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Note: Comments on Dangers of Hedge Funds and Derivatives Dealing

12:46 P.M. EST 
    PRESIDENT CLINTON:  (Applause.)  Thank you.  Thank you very much. 
(Applause.)  Thank you.  Thank you.  Thank you -- (inaudible).  Thank 
you.  (Applause.)  Thank you. 
    Ladies and gentlemen, even though the mayor's promised warm 
welcome to Detroit turned out to be a bit of false advertising today 
-- (laughter) -- I am delighted to be back. 
    I have had a wonderful time.  The auto show made me feel like a 
kid again.  I wanted to leave with 10 of the cars myself, but I had -- 
I was embarrassed to say -- you know, I haven't bought a car in six 
years, so I had to go around and ask what every one of them cost. 
    I liked the concept cars; I liked the orientation toward the 
future.  It was a wonderful thing.  And we have some people here 
associated with the auto show, and I'd really like to thank them for 
making me and the congressional delegation and our guests feel so 
welcomed today. 
    I want to thank the mayor for letting me be his stand-in.  We 
have been friends as long time.  Mayor Archer's friendship is one of 
many thousands of things I owe to my wife.  They were friends in bar- 
association work.  I knew Dennis Archer when he was just a mild- 
mannered judge with no political opinions.  (Laughter.) 
    I'd also like to thank your attorney general, Jennifer Grandhope 
(sp), for being here -- (applause); my good friend Ed McNamara (sp), 
to my left; thank you, Jennifer.  (Applause.) 
Thank you, Mr. McNamara (sp), for being my friend.  And City Council 
President Gil Hill (sp); Frank Garrison (sp), the president of the 
Michigan AFL-CIO. 
    And I want to thank my good friend Governor and former Ambassador 
to Canada Jim Blanchard.  I think he was the best American ambassador 
we ever had to Canada, and you can be very proud of what he did there. 
    He also brought me here the first time.  Maybe there were this 
many people when I spoke in August of '92, but I don't remember it. 
This is the longest head table I've ever seen.  (Laughter.)  I got up 
at 6:00 this morning.  I didn't do my normal workout.  It doesn't 
matter; I ran all the way down the head table.  (Laughter.) 
    I'd also like to thank the unusually large delegation from 
Congress who came with me today, and I'd like to ask them to stand and 
be recognized:  Congressman John Dingell and Debbie; John Conyers is 
here with his son; David Bonior; Sandy Levin and Mrs. Levin; Jim 
Barcia; Bart Stupak and Mrs. Stupak; Carolyn Kilpatrick; and Debbie 
Stabenow.  They're all there, and I thank them for coming with me from 
Washington.  (Applause.) 
    Here in Detroit nearly a century ago, as all of you know better 
than me, Henry Ford set history in motion with the very first assembly 
line.  He built not only a Model T, but a new model for the way 
America would do business for quite a long while.  He said he was 
looking for leaders and thinkers and workers with, I quote, "an 
infinite capacity to not know what can't be done."  People like that 
came together in Detroit and all across America.  They forged 
America's transition from farm to factory.  Detroit led the way, and 
America led the world. 
    Today, as Mayor Archer just documented, Detroit is still leading 
the way, and America continues to lead the world.  Indeed, we gather 
today at a time of an American economic renaissance.  Our budget is 
balanced for the first time in a generation.  We are now ending -- 
entering a second year in an era of surpluses.  This week I announced 
-- (applause) -- I announced that our economists project we will close 
out the year and the century with a surplus of no less than $76 
billion, the largest in the history of the United States, for the 
second year in a row.  (Applause.) 
    Today we received the December unemployment figures. 
Unemployment was 4.3 percent, the lowest monthly rate since February 
of 1970.  For the year it was 4.5 percent, the lowest annual rate 
since 1969.  It's the lowest peacetime rate of unemployment since 
1957.  There were 378,000 new jobs last month, for a total of 17.7 
    The welfare rolls are the lowest they've been as a percentage of 
our population in 29 years. 
    Homeownership is the highest in history.  And in the last six 
years, 7 million Americans have bought new homes, and another 18 
million have refinanced them at lower interest rates. 
    We also know now, with this last month, that this peacetime 
expansion is the longest economic expansion in peacetime in the 
history of the United States.  (Applause.) 
    And equally important to me, this one is different from the ones 
of the last several years; it is inclusive, not exclusive.  We have 
seen, for example, the highest real wage growth in over two decades, 
growing at twice the rate of inflation; the lowest African-American 
and Hispanic unemployment rate ever recorded since we began keeping 
such statistics in 1972 -- (applause); and average family income up, 
after inflation, by $3,500.  This is a rising tide that is lifting all 
    Closer to home for many of you, we learned that this week (sic) 
was also quite a remarkable year for U.S. automakers; 15.5 million 
cars and light trucks sold last year, the most in 12 years.  Ford had 
its best year since 1978.  The sales of the former Chrysler 
Corporation -- I met with the Daimler people again today, and again I 
asked them to sell me a Mercedes at the price of a Chrysler. 
(Laughter.)  And I'm working on making that deal for all Americans, I 
want you to know!  (Laughter, applause.)  But anyway, we're excited 
about this merger.  And their brand set a record high -- 2.5 million 
vehicles.  GM ended the year on a strong note with great momentum for 
    Now let me compare just for a moment how far we have come these 
last six years.  The last time I spoke here, and Governor Blanchard 
brought me, as a nervous candidate for president, in August of 1992, 
it seemed America had lost its way in the strong headwinds of economic 
change.  In August of 1992, I said we had a choice to make; whether to 
create a high-growth, smart-work, high-wage economy or to continue to 
drift into a low-growth, hard-work, low-wage future.  In August of 
1992, the unemployment rate for this entire area was almost 9 percent, 
the same for the state as a whole.  In August of 1992, Michigan had 
lost more than 60,000 jobs in the previous two years, businesses were 
folding, residents were losing jobs and hope, crime and poverty were 
hitting record levels. 
    The new world of high technology and greater global competition 
threatened to bypass America's heartland.  Foreign competitors 
actually described America as another great power in a state of 
inevitable decline.  On our own best-seller list there was a 
remarkable book that asked a question with its title, "America:  What 
Went Wrong?" 
    Well, three months after I was here, in my inaugural address, I 
said that I believe there is nothing wrong with America that cannot be 
fixed by what is right with America.  And today we can thankfully ask 
the question,  America:  What went right? 
The answer is, a lot of things.  In fact, most things are going right 
for our country.  Our real recovery began when we returned to a 
principle as old as our republic:  we, the people.  We have pursued a 
vision of 21st century America with opportunity for all, 
responsibility from all, a community of all Americans.  We have 
married old ideals to new ideas to fit our new economy and our new 
society.  We have moved beyond the false choices of using government 
to hold back the tides of change or leaving people to sink or swim all 
    We believe the role of government is to empower people to ride 
the tides of change to greater heights.  We believe in a government 
for the information age that is progressive, creative, flexible and, 
yes, smaller.  You might be interested to know that the government 
that you have today has more than 300,000 fewer people than it did 
when I last came here to speak in August of 1992.  Indeed, it's the 
smallest federal government since John Glenn first orbited the Earth. 
    For example, under the vice president's's leadership, we've cut 
more than 16,000 pages of federal regulations, streamlined or 
simplified 31,000 more, committed to work with those who bear the 
burden as well as those who receive the benefit of future regulations 
in drafting them.  In areas from workplace safety to the Partnership 
for New-Generation Vehicles with your automakers, which I'll discuss 
more in a moment, to climate change, we are working with business to 
use technology, research and market incentives to meet national goals. 
    Some have called this political philosophy the Third Way.  It has 
modernized progressive political parties and brought them to power 
throughout the industrial world.  Here in America, it has led us, I 
believe, to a new consensus, making the vital center once again a 
source of energy, action and progress that I believe is the only way 
for any advanced industrial nation to thrive in the new global 
    Our new economic strategy was rooted in a few basic ideas. 
First, in fiscal discipline.  In an era of worldwide capital markets, 
nations purchase prosperity by saving and investing and being prudent, 
not by running big deficits.  So we cut the deficit, balanced the 
budget, sent interest rates down, helping people to buy new homes, 
helping more entrepreneurs to start new businesses. 
    Also, the reduction of the deficit and the ultimate balancing of 
the budget has freed up more than $1 trillion in capital for private- 
sector investment.  Unlike past expansions, where government bought 
more and spent more to drive the economy, during this expansion 
government spending as a share of the economy has actually fallen, and 
over 90 percent of those 17.7 million new jobs are private-sector 
    The second part of our strategy has been to invest in our people. 
In 1992, we had two deficits -- one in the budget, but another in our 
investment in our people and our future.  A high-tech economy that 
places even grater demands on skills must put people first, as the 
mayor said.  Therefore, even as we cut spending and eliminated 
hundreds of programs to balance the budget, we nearly doubled our 
annual investment in education and training.  Even as we closed the 
budget gap, we have expanded the earned income tax credit for 15 
million low-income working families, giving them hope and lifting over 
2 million working people out of poverty. 
Even as we cut government spending, we have raised investments in our 
welfare-to-work jobs initiative and invested $24 billion in a 
children's health initiative to bring health insurance to 5 million 
young people who do not have it. 
    Third, building a new American economy has meant making the world 
economy work for us.  Until last year, when we had all the turmoil and 
trouble around the world, fully one-third of the strong economic 
growth we had enjoyed in the '90s came from expanded trade.  For every 
country engaged in trade, for every market opened to our products, the 
base of customers for American goods and services expands.  That is 
why it matters to all Americans that we have negotiated 270 trade 
agreements in the last six years.  Not all of them have met all of our 
hopes, and a lot of them have been limited by the economic problems 
faced in particular countries. 
    I think those here associated with the auto industry know how 
hard we have worked on the auto trade agreement with Japan.  We will 
never make the kind of progress we intend to make there until the 
economy begins to recover, which brings me to a point I will return to 
in a moment. 
    Nonetheless, if you look at our approach -- fiscal discipline, 
investment in people, expanded trade -- it has enabled the United 
States, the businesses and the people working here, to create a truly 
new global high-tech economy.  More than 7 million Americans today 
work in technology-related industries, earning two-thirds more than 
average workers' salaries.  Technology has not just built the computer 
industry, it has transformed existing industries; from high-tech 
research and development, in real estate, in construction, and as I 
saw today, to transportation. 
    A lot of these cars now that I saw today have more computer power 
in them than Neil Armstrong had to steer Apollo 11 to the Moon.  It's 
an interesting time in which we live, and we should feel fortunate to 
be here. 
    The question for all of us today and the thing I want you to 
think about is:  Okay.  We feel good, and Dennis reeled off the 
statistics, and you clapped, and I was pleased.  (Laughter.) 
And I like it even better knowing that there are real families now 
that have work and a stronger future for their children and safer 
streets for them to live on. 
    But the question for us today is the question you have to face 
every day you get up, whether it's a good day or bad day:  What are 
you going to do today, and what do you intend to do tomorrow?  What 
are we going to do with this prosperity?  We can rest on our laurels 
or press ahead. 
    In a sentence, here's how I assess our present condition: 
America is working again.  It's working.  Not just the economy; the 
crime rate is the lowest in 25 years.  A lot of our social problems 
are receding.  It's working again.  That is the good news.  But no 
serious analyst of our condition could seriously say that we have met 
the long-term challenges that our people will face in the 21st 
century, and there will never be a better time to meet them than a 
time when we have a surplus in our budget and a strong surfeit of 
confidence in ourselves and our ability to meet the challenges ahead. 
    So I say this is the time to press on with the big challenges of 
the 21st century, not just to have America work, but to know that it's 
going to be working for decades ahead.  What are those challenges? 
They are many, but I will mention just three I'd like to ask you to 
think about in the context of the mission of the Economic Club. 
    First, we must maintain our prosperity and spread its benefits to 
people in places that have not yet felt it, and we must deal with the 
challenges of the global economy, for without a successful global 
economy, our ability to continue to grow and prosper will be 
dramatically limited. 
    Second, we must deal with the challenges of the old and the young 
in America.  We have to face the fact that the baby-boomers are about 
to retire, and when they do, there will only be about two people 
working for every one person drawing Social Security; that more and 
more we are living longer.  The average life expectancy in America 
today is over 76 years; in 20 or 30 years it will be well over 80 
years.  That will impose great new challenges to meet in long-term 
And we must face the fact that we have a challenge of the young, 
because more and more and more, our children tend to have higher 
poverty rates than our seniors, and more and more, our children come 
from very diverse populations in race, in religion, in culture, in 
income, in condition.  And yet every one of them needs to have a 
world-class education and a world-class opportunity to make the most 
of his or her life. 
    And third, we have to grow the economy while meeting the 
challenges of global responsibility, including global environmental 
challenges.  And if we are ever forced to really choose between one or 
the other, then our children and grandchildren will be the losers. 
So, let's deal with these things briefly. 
    In the economic arena, I think we have to do the following 
things.  First, in the next year and beyond, we must maintain our 
hard-won fiscal discipline, keeping our budget balanced, saying that 
no tax cuts or spending programs, no matter how attractive, can put 
our prosperity at risk by driving us back into deficits.  (Applause.) 
    Second, since all respected prognosis tells us that we are, in 
fact, entering an era of sustained surpluses, we should use this as an 
opportunity to address the challenges of an aging nation.  As I said, 
soon the number of elderly Americans will double.  This represents a 
seismic demographic shift for the United States.  I am grateful that 
last year the Congress agreed with me to set aside the surplus until 
we save Social Security.  Now it is time to actually save Social 
Security for the 21st century and to strengthen and secure Medicare 
for many more years. 
    Medicare is a great legacy of Congressman Dingell's father.  It 
is a great program.  A lot of people depend upon it.  It needs some 
support.  And there will be some money involved.  We have the ability 
now to deal with the challenges of the aging population.  And as you 
know, I also proposed a few days ago a tax credit to help people pay 
for long-term care. 
    If we can save Social Security for the 21st century, if we can 
strengthen and secure Medicare for the 21st century, if we can help 
families to deal with the challenges of long-term care, we will have 
gone a long way, not only to make sure that the older years of people 
will be more secure but to alleviate one of the principal worries that 
people in my generation have, which is that our retirement, because we 
are such a big group, will be so costly that it will undermine our 
children's standard of living and their ability to raise our 
grandchildren.  None of us want that.  And we have to take this 
surplus and this opportunity and deal with these challenges; and we 
ought to do it right now, this year, with no excuses.  (Applause.) 
    Now thirdly, we must do more to continue to close the investment 
gap for our young people and our people in their working years.  For 
more and more, the income gap in America is a skill gap.  We have made 
dramatic progress in opening the doors of college to all Americans, in 
hooking our classrooms up to the Internet, in raising standards in our 
schools and promoting more school choice and charter schools, in 
putting a hundred thousand new teachers in our schools to deal with 
the growing student population, which we began to do last year and we 
must continue this year. 
    In my upcoming State of the Union address, I will propose further 
reforms and improvements in our public schools, and I will also 
advance a new training agenda to give the American people the 
assurance that they will be able to get the skills they need for a 
lifetime of competition in the global economy. 
    Fourth, at this time of turmoil in the international economy, we 
must do more to make the world economy work for all our people and 
indeed for ordinary citizens throughout the world.  I want to press 
forward with open trade; I have always believed in it.  It would be a 
terrible mistake, at this time of economic fragility for so many of 
our friends and neighbors and democratic allies, for the United States 
to build walls of protectionism that could set off similar responses 
around the world and lead us into a sustained global recession.  That 
would be a mistake. 
    On the other hand, if we expect the American people to support 
open trade, we must be prepared to bring the full force of our trade 
laws to bear upon any and all unfair trade practices.  (Applause.) 
    Just yesterday I addressed such a practice, when I sent a 
comprehensive action plan to Congress outlining our response to the 
dramatic increase in steel imports into the United States, especially 
in the area of hot-rolled steel, where the prices are below what 
anyone believes the reasonable cost of production is anyplace in the 
    Let me be clear:  I am especially concerned about the dramatic 
surge of steel imports from Japan, but there are problems elsewhere 
too.  If these imports do not soon return to their pre-financial 
crisis levels, my administration is willing to initiate forceful 
action under our Section 201 surge protection laws, and under our 
antidumping laws.  An open, fair, rule-based system is essential to 
American prosperity.  I cannot go to the Congress and ask for expanded 
trading authority for an Africa trade initiative, for a trade 
initiative for our neighbors in the Caribbean, unless the American 
people know that whatever the rules are, we intend to play by the 
rules and we expect others to play by the rules as well.  (Applause.) 
    I would also tell you that this question of whether ordinary 
working people are benefited by expanded trade is an even more deep 
question in other countries than it is in the United States.  I went 
all the way to Switzerland a few months ago, on the 50th anniversary 
of the World Trade Organization, to argue for changes in the world 
trading system for the 21st century; changes that will make sure that 
competition never becomes a race to the bottom; changes in labor 
protection, consumer protection, environmental protection.  We should 
support more free trade and we should support more input from and 
consideration of those sectors.  We should be leveling up, not 
leveling down. 
    Strengthening the foundations of trade also means we have to 
stabilize the architecture of international finance.  Now, I'd like to 
just talk about this for a moment. 

Return to Top.
You know that -- all of you know in the last year how the global 
financial crisis has hurt our farmers, our ranchers, our 
manufacturers.  You've seen it in the steel industry.  One of the 
problems we have with the import of steel from Russia is that the 
currency value has collapsed as the money has flown the country.  One 
of the problems that they had in a lot of the Asian countries -- from 
Indonesia, to Korea, to Thailand, to other countries that have been 
troubled -- is that money flees the country.  Money moves across the 
globe in volumes and at speed far greater than ever before. 
    And it has created a situation which permits enormous increased 
investment almost overnight, but also can trigger a collapse.  All 
these financial mechanisms, the derivatives and hedge funds and all 
that, very often have investments that are guaranteed by only 10 
percent margins, far lower margins than people can buy stock, for 
example.  And the real danger has been, as you have seen all this 
happen, is, number one, that a problem in one country can spread to 
another, and a problem in one region can spread to another region, and 
then if all of our trading partners are affected, then we are affected 
because there aren't any markets for our products anymore. 
    Now, we can't have a global trading system unless people can move 
money around in a hurry and at great volumes.  No one wants to 
interfere with that.  So the question is, how can we do that and still 
avoid running the risk of having these huge boom-bust cycles in the 
world economy of the kind that caused domestic depression in the 
United States and elsewhere in the late '20s and throughout the '30s? 
And we are working very hard with other countries to come to grips 
with this, to try to find a way to facilitate it. 
    But to give you some idea of the magnitude of the problem, every 
day about $1.5 trillion crosses national borders in currency 
transactions, far, far, far, multiple times more than the annual -- 
than the daily value of trade in goods and services and daily 
investments.  So the trick is that we've been struggling with the 
Europeans, struggling with the Asians, struggling with people on every 
continent who understand this, how can we modernize the financial 
architecture which was created 50 years ago to facilitate trade and 
investment so that it also supports this global economy and the 
movement of money in ways that never could have been imagined? 
    I think we're making progress, but I expect it to be a major 
focus of my international efforts this year.  And I hope, even though 
it's a fairly obscure process, it will be clear enough to everyone 
that we will have support for the United Stats leading the way. 
    Let me say finally, we have to do more to renew our greatest 
untapped markets so that we can continue growth without inflation. 
And they are not around the world, they are in our under-invested 
urban and rural areas here at home.  (Applause.)  You heard Mayor 
Archer say that the unemployment rate in Detroit proper had gone from 
16 to 6 percent.  I hope the empowerment zone had something to do with 
that.  We have done everything we could across a whole range of 
policies to help our cities and our rural areas to attract more 
investment and opportunity.  My budget next -- in the next few weeks 
which I'll submit to the Congress will include more initiatives to 
have more opportunities.  Next week at the Wall Street Project in New 
York, convened by the people who run the stock exchange, major 
companies and Reverend Jackson, I will talk about how we can do more 
to bring growth to emerging markets here at home. 
    And lastly, let me just say a brief word about the environment. 
Last May here at the Economic Club the vice president spoke and 
asserted that we believe we can achieve economic growth along with 
cleaner air and cleaner water and meeting the challenge of global 
climate change.  That is, after all, the idea behind the partnership 
for the Next Generation Vehicle, which we started six years ago with 
those of you in the auto industry here, developing cleaner, more fuel- 
efficient cars and hoping to make American car companies even more 
competitive in the global economy.  I was pleased to see some of the 
fruits of that partnership, along with the fruits of other 
governmentally-funded investment at the auto show today, and I'm 
looking forward to seeing the concept cars from each of the companies 
in a year or so. 
    Now, let me say, these are some of the big challenges.  You may 
not wake up every day worried about the global financial markets.  You 
may not work up (sic) every day worried about the Social Security 
system, and if you're anywhere near drawing it, I hope you don't 
because it's fine for the next few years.  (Mild laughter.)  But it 
has been a generation since we have had the combination of economic 
and social circumstances which give us the emotional and financial 
space to think about the future.  And this country is changing in 
dramatic ways.  I didn't talk about the challenges of immigration 
today and our obligations to children and to our new citizens.  There 
are lots of things that we didn't have time to talk about. 
    The main idea I want to leave you with is that the temptation to 
rest on our laurels and relax because times are good must be resisted. 
Every business here subject to competition knows that good times today 
can become bad times tomorrow if you don't stay ahead of the curve. 
    The same is true for a nation.  We will never have, in all 
probability, in the lifetime of the people in this room, a better 
opportunity to take the long view -- to imagine how our children will 
live when they're our age; to imagine how our grandchildren will live 
when they're our age.  These are the challenges we should be dealing 
with today.  And as we deal with them, because they will inspire 
further confidence and further investment, they will strengthen the 
American economy and the American society in the near term, as well. 
    Henry Ford said, "Coming together is a beginning.  Keeping 
together is progress.  Working together is a success."  That is the 
question for us:  Will we rest on our laurels, become diverted in our 
energies, or keep working together?  If we work together, there are no 
limits to 21st century America, and that's what we owe our children -- 
no limits. 
    Thank you and God bless you.  (Applause.) 
Thank you.  Thank you.  (Applause continues.) 
    MODERATOR:  Mr. President, we are -- we work until 1:30.  And 
with that in mind, we have some questions that have come from the 
audience.  There are a series of questions, but I'll boil them down on 
this issue: 
    What are you thoughts about trade and finance after the launch of 
the euro?  And what effect with the euro dollar have on the United 
States' economy? 
    PRESIDENT CLINTON:  I have supported the economic and political 
integration of Europe for a very long time now.  As it proceeds, and 
as people begin to see Europe as a single entity, we will all come to 
understand that they have more people in the aggregate and a bigger 
economy in the aggregate than we do.  There may come a time in the 
future when, instead of the dollar being the accepted standard of 
international currency, it will be the dollar and the euro.  No one 
really knows. 
    But I believe that any anything that facilitates growth and 
opportunity for our friends in Europe has to be good for us, as long 
as they don't build walls around the European community.  That is, if 
Europe continues to be a more open trading environment, if this gives 
them the confidence and security to take down even more barriers, 
because our economy is still more open than Europe, this will be a 
very good thing. 
    We need to support their success.  We should hope that this will 
lead to a more rapidly rising standard of living in the European 
countries that don't have such a high standard of living.  We should 
hope that this brings them great new opportunities, and we should 
believe and have enough confidence that if they'll keep their doors 
open, that we'll get more than our fair share of opportunities.  We 
should also hope that it will bring more political self-confidence and 
that we will be able to work with them even more rapidly and more 
comprehensively in dealing with other challenges, like the challenges 
we face in Kosovo or the one we faced a few years ago in Bosnia, that 
we're still working on. 
    So on balance, I have to say I think this is a good thing, and I 
think it's an inevitable thing, and I don't think it would be worth a 
moment's attention by anyone to rue the day it happened.  They are the 
masters of their own fate.  They are going in this direction.  I 
think, on balance, it's positive, and we need to figure out how to 
make it a good thing for America and a good thing for the world. 
[section missing] 
    x x x it. 
And we have people on the seas, people in foreign countries, all over 
the world on every continent.  I visited in Africa -- when Hillary and 
I went to Africa this year -- I visited the young Americans that are 
part of the Africa Crisis Response Initiative, training African 
soldiers to deal with civil wars and other problems there. 
    We are everywhere.  And what's happening is, as we downsize the 
military, the following problems have arisen -- and you should all be 
aware of them:  Number one, the deployments overseas are lasting 
longer and the breaks between them are shorter.  Number two, we 
haven't had the money to replace and repair our equipment as rapidly 
as we should.  Number three, married people in the military who have 
families and children and who need to live in military housing have 
not seen any significant improvements in their military housing. 
    Number four, we have not done as much as we could have done and 
as much as I think we'll have to do in the years ahead in modernizing 
the weapons that we have, and as you saw in the recent military action 
in Iraq where we did a terrific amount of damage to the military 
infrastructure and the weapons of mass destruction infrastructure, 
while causing the deaths, the unintended deaths, of far, far fewer 
civilians than were lost even in the Gulf War a few years ago.  The 
technological edge the United States has is very important. 
    Finally, in certain critical areas, we just can't keep up with 
recruitment.  We have a lot of pilots leaving because the airlines are 
doing very well and they can get jobs making a lot of money working 
for the airline companies.  And I don't blame them, but it would 
bother you if you knew I needed the American Air Force and there 
weren't enough people to go fly the planes. 
    So when I say we're going to spend $100 billion over 10 years, 
you should know that some of that money is coming out of savings the 
Defense Department has achieved in -- when inflation's lower than we 
thought, when fuel costs are lower than we thought.  Normally, they'd 
have to give up that money.  We're just letting them have money that 
they were budgeted for anyway.  Some of that money will be new money. 
But we have to raise pay, we have to improve living conditions, we 
have to make sure that people are on safe equipment. 
    Do you know, not a single one of those planes that flew in Iraq 
came down?  Not a single bolt came loose, because people that you will 
never see work like crazy maintaining those planes in tip-top shape 
condition.  They should -- no American pilot, no man or woman that 
flies those airplanes should ever have to worry about getting into an 
airplane wondering about whether it's been properly maintained, 
whether the equipment was there, and all of these things. 
    So that's what this is all about.  And we are going to invest 
some more money in modernized equipment.  I hope you will support 
this.  (Applause.)  I know everybody'd like to see more money spend 
everywhere else, but they deserve it.  (Continued applause.) 
    MODERATOR:  Mr. President, we are out of time, but as a presiding 
officer, I always attempt to try to reach to our young people who have 
tried to ask, and they do ask, some very interesting and challenging 
questions.  I close with these two combined, one written by a person 
who is age 13 and the other by the age 12:  "Mr. President:  Are there 
horses and a horse barn at the White House?  If so, could you please 
send me a picture?"  (Laughter.)  And, "Who is the most interesting 
person you have met during your presidency?"  (Laughter, scattered 
    PRESIDENT CLINTON:  There are no horses or horse barns in the 
White House.  (Laughter.)  There is a place where Socks and Buddy 
sleep.  (Laughter.) 
    However, the president can ride horses, either in Rock Creek Park 
or up at Camp David.  And the National Park Service keeps horses, 
wonderful horses, which my family and I sometimes ride and, if we have 
friends come spend with the weekend with us, we can ride.  So we do 
have access to horses, but they're not right there on the premises. 
    It's very difficult to answer who's the most interesting person 
I've met since I've been president, because I meet all different kinds 
of people.  For example, some of you know I love music very much, and 
one of the big perks about being president is, if you ask somebody to 
come perform, they'll pretty well do it.  (Laughter.)  And so it's 
been a real kick, you know.  (Laughter.) 
    And I've met a lot of very fascinating people in public life. 
But -- and among the most interesting people I've met are: 
    The president of China, who's a fascinating man. 
    Boris Yeltsin, who's a fascinating man.  I remember he got up on 
a tank alone when they tried to take democracy back in Russia, and he 
said, with all the soldiers all around him and the threat to take 
democracy away, "You may do this, but you'll have to kill me first." 
And he was standing on that tank all by himself. 
    The late prime minister of Israel, Yitzhak Rabin, who was 
assassinated by one of his own citizens for working for peace with the 
Arabs, after he'd spent a lifetime protecting the people of Israel in 
    But I think among the politicians, the political leaders I've met 
-- I could mention many more, but I think the most interesting one 
I've met, for me, for a particular reason, is Nelson Mandela, the 
president of South Africa.  (Applause.)  And I say that for this 
reason, to the young people -- you should think about this the next 
time something bad happens to you, and you get discouraged -- bad 
things happen to kids, you know.  People they like don't like them. 
Gang members try to push them around, maybe threaten them, maybe even 
hurt them.  They make grades that are -- they don't think are as good 
as they ought to be.  You know, disappointments happen in life. 
    Nelson Mandela was in prison for 27 years because of his 
political beliefs -- and we talked once about it -- and he walked out 
of there with enough mental and emotional strength to take all the 
support that he had generated by becoming the symbol of South African 
freedom and to win in a landslide the first free election they'd had 
in 350 years, and to do it in a way that brought people together 
across racial and political lines instead of driving them apart. 
    When I went to South Africa, Nelson Mandela, for example, 
arranged for me to have lunch with legislative leaders, and one of 
them was the leader of the most militant right-wing, white party there 
who had once threatened to restart a civil war if Nelson Mandela got 
elected president.  And Mandela sat down and talked to him and 
convinced him he ought to be part of the political system.  And then 
when I came to South Africa, instead of having me eat lunch with all 
of his allies, he had me sit down and eat lunch with this fellow. 
    I have a minister friend who ran into President Mandela at the 
airport in Johannesburg, and he came up to a little five-year-old 
white girl and he asked the young girl if she knew who he was, and he 
said yes -- the young child said -- the girl said, "Yes, you're 
President Mandela.  You're my president."  And he looked at this 
little child now after all his life, and he said, "Yes, young lady," 
and he said, "if you study hard in school and you learn a lot about 
things, you too could grow up to be president of South Africa." 
    And, you know, when -- Hillary and Chelsea and I have all become 
friends of President Mandela, but also fascinated by how he survived 
27 years in prison.  There was over a decade in which he didn't have a 
bed in his cell; a dozen years of breaking rocks; an experience which 
cost him seeing his children grow up, ultimately cost him his 
marriage, and subjected him to all sorts of physical and emotional 
abuse.  And he walked out of prison, got elected president, invited 
his jailers to his inauguration.  And so I asked him one day, I said, 
"How did you do this?"  I said, "How did you go without hating them?" 
    And he said, "Well, you know, I did hate them for a long time, 
about 12 years."  And he said, "One day I was out there breaking rocks 
in prison, and I thought, "Look what they've taken away from me. 
They've taken the best years of my life.  I can't see my kids grow up. 
They've brutalized me.  They can take everything, they can take 
everything from me but my mind and my heart; now, those things I will 
have to give to them.  I don't think I will give them away."  You 
think about that.  "I don't think I will give them away." 
    The morning Nelson Mandela got out of prison, it was an early 
Sunday morning in America in the Central Time Zone.  And I got my 
daughter up and I took her down to the kitchen and turned the 
television on and sat her up on the counter -- she was a little girl 
-- and I said, "I want you to watch this.  This is one of the most 
important things you'll ever see."  And some of you remember when 
Mandela took that last long walk, you know, to freedom when he was 
coming out of the prison. 
    So I asked him, I said, "Now, when you took that last walk, tell 
me the truth, didn't you hate them again?"  He said, "Yeah, I started 
to."  And he said, "I was also scared, because I hadn't been free in a 
long time.  I was actually scared.  And I was filled with anger.  And 
then I thought to myself, when I become free, I want to be free.  If I 
still hate them, I won't be free.  They've had enough of my time; I'm 
not giving them any more, not another day."  Now, you think -- 
(interrupted by applause).  This is a very long answer to a child's 
question, but it's an important answer.  That's why this -- he's the 
most interesting person I've met, because I don't know another human 
being that suffered so much for so long and came out so much stronger 
and richer and deeper than he went into his period of suffering. 
    And so I ask the children here, and the parents here, to think 
about it when times get tough.  And I ask America to think about it 
when we have all these racial and religious and political divisions 
that we think are so big, and when we spend all of our time trying to 
solve the problems in Northern Ireland, the Middle East and other 
places in the world.  None of the people that -- practically none of 
the people that are involved in any of this stuff around the world, 
and nobody here in America, has ever been through anything, anything 
like what he went through.  And so when we call for a spirit of 
reconciliation and unity and community and mutual respect in America, 
we ought to think about Nelson Mandela.  If it was good for him, it 
would sure be good for us. 
    Thank you, and bless you all.  (Applause.) 

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Readings from the American Almanac. Contact us at: american_almanac@yahoo.com.