day.  You
know forty-five minutes one day, ninety three minutes the next day. 
You don't have to buy futures or other instruments to figure out
what the length of an hour is going to be three months from now.  
  The same thing is true of a ruler.  A foot is twelve inches, that
doesn't change each day.  Imagine building a house where the  ruler
was twelve inches, thirteen inches the next, nineteen inches the
day after.  Kind of makes life complicated.
  So let's make the dollar a fixed measure.  And then, when we had
that fixed measure before the late nineteen sixties, none of you
who 're here are old enough to remember.  But, how's that for
political pandering?
  [laughter]
  But thirty years ago, thirty years ago in America.  Thirty years
ago in America, a typical family could get a thirty year, fixed
rate mortgage for four and a quarter, four and a half percent.  Now
just image, if you woke up tomorrow morning, flat tax, thirty six
thousand of exemptions, seventeen percent rate above that, and a
four and a half percent mortgage.  Don't you think life would be
better in these United States?  Don't you think the quality of life
would be better?  That families that feel they're on a treadmill,
the treadmill is winning.  Would finally have a chance to get off
that treadmill.  You know it would so let's do it.
  Other reforms, medicare, have medical savings accounts.  Take it
out of the hands of the politicians again.  Put power back to you
the consumer.  Under medical savings accounts you'd have two
thousand dollars in your account.  If you wanted a prescription,
you could get it and not worry whether the bureaucracy said you
could, it was it was valid or not.  You'd have total catastrophic
coverage above a certain level.  So there'd be no need again to
have medi-gap insurance or have these big co-pays on part B, or
high deductibles on part A.  So why not do it?  
  We did a variation at Forbes magazine.  Four years with medical
savings accounts.  Our expenses are less today than they were four
years ago.  And we did not force anyone into managed care.  We did
not take people's benefits away.
  On social security.  We must keep our promises to current
beneficiaries, and those who are going to retire in ten to fifteen
years, because real life decisions have been made on the basis of
those promises.  But for young people they know, and we all know,
that the system is going to be broke, bankrupt by the time they
retire.  
  So while we still have time, why not put in, why not put in a new
system for younger people.  Where a portion of the payroll tax that
now goes to Washington,  would instead go to their own individual
savings or retirement account.  It would belong to them, not the
politicians.  They would direct the investment in the real economy,
instead of subsidizing the national debt.  And therefore there'd be
something there for them when they retired.  It would also avoid a
generational conflict between younger people and the elderly.  So
why not do that now.
  All these and other reforms, as I emphasized, all have the theme
and threads of giving people more responsibility and power over
their lives.  Let me just make a word too about government
spending.  
  I think that if we're going to reform the government we must do
more than one approach.  We must change the tax code, which will
mean more revenues for for government, because people will be doing
better.  We must change the monetary system so we get lower
interest rates.  That alone would save one hundred billion dollars
a year on the federal deficit.  We must have medical savings
accounts that would curb the inflation in medicine.  We must
combine that too.  
  If we do those things, I think we'll have more success in re-
organizing and downsizing government, because we're going to need
long term support to make those changes.  Such as getting rid of
the Education Department, scaling down HUD, Commerce, Energy, FCC,
and other alphabet agencies that have outlived their usefulness. 
If we're gonna make these budgetary changes, we can't concentrate
on them alone.  It must be part of an overall approach of reforming
government and returning more responsibility and opportunity to
individual Americans.
  Let me just close by making an observation about foreign policy
since that is in the news today.  As a general principle America
must keep a presence in Europe and Asia.  We must not the mistake
we made in the twenties and thirties when we turned our backs on
the world and we and the world paid a fearful price for it.
  Out troop strength in Europe and Asia, regardless of what happens
in Bosnia, is overall, a stabilizing influence.  In Asia, for
example, China is now in a military buildup.  Nobody knows where
it's going to lead. But if we're not there, then countries like
Japan are going to say, "If they're defenseless they're going to
have to re-arm."  I don't want that to happen.
  America is a stabilizing influence there.  And the leaders of
Asia will tell you that.  If we're not there, past patterns are
going to emerge, and we're not going to like the results of them. 
  I remember ten years ago, the Chancellor of Germany saying to me,
he said, "Don't leave Europe to its own devices."  
  We must also stay on the cutting edge of technology.  We saw that
in the Gulf War.  
  Let me now make a specific comment about Bosnia.  It's no secret,
I was opposed to the troop deployment in Bosnia.  Now that the
troops are going over there,  I think we're under, we're under an
obligation to rally around them.
  [applause]
  I think that we should ask that two things be done, while our
troops are there to ensure that their mission has a chance of long
term success.  Number one, is that we should arm and train the
Bosnian Muslims.  If we don't, when the troops are withdrawn, the
war will resume, the war will resume.  Moreover, along the same
lines, we should make it clear that we will use NATO air power if
either the Serbs or the Croats decide on a military buildup to
launch a military offensive.
  If we don't take those two steps, what I fear is that when our
troops are withdrawn, someday they will be withdrawn, Bosnia will
suffer the fate that Poland used to suffer.  That is be partitioned
by more powerful neighbors.  Molosovich, the dictator in Belgrade,
has never accepted the idea of a, not having realizing his dream,
which is other people's nightmare, of a greater Serbia.  
  We have Croatia, [inaudible] a month, a few weeks ago his plan
for partitioning Bosnia with the Serbs.  So, do those two things. 
The Bosnia Muslims, know what's at stake, they've been the victims
of aggression.  They've been the victims of ethnic cleansing, the
women have been in the rape camps.  Give them the arms to defend
themselves, so that no uh no side, so that neither of the sides get
the illusion that can achieve a cheap victory.  
  So arm the Bosnian Muslims, provide airpower, there is a
concentration.  And then I think you at least have a chance for
some sort of settlement instead of a re-descent into the kind of
war that we've now just ended.  
  So in closing, on foreign policy, I think that we must not
withdraw from the world.  And we must realize though, ultimately, 
we are only two hundred and seventy million people in a world of
six billion people.  That ultimately our security comes from more
and more people sharing our values of democracy, freedom, belief in
the individual.
  So,  in short, ladies and gentlemen, we have enormous
opportunities in 1996.  But if we don't take advantage in a
positive way of those opportunities,  I think that we are going to
pay a fearful price for it.  I'm an optimist.  I think we will do
things more right than wrong.  And I think when historians look
back on this period, they're going to conclude that America once
again have proven wrong, the critics, skeptics and the crep-hangers
[sic?] that America will once more take her place as the leader and
inspiration of the world.
  Thank you very much.