(00:00:00) It is indeed a pleasure to welcome all of you to today's meeting. I would also like to welcome our radio audience throughout the Upper Midwest or hearing this program on Minnesota public radio's. Midday program broadcasts of Minnesota meeting or made possible by the law firm of Oppenheimer wolf and Donnelly with offices in Minneapolis. And st. Paul and major cities in the United States and Europe members of Minnesota meeting represent this communities leaders from corporations from government Academia, and the professions, they meet 12 times a year to hear from and question leaders of national and international stature. This is our 14th year in the marketplace of ideas. I am very excited this year to take the Helm of Minnesota meeting for our 1995-96 season, which begins with this meeting today. We are going to do something a little different this year the board of Minnesota meeting recognizes that the information age we are now just beginning to enter will change the way we all live and work and play this year. We're going to focus on three related areas under this umbrella understanding the technological and intellectual developments behind the information age how those developments will affect our competitiveness in a global economy. And finally how we can together continue to build communities in this new age. We are very pleased today to begin this year long discussion with the US Secretary of the treasurer. Mr. Robert E. Ruben. Today's meeting with secretary. Ruben is being held in association with the University of Minnesota's Hubert H, Humphrey Institute of public affairs G Edward shoe dean of the Humphrey Institute is here with me and he will say a few words about secretary Ruben before he does that I have one logistical item one. Mr. Rubin has finished his address. He will take questions from the audience Jane mrazek and Gloria mcclenahan will move among you to manage the question and answer session Dean shoe. Pleasure and an honor to be with you today and to be able to introduce our speaker before I do that. I would like to introduce two of our special guest at the head table Martin Sabo. Who's the congressman from this District who incidentally helped us arrange secretaries. Ruben's visit to the Twin Cities across the table from him is Congressman Bill Luther bill. Would you stand up also? Secretary Ruben incidentally is the 70th secretary the treasure. Supposed that he has held since January of this year. Secretary Rubin brings a wide range of experience to this key policy making position prior to joining the administration in 1993. He spent 26 years at Goldman Sachs and Company a large Financial Services firm in New York. He came to that company as an associate became General partner five years later in 1971 and joined the management Committee in 1980. He was vice chairman & Co Chief Operating Officer from 1987 to 1990 and served as Co senior partner and co-chairman from 1990 to 1992. Mr. Reuben first serve the Clinton Administration in the white house as assistant to the president for economic policy position. He held for two years in that capacity. He directed the activities of the National Economic Council which was a new institutional innovation in this Administration and the council's functions include overseeing the administration's domestic and international economic policymaking coordinating Economic Policy recommendations to the president ensuring that Economic Policy decisions and programs are consistent with the president's goals making sure those goals are effectively pursued in monitoring the implementation of the president's policy goals. So the person who overlooks and does all of those things rest on Sunday afternoon only as you can talk secretary has many other credentials not the least of which are a be degree in economics. From Harvard and LLB from the Yale law school and a tour at the London School of Economics without further Ado. Let's give the Secretary of warm, Minnesota. Welcome back. Thank you. (00:05:41) Add thank you for the very kind. This is very nice. When your Washington and you appear someplace, they tend to throw stones at you. So it's very nice to be to be in Minneapolis Ed. I thank you for the kind introduction. First time. I was ever in Minneapolis was in January of 1984. When I came for Fritz Mondale formal announcement of his candidacy and I learned a lot of things when that experience one of which is a new definition of (00:06:04) cold, (00:06:07) but it would that was a very good experience before I continue with my remarks. Let me just say a word or two if I may about Martin, Sabo. As we worked our way through one of the subjects. I'm going to talk about today the 1993 deficit reduction act which was really an historic event. It became apparent that we were going to be dependent on The Good Sense and Powerful leadership of a very small core of Sent wrists and people who really cared about what the government did in our Congress and the chairman of the house budget committee turned out to be arguably the single most important person in Congress with respect to that legislation. And I think the country owes 88 enormous debt of gratitude to Martin Sabo. The Luther is a gentleman who I am very pleased to know because he's a freshman Democrat and that makes them one of a relatively small but much admired in this highly esteemed group of the 13. Am I right in thinking? I'm right? Well, okay. There are 13 each of whom is a giant (00:07:17) and with that (00:07:19) let me if I may turn to my (00:07:22) remarks (00:07:24) today is I mentioned I think a moment ago is the second anniversary of the presage of President Clinton's truly historic deficit-reduction program, August 10th, 1993, which has fundamentally changed the fiscal position of the federal government reversing the trend toward ever higher deficits which had going back at least 15 or 20 years and which by doing so Put our country in a position to prepare effectively for the 21st century. We are enjoying the first investment LED low inflation recovery in the United States since John F. Kennedy was President reducing the deficit led to lower interest rates and the lower interest rates are what drove the recovery moreover by virtue of the fact that the deficit was out of the bond market when the recovery began interest rates did not rapidly go back up as it happens. So often in the past and choke off the recovery in my judgment, there was absolutely no question, but that without that damage Reduction Program, we would not have started the recovery and we would not have continued the recovery, but (00:08:42) We now (00:08:43) face critical decisions as to whether or not our economy will continue on the right track for the future. I would like to talk about those decisions today. But (00:08:56) first (00:08:58) I would like to point out something which I think we all tend to forget which is how starkly different today. The economic environment is as compared to two and a half years ago. If you remember the rhetoric when our deficit reduction plan was passed and I remembered well by virtue of having been involved in debates with its opponents. You heard some rather dire warnings. They said it would produce a democratic recession weaken, the economy throw hundreds of thousands out of work lead to high deficits a slower economy and high interest rates. In fact, we haven't seen exactly the opposite on all points. Consider the job numbers 7.1 million new jobs in about two and a half years compared to 2.4 million new jobs during the four (00:09:51) years of the prior Administration (00:09:55) unemployment rate is now approximately five point seven percent versus 7.1% we came into office. Growth rate and the four years of the prior Administration average 1.4 percent versus the 3.2 percent of the first two and a half years of our Administration and the projection that we're making for resumption of solid growth and two and a half percent growth next year. inflation Average a little bit under 3% so far in this Administration and our projection is that will continue at about that level. Perhaps a touch higher to 3% or something Just a Touch Above three percent real business investment in equipment is up 18 percent per annum since January 1993 versus 2.2 percent per annum in the four years prior to this Administration mortgage rates are low by historical standards and consumer confidence is way up and finally the deficit has been cut by more than half. As a percentage of the total economy from the time that we came into office to the present moment, or if you want to look at it in raw dollar terms the deficit that have been projected for this year 1995 under the last numbers that came from the prior Administration was three hundred and ten billion dollars the present projection for the deficit for this year is a hundred and sixty billion dollars. In fact, it's interesting the government pays fully for everything that it spends expenditures are fully covered by receipts the deficit is solely a product of interest on the debt and three quarters of that debt was accumulated between (00:11:36) 1980 and 1992. (00:11:40) That's a nonpartisan Comet just no it is no it absolutely is that's just factual facts are what they are. I mean, I would say it no matter which way you cut it happens to you. Have an interesting ramification, but that's neither here nor there. If the four years of this Administration now turn out the way it seems likely it will have been the most remarkable four-year period in a long long time solid growth modest inflation falling unemployment increased jobs a high level of investment and a falling deficit many factors have contributed the private sector has greatly increased its competitiveness over the last 10 years in particular last five years and many of you know, when you speak to CEOs of big companies in almost all cases, they will tell you that their Industries are competitive on a world basis for the first time in a long long time. Your Midwest has been the Dynamo of the recovery with 30 percent of the new jobs in an area that has a quarter of the nation's employment. The Rust Belt image is gone. The industries of the Midwest are now among the most competitive in the (00:12:52) world having said all that (00:12:56) the key element the indispensable element the element without which this recovery would not have started and would not have continued was President Clinton's commitment and success in bringing down the deficit with the historical and Powerful deficit-reduction program of 1993 and the political courage of Congress in narrowly and acting that program as Martin Sabo can tell (00:13:25) you (00:13:27) neither for the president nor for the majority in Congress was at an easy task political politically, but I believe that history will show it to have been a task of monumental and accomplishment of monumental importance. While a lot has been accomplished much remains to be done our country faces new and (00:13:48) critically important decisions (00:13:51) debate now is not whether to balance the budget that is something which the president and Congressional majority agree on but how to balance the budget. This is a debate over whether reaching balance is driven by an arbitrary seven year deadline for balance. Plus very large tax cuts that in my judgment at least produce very little economic benefit relative to the cost and most surely benefit primarily the most affluent or by a budget that was designed with the in purpose of doing what is best to increase jobs and increased standards of living when the president made the judgment about his budget proposal and I was there in the very early stages of that what he said was what do we need to do to best promote economic growth jobs standard of living in this country with a very heavy emphasis on fiscal responsibility because that's what he believed in and the result was a ten-year budget but a budget with very vigorous programs ten-year budget to balance, but with very vigorous programs in a whole range of other areas that he thinks I think rightly so or absolutely critical future Economic Development, the debate will be to say the least vigorous. The outcome is critical for the nation's economic future and there is the potential not a certainty but the potential for a period of historically unparalleled difficulty, especially with the Press has come to call the train wreck that could follow doesn't have to follow but could follow the end of the fiscal year on September 30th. The outcome of this debate will in significant measure determine whether this nation positions positioned itself properly for the global economy of the 21st century or tears down the very building blocks that are Central to our economic success in the future. education training programs to increase the productivity of the disadvantaged and that latter item programs to increase the productivity of the disadvantage is not a moral or social judgment that is a hard-headed business judgment as to what this country needs if it's going to be successful in the years to come technology and other public Investments critical to Future productivity and competitiveness as well as Medicare and other programs that are part of our social compact. (00:16:25) These (00:16:26) are the core of the budget debate. That we are now in and that will greatly increase its (00:16:34) intensity when Congress returns from Recess in September. (00:16:40) Before I move on to the detail of these issues, I'd like to degress for a moment. I'd like to focus on is one of the reasons why this Administration is so committed to a budget that prepares our economy and our (00:16:55) people to be competitive in the years and decades ahead. (00:17:02) Everything that I said about the success of this economy in the last four years or rather in the last two and a half years. What I will believe will be the full four years of this Administration notwithstanding many Americans do not yet feel our current prosperity in their lives for the first time since the depression many field American dream is in Jeopardy and that their children will live less. Well than the parents one cause of these fears is our countries increasing inequality in income in the 1950s the 1960s and through the middle of the 1970s all income levels Rose at approximately the same rate but since then, The lowest 40 to 50 percent have seen falling real wages falling rate wages adjusted for inflation and only the top 40 percent have benefited from the growth in our economy. That in addition to being a serious economic problem is an enormous threat to our social fabric. Thus one of this administration's imperatives is to provide the conditions that will enable all Americans to benefit from economic expansion. This Administration has started this process. And we will not Retreat on these issues. Congressional budget proposals will do serious damage to public investments in Education and Training this is counterproductive to the goal of raising living standards in a modern economy of developed and developing nations that are themselves highly focused on Education and Training to prepare themselves for the future. Let me give you a flavor of a few of these cuts. It was a 36 billion dollar cut in Education and Training proposed in the house budget. This will cost Minnesota roughly five hundred and thirty million dollars over seven years Head Start a proven and important tool in preparing disadvantaged kids for schooling will be denied to over 2,000 children in Minnesota in the year 2002 the end year of the Republican budget as compared to 1995. Some 1.1 million students Nationwide including 14,000 here will not receive basic and advanced skills training next year under the house bill job training funds in Minnesota would be cut by more than 8 million dollars. Again, next year denying training opportunities to 3400 dislocated (00:19:52) workers (00:19:54) every single School District in Minnesota and most school districts around the country take part in the safe and drug-free schools program that program would be devastated by the cuts called for by the Congressional budget proposal. The gap between the average earnings of male high school and male college students was roughly 40% 40% in 1979 today. It is roughly double that at 80% education is the key to American success and American Prosperity, but the Congressional budget plan would raise the cost for student loans by 10 billion dollars over seven years and the list goes on and on. That is no way to educate a Workforce that will be ready to compete and to succeed globally that is a prescription for falling behind. We must balance the budget and the president I believe. Is the single most responsible of anybody in this country? For the fiscal responsibility. This government has finally accomplished. But we must balance the budget and at the same time do all else which is requisite. If we are going to be productive and competitive in the years ahead. The president has said he will veto. The president has said that he will veto legislation that undermines the public investment programmes Central to Future competitiveness and I can tell you from having sat with him as we've discussed these issues that he means it absolutely and without question. Having said that let me examine one other aspect of the budget debate Medicare and essential element of our social (00:21:53) compact. The (00:21:55) president's budget reduces the growth of Medicare, but by about half of the amount of the reductions in the Congressional budget and without increasing the costs to beneficiaries, so as to maintain an effective Medicare program, Congressional reductions in this vital program are not driven by policy, but just as an education, they are driven by the need having started with an arbitrary seven-year date and very very large tax cuts primarily for the most affluent by the need in those circumstances to find sufficient cuts to fund that (00:22:35) framework. (00:22:41) Working documents being used by the Republican majority indicate that nationally Medicare beneficiaries who want to keep fee-for-service plans will pay more than 2,800 dollars extra in premiums and co-payments in seven years. That's per individual. Per couple is double that or 5600 in Minnesota. The numbers are slightly higher. Let me also be clear on one more point because you're going to see it. I think receive a lot of publicity. In the weeks and months ahead. This Administration is fully committed to the solvency of the Medicare trust funds. Of which I as Secretary of the Treasury and the chairman. And I am fully committed to the solvency of these trust (00:23:38) funds. (00:23:40) When President Clinton took office, the Medicare Hospital Insurance trust fund was projected to be exhausted to be out of resources in 1999. The deficit Reduction Program that we put in place in 1993 extended that period to 2002 the president's current budget proposal extends that period to 2006 which is 11 years from today. Both parties Republicans and Democrats say that we must find a long-term plan for the long-term problems of Medicare. The president's budget provides 11 years to get that done, which is more than adequate (00:24:21) time. (00:24:26) Let me address one other point as I close my remarks. And I said a few moments ago. We were beginning to hear more and more talk. And when I meet with media people, which I do almost every day. I'm getting more and more questions. About what is being called the train work train wreck? those questions go two two issues All of which goes back to what I referred to before as the possibility of unparalleled difficulties in the fall. The federal government's fiscal year ends on September 30th, the government runs out of the authority to spend money on that day except for certain essential Services unless a new budget is in place in theory. It should be but the Congress has fallen way way behind in its homework as of yesterday. Not one of the 13 spending bills that Congress must pass the called Appropriations bills had cleared a conference committee been passed and signed into law. In 1993 under Martin Sabres leadership, the entire budget was signed on this date, August (00:25:47) 10th. (00:25:49) The government can still be kept operating by temporary spending measure called A continuing resolution. And that often happens and on one occasion where there was failure to reach agreement on a continuing resolution the government closed down. For two or three days much to the detriment of good government. What is troubling now? Is the potential for far more difficulty because of the great differences between these two budget plans and economic programs. and because of those great (00:26:26) differences (00:26:28) the higher probability of a shutdown which itself is highly disadvantageous to the American people and if a shutdown a shutdown, For a longer period the way to avoid this element of the train wreck is for Congress to take the responsibility the responsibility which I firmly believe is Theirs to pass a continuing resolution that enables government to continue functioning in a reasonable fashion while the budget debate goes on and reaches its conclusion. On a second track, we will reach the debt limit of the United States government sometime in October. Although it is too early to know now precisely when most likely sometime in late October. I have said by letter to the Congressional leadership that it is imperative not to entangle the debt limit in a political battle over the budget. But rather to extend the debt limit well before reaching it so that no uncertainty is created particularly. No uncertainty in the financial markets. There is without question a risk that some will attempt to use the debt limit issue to provide leverage in the budget debate. For example, we have received publicly distributed letters are approximately a hundred and eighty Republicans and two Democrats in the house saying they will not vote to increase the debt limit unless the president accepts the Congressional majority budget plan. Those engaged in that effort to create leverage are taking an irresponsible risk with the Financial Health. Of this nation by threatening to interrupt government operations delay payments to Federal beneficiaries and creditors and raised questions about the government's ability to pay its obligations. Default is unthinkable. And Congress must and I believe will fulfill its responsibility to increase the debt limit. This country has never defaulted on the obligations of the United States of America and I do not believe it will happen now. But the debt limit should be increased now or as soon as possible independently of the budget debates to avoid even the appearance of a possible problem. So I would repeat there should be and there undoubtedly will be an extremely vigorous budget debate. in which both sides are aired and ultimately decisions are made on issues that I believe are critical to the future of this country, but that debate Must remain separate from the debt limit issue. And the debt limit issue should be attended to promptly to conclude two years ago Congress. Took what economic historians will record as a step that broke the back of the deficit explosion and set this nation on the path to economic (00:29:53) strength. (00:29:55) Our private sector has continued to grow and to become more competitive in this new economic environment. To continue on a path to positions this country for the 21st century requires continuing fiscal responsibility and balancing the budget but also requires key public investments in education. And in the other areas, we have discussed the alternative a budget that is driven by the need to meet an arbitrary seven-year deadline and very large and unnecessary tax cuts is forced to severely cut the very programs Central to Our Success with the proper decisions. The United States will continue to lead compete and prosper. And we can raise American living standards and Increase jobs for Americans. The stakes are figuratively and literally our future. Thank you. (00:31:11) Thank you. Thank (00:31:17) you. Now I'd be delighted respond to questions. And if they're very hard, I'll refer them to Martin Sabo where Bill Luther will take that under consideration. Mr. Secretary for our radio audience. You were listening to Secretary of the Treasury Robert Rubin speaking to the Minnesota meeting on the station's of Minnesota Public Radio. We have a first question here from Steve Young who's a lawyer in Minneapolis. Thank you. Mr. Secretary. First. I'd like to say is a member of the other party that I must compliment you on your stewardship of our economic Affairs the last couple of years you could change parties. It's a thought but unlikely but it makes you guys harder to run against you pointed out the trend which many of us are concerned about of declining real incomes for many many Americans. There's been another Trend that some of us are also concerned about over the same period of time the last 25 to 20 years, which is declining educational achievement particularly in public schools at elementary levels and high school levels (00:32:10) if these two Trends are interrelated as I would think they are then so my (00:32:14) first question is would you (00:32:15) agree? That's a Some measure declining (00:32:18) educational achievement is producing declining real wages and if that's true then shouldn't the administration's top priority be not spending more federal dollars for (00:32:28) a few programs but leading a major (00:32:31) program of fundamental reform of public education, well, I do absolutely agree with you that the problems in public education system are Central to these this falling the falling wages by Bryce the Secretary of Labor and I had dinner last night with about half a dozen of The Economist from the administration we were discussing this very subject and while it was a broad range of disagreement about many many things all of us agreed on the the premise that you just set forth the president's budget is directed toward precisely what you're talking about programs like schools 2000 is a program to create National standards and raise the standards of public school system school to work as an apprenticeship type program to help people move from the public schools into the into the workforce Head Start and Core programs to try to help kids from the inner cities where they start with so it's an enormous array of this advantage of not of their making become part of the economic mainstream. So I think you you would I think you and an effect really have stated that the very great concern that we have and that is one of the elements that are really at the core of the president's (00:33:36) budget. Thank you. Secretary Reuben. Our next question is from Dick Todd who is with the Federal Reserve Bank of Minneapolis. As part of thinking about social programs like Medicare and Social Security. There's been some attention recently to programs such as in GLA where they made a transition from a public sector social security system to a purely private sector system with an appropriate transition period do you see something like this being advantageous for the United States? (00:34:10) That's a question that has been raised by a lot of people. I don't have any great wisdom on it. There are as you know, long-term problems with the Social Security System The Driven largely by demographics. Fortunately, they don't begin to bite for quite a long time. So the country has a goodly period of time to deal with them. Those are going to have to be solved. After a long public debate and on a bipartisan basis and when that comes I suspect there will be those who Advocate the kind of or at least raise the kind of question that you are raising, but I have no opinion at this time Secretary Ruben just so you don't think we only have Republicans in Minnesota. We have a question now from former state auditor Mark Dayton who happens to be a Democrat. Am I right? That's right and not considering switching parties Mr. Speaker. I know Mark. He'll be the last on the ship except. I think it's going to be a ship that's going to fill up with people. He's not even able to get a stateroom. I don't think So P better make the reservations now my family recognize that long ago. That's why they urged me not to go into retail ings, (00:35:18) even if the administration and the Congress succeed in eliminating the deficit over the next seven to ten years the legacies you say of the last 20 years of deficit spending will be (00:35:30) some 200 plus billion dollars a year in interest payments who mounted to some fifteen percent of the federal (00:35:35) budget looking long term what you impact do you think that will have on the US economy? And how do we work our way out of that predicament? (00:35:45) And you raised is unfortunately an exceedingly good one. We have our dead. I've apologized for an exact number but I think it's about 55 anybody know. I think it's about 55 percent of GDP or something like that. If I'm off I'm off by Liberty little bit. I just don't it's in that area and I think we need to do is get to the point and we're there now where the debt because the deficit has had fallen up. The yearly depth is full enough. The dead is becoming a smaller and smaller percentage of the total economy. And then in the fullness of time the interest will become a smaller and smaller percentage of the total budget, but you are absolutely right. We have been given a legacy which is severely impeding the ability of the federal government to do with the American people need the way to deal with that problem is to restore fiscal balance, which I think the president as I said before I think president of historic step in 1993 as we move toward balance, we get them better better shape and then over time the debt as a percentage of the economy and interest Sent the budget will come down and down and down and the federal government will be liberated to once again. Do the kinds of things it needs to do for the American people. There's no quick (00:36:51) fix. Thank you. Our next question is from David Ornstein who's a CPA here in Minneapolis? (00:36:57) Thank you. Mr. Secretary. I'm not sure if this is for you or assistant secretary Samuels, but I'll try the question today. I was reading about the she's not here. I'll try to answer try to answer it. Yeah, I understand. I was reading today about represented archers 17 percent flat tax and I also saw something about Senator Helms 15% proposal for flat tax and maybe you can comment on the flat tax. It's going to be a part of the next election and the pluses and minuses and whether work and what it does to the economy. I think it was Dick armey's 17 percent flat tax wasn't it? Yes. It was. Yeah. You said Bill our job, sir. Yes, sir. Yeah, I can I can comment on that but not favorably. The flat tax on its really part of a much larger question, which is tax reform is the variance thing subject. But the flat tax at first appearance is I think very appealing but the more you get into it and the more you understand it you find it has inherent contradiction such that in my judgment it simply cannot work the dick armey flat tax with its present terms has been judged by Treasury Department career professionals to be very very substantially in excess of a hundred billion dollars a year short of deficit-neutral. I believe the number somewhere around a hundred sixty billion, but don't hold me the exact number but sin that area short of deficit-neutral to get back to deficit-neutral. He has to take that 17% and make a 23% when you make a 23% What you will find is that most Americans are paying more and when you think about it that logic is inherent in the flat tax because of the most affluent I going to pay less and you're going to collect the same amount of money. Somebody has to pay more and who was somebody it's everybody else. And unfortunately, there is no simple fix to the problems which understandably Vex people about the tax system. One more comment on that which goes beyond little bit what you ask but I do think that one needs to be very very careful when talking about reforming the tax system and I think there are four criteria. That one should apply. What does is a good for the economy tax fairness Simplicity deficit neutrality. Well, we are doing a treasury is looking at all the proposals extent plus ideas. We have our own. And judging them by those criteria. I do not believe that the president I'd State should make a proposal in the tax area unless We can be confident that is that it is much for the better for this country by those criteria. And I think another responsibly the president has is to be a bulwark against people who put forth proposals in very simple terms not fully fleshed out, but very simple terms as part of the fashion now of tax reform and that isn't to be critical of all the proposals have been put forward there been some very good ideas, but people put forward by people like to get hard and Sam Nunn and Piet de Medici. I don't say that. I think that the proposed themselves on balance or things that we would Indoors because they're because they're not but I think their individual elements of them that contribute to the tax reform (00:40:12) debate. (00:40:16) Thank you. We have a next question here from Miller Stewart who is a senior fellow at the University of Minnesota's Humphrey Institute. Mr. Secretary, I am not a republican. I'm not a Democrat. I'm not even independent. I'm not even an American for that man. You know, I was getting that impression. But yeah in my first Incarnation, I still them political columnist for the newspaper. Izvestia Moscow. That's why my question is how the Russian economy now and how its future Dynamics and how the Russian American economic relations look from the vantage point of Washington. Well, I was in Russia. I think it wasn't well about three. I don't remember exactly about 3-4 months ago with the president. He went to Russia and he went to Ukraine in May was it good? I was in Russia and May. With the present and what did I see there? And and and even as well, wait a minute, wait a minute and even more importantly, how did I react? My impression was as follows. I think that Russia has made remarkable progress when you consider the base from which it started in a relatively short period of time and I was struck by how much has been accomplished across a broad array. Of issues on the other hand Russia is starting as you know far better than I do with a lack of so many of the fundamentals of a market system that we take for granted effective and deep Capital markets. Legal structures and so many areas that we have had here for 200 some odd years and continue to reinterpret are not present in Russia. So on the one hand, I came away feeling that a lot more had been accomplished than I had realized actually know a fair bit about the Russian economy. So being there gave me a feel for that which I already knew a fair bit about and on the other hand. It also struck me how much remains to be done to become a fully effective economy. One thing I will note and it's an interesting observation of it more self-interested type with respect to the to the Russian economy is that Russia has been inundated with foreign capital in the last couple of months and it was putting so much upward pressure on the ruble that they actually went into a band type exchange rate structure. And that is a tremendous tremendous sign of kind of approval. I suppose from the international financial markets and they tend to be pretty harsh critics. But there was clearly a but while one can be enormously impressed and I was by what's been done there clearly is is you will know a lot left to be (00:43:13) done. Thank you. Secretary Reuben. Our next question is from Paul Anton (00:43:17) whose with bugbee Anton Associates. Secretary Reuben, what do you think of the view point put forward recently by the FED Reserve Bank of Minneapolis that economic growth would be enhanced. If Congress intervene to call off the economic war between the states and prohibit the tax incentives and other spending that goes into luring businesses across state lines. I think the resources involved in that both tax spending and direct the state and local levels. If let's say they were redirected towards education would dwarf some of the other kinds of programs being considered, you know, I didn't see that but I must say it it has occurred to me before and even before I went into government when I was living in New York that it as you correctly say enormous resources are spent to provide people for provide people with incentives that go beyond the normal Market incentives to move from one place to another and on the face of it though is not a subject. I thought much about it does seem like a nun economic use of society. Resources and if they weren't used for that purpose, then I think the two possible negative effects one is people are making decisions locational decisions for economic decisions that are affected by special incentives. Not just the normal Market forces and secondly using a lot of local resources that could be used for another purpose. So while I don't have a definitive you not having thought about it, I think that the comments you make are well (00:44:42) taken. I could get you a copy of that (00:44:46) report. Well, you you may be right if they do I'll read it. I think I have some reports I could give to them to and all kinds of things. I'll make sure that our enrollment gets that to you. We have you're listening to Secretary of the Treasury Robert Rubin speaking to the Minnesota meeting on the station's of Minnesota Public Radio. We have time for a couple more questions. Mr. Secretary a question here from Jim Powell who is with the Windsor Financial Group. Thank you. Mr. Rubin, the size of the national debt ballooned under a democratic Congress the sole constitutional Authority for budget-making and a republican Administration. I guess that makes me part of the so-called politically disenfranchised but we're not persuaded by partisan arguments of Innocence. Both are culpable in their fiscal their sins of fiscal irresponsibility. I hear you saying that the administration is willing to sacrifice a balanced budget for the principles of the party or the administration. Am I hearing you correctly you hear me saying what I hear you saying that that the administration is willing to sacrifice the principal's not the principles to sacrifice a balanced budget to achieve the principles of the party or the administration. Am I hearing that was the big absolute veto threat? Believe me? He no, no, no, no. No. No what you heard is interesting, but not what I said. It is true that during the period from 1980 to 1992 in part. There was a mixed government a Republican president Democratic Congress. Although doing part of that. That was a Republican Senate. Well, but the president has a veto pen he has all sorts of things. I do not think that. One could debate this I suppose my own view is that a president who was determined to accomplish deficit reduction can accomplish great deal on a president's relatively indifferent can can give rise to an awful lot of fiscal irresponsibility this president be that as it may that certainly is blamed to go to both sides. I'm not going to argue with that might argue about the quality of the blame but get be that be all that as it may I don't have any question but this President 1993 against the advice of almost all his political advisors took into Stark step to get us back on the right track know where he is right now is he is absolutely firmly without any question committed to reaching balance in 10 years. It's 10 years instead of seven years by virtue of going the extra three years and not having the very large tax cuts that the Republican budget has he gives himself the ability to vigorous programs in education and training programs for the disadvantaged having a much healthier Medicare program in the other things that he thinks are critical to the future of this country, but there is zero none zero no hasn't reservation on. Part with respect to balance. The reason he's going to veto the appropriation bills is that they are all directed toward the existing Congressional Republican rational budget and that's inconsistent with the emphasis that he wants to place on the education other programs and he thinks the critical future of the country. (00:47:54) Thank you. Our next question is from George Lunde local (00:47:56) Banker. Mr. Secretary, would (00:47:59) you comment on some of the recent appreciation in the dollar especially vis-à-vis the Yen and the mark and what that may mean for trade tensions going into the future? (00:48:13) Huh? The answer is no I was on Wall Street for 26 years before I went to the White House and during all of that time. I had responsibility of one sort or another expected trading operations. In fact, I ran a major major foreign exchange operation for by wouldn't run it but I was responsible for it for many many years one of the lessons I learned from that experience as Secretary of the Treasury and and chairman of the Federal Reserve Bank. So I deserve board really really what not to comment on the dollar because when they do it just creates untoward things having said that let me make one or two comments. One we believe a strong dollar is in the best interest of this country. To we have not we are not we never have and we will not use the dollar as an instrument of trade policy and number three. We did have very successful meetings in the April G7 group in Washington and we issued a communiqué at the end which most of the media thought had no meaning but I said was very significant and I believed I was right and they were wrong and I think time is some extent proven. That's correct that it's a I'm correct. Not them and what the communicate said was that all of us felt of dollar was undervalued relative the yin and the mark and then we needed to work together in appropriate fashion to do something about that. What we also said was that we would intervene when appropriate and not intervene when not appropriate. So those are my comments on the dollar. Thank you. Mr. Secretary we have time for one last question from Sandra Hill who's the president of Enterprise Management International (00:49:46) Sandy? (00:49:49) If we run out of time, you could always stay after you go off the radio finish the answer listing at the priorities of Education and Training in the disadvantage of Medicare where and I know it's not usually the province of the Secretary of the Treasury, but where should the general areas of the cuts come from in your position in your mind? I know a number of people are talking about defense and defense being even some projects that they didn't request are being in at least in the house version. Well the president the the cuts I'll tell the Press Cuts come from the president's program. He reduces the rate of growth of the federal health care entitlements Medicare and Medicaid but he reduces them at a slower rate than the Republicans so that he continues to have good and vigorous programs instead of the very severe cuts. The Republican budget has he reduced welfare spending but still retained enough welfare spending to have a true welfare-to-work program real welfare reform he reduce spending. Not in the priority areas like Education and Training that I mentioned but in many other areas of what is called the non-defense discretionary budget in many other areas of the budget more operating parts of the budget. He has a much smaller tax cut. He does have a tax cut and it is geared toward middle income people and toward writing sentence for saving education like but it's much much smaller than the Republicans when you do all of that. What you find is you get to a he also has a vigorous defense budget. But the Republicans for whatever reason in their 96 defense budget increase the request above his level, even though the Chiefs of Staff and the secretary defense and having their security count said that was not necessary for the National (00:51:35) Security. (00:51:37) You put all the cuts together that I talked about plus various others what you get is a balanced budget in 10 years good. I thank you very much for nice to be with you.