Remarks at a Symposium at the University of Tennessee in Knoxville

September 24, 1985

Well, thank you, Dr. Reese, distinguished panelists and guests. Thank you all -- and Senator Baker, Congressmen Duncan, Quillen and Ford -- all of you. It's wonderful to be here in the Volunteer State at the university of volunteers.

Governor Alexander couldn't make it today; I'll miss him because he's been one of the staunchest and most eloquent supporters of America's fair share tax plan. Right now he's on his way to the East looking for opportunities to expand Tennessee's links to the Asian market. He pointed out to me that Tennessee has a significant concentration of Japanese capital investment and that the future of this State, as well as every other State in our nation, is dependent on an open, free, and fair trading system. And that's why he's abroad right now aggressively promoting Tennessee's interests. He's trying to increase world trade, not block it out. I'm glad to see Governor Alexander taking this positive approach to prosperity through free trade.

When I was in Tennessee last year, the Governor and Senator Baker briefed me on the proposals for a high-tech corridor in Knoxville. They talked about soon competing with Silicon Valley. And when I see the impressive strides Tennessee has made in just the last few years, all I know -- they weren't just whistling Dixie. [Laughter] As all of you know so well, advances in technology are almost synonymous with advances in knowledge, and that's one reason why improving America's educational system must be a high priority for our nation.

Last year scholastic aptitude test scores rose four points nationwide. And this year we have even better news to report; yesterday we learned that the SAT scores were up nine points over a year ago. I like that trend; that's the biggest single jump since 1963. We're making a powerful comeback from the two decades of educational decline that began in the 1960's, but we have more to do if we're going to fully prepare our nation to lead the world into the 21st century. So, let's keep up the good work.

Now, I've really come here today to listen to you. I can't wait to hear about your plans and the progress that you've made, and afterward I may say a few words about how America's fair share tax plan will promote high-tech investment and -- [laughter] -- and the prosperity that it brings here in Knoxville.

[At this point, symposium participants discussed developments in the partnership between the State of Tennessee, the private sector, and the university. At the conclusion of the symposium, the President delivered the following remarks.]

Well, first of all, I am fascinated by what I've heard, and at the same time, here we've all heard concrete examples that explain some of the statistics about which I like to speak now and then, such as how we could, since 1979, lose 1,600,000 manufacturing jobs. And in one of the talk shows over the weekend there was someone from government that was making quite a point of this -- neglected to answer why at the same time, since 1979, we have added more than 9 million new jobs to transportation industries, to service industries, and so forth. And I've seen here the examples of what we're talking about.

When I was young, which was quite a while ago everybody reminds me -- [laughter] -- high technology then probably referred to a Model T that could make it up a hill. But we've come a long way. I think we're standing at the beginning of a new era of technological revolution that will transform all our lives for the better. And it's more than just the personal computers that have found a place in so many of our homes and offices. Every facet of industry, as has been evidenced here at this table today -- the manufacturing, agriculture, science, health care -- is being improved, made more efficient and productive by technology. Our healthy increases in productivity are in great part attributable to the efficiencies that technology brings. And technology also strengthens our national security and has given us the hope that within the next generation the human race can strengthen and ensure for the long term our ability to deter nuclear war with nonnuclear defense systems that would allow us to protect against missiles without threatening innocent civilians.

But while we celebrate the beginning of this new era, we should remember that misguided tax policies in the late sixties and seventies almost destroyed America's position as the leader of the high-tech revolution. Not just the tax policies -- I know that you were sure you were going to hear me say something about that -- but when I first became a part of government, I did so imbued with the feeling that, among other things, government had developed a kind of adversarial relationship with its own business community, where government and its business community should be partners, and not with government being the senior partner, by any means. And I say -- we'd almost wiped out the venture capital markets in this country with tax rates, plus the high rate of inflation. Entrepreneurs were forced to look abroad for financing.

You gave an example of someone who couldn't find what was needed here. There was a fellow named Gene Amdahl, the inventor of what many consider the most successful computer that was ever built. And back in the seventies, he was going to start his own company. He couldn't find the venture capital that he needed in this country, and he was forced to go to Japan to a large, high-tech competitor. And they gave him the money all right -- in exchange for his ideas.

High tax rates were literally producing an exodus of American high tech to foreign countries and creating tax refugees out of some of our best minds and talents and most successful entrepreneurs. One figure that just explains this -- just a few years ago, in the late seventies, there was only $39 million -- in I believe the year was 1979, of venture capital available in the United States. Today there is $4 billion in venture capital that is available. And I think that one of the basic rules of economics was proven: that if you tax something, you get less of it. So, this was the result, I think, of our cutting the taxes and, certainly, the taxes on capital gains and so forth. High rates discourage work and risk-taking and initiative and imagination. And they're really a tax on hope and optimism and our faith in the future, and they penalize many of the people that give us the most -- the risk takers, the entrepreneurs who create whole new businesses and industries and often do it out of no more than a dream and some hard work, as this little bottle also evidences. [The President referred to a vial containing a small plant used in tissue propogation given to him by Randolph Henke, president of Phyton Technologies, Inc.]

Cutting the tax rates has opened the floodgates on entrepreneurship in our country. That's why, on the theory that you can't have too much of a good thing, we're going to propose more tax cuts in our fair share tax plan, and we're going to cut the capital gains tax rate again to encourage more venture capital and fuel the fires of technological innovation. Equally important for entrepreneurs in small business, though, we're bringing down the top personal tax rate to 35 percent, and that's just half of what it was 5 years ago. We're going to close wasteful loopholes. And we'll be able to lower tax rates on America's businesses. We think it's time that America pulled its money out of tax shelters and started investing in the future. This tax cutting has given the economy new blood and new life. And in the last 33 months, we have created 8 million new jobs alone. And I believe that this tax plan that I'm out on the road talking about -- and will be talking about it in Athens in a little while -- will give us a decade of economic expansion, and we foresee creating 10 million more new jobs in the next 4 years. Now, I'll bet you anything a whole bunch of those jobs are going to be created right here in Tennessee. Incidentally, I had the privilege of driving the prototype of the new car that is going to be built here. I don't get to do that very often -- only drive the Jeep when I'm up at the ranch and -- [laughter] -- 8 years as Governor, when we finally left the Governor's office and went home, I remember one night Nancy and I were invited out to dinner. We went out and got in the back seat of the car and waited for somebody to get in and drive us. [Laughter] But driving that Saturn, I must say, was an experience. [Laughter] Having driven for a lot of years -- you're really going to be making something very remarkable here.

Well, the best way, I think, to stay number one is to lower tax rates further and give all of our business community and our people a chance. You can feel the excitement, and I felt it here at this table down here in Tennessee; it's the excitement of progress. Your Congressman here, John Duncan and his colleagues Jimmy Quillen and Harold Ford and I are not going to let Washington obstruct the road to the future. So, you let these people know how you feel, and we'll pass this tax bill in this year of 1985 and open the future to hope and opportunity.

This whole idea of your partnership here -- it's government, education, private sector -- I've had some experience with that. When I became Governor of California, I invited what had to be the top industrialists and business and labor people -- well, the leadership of the State of California to a luncheon. The room wasn't much bigger than this one and probably no more people than are here today. And I suggested to them an idea, and that was would they volunteer their services to be formed into task forces to go into every agency and department of the State government and come back and tell us how modern business practices could be put to work to make it more efficient, more economic -- and to a man and woman, they volunteered. And for the next period of virtually a year, these busy people gave an average of more than 3 days a week to this task. They appointed among themselves an executive committee to put things together, and they delivered to us 1,200 specific recommendations. And by the time I had left the governorship, we had implemented more than 800 of those for a visible savings of billions of dollars to government, and it vastly reduced the size of the government, while the population of California was increasing faster than any other State.

We've done something of the same kind at the Federal level, and that partnership does work. And the private sector, in every way -- and this country of ours has made us unique in all the world. It's possible that some of the deterioration of our technology and all that has been mentioned here, maybe that was a result of World War II, where everything of ours remained intact and the rest of the world -- our industrial partners and neighbors -- had theirs virtually destroyed in the war, and then we set out to help them rebuild. And they rebuilt in a different period of time and with all the newer things that were available.

Well, we don't have to bomb everything here to catch up with them, just do what several of you here have been suggesting that you have been doing. And I see my job, and that of John's and the others here in government, to get out of your way, to be a partner but not a senior partner, and to have policies that we are sure are not going to hinder the practice of the free economy. I think we've discovered in this land more than anyplace else, freedom really works.

Well, I've gone on for too long here. I'll stop talking and listen some more.

Note: The President spoke at 10:50 a.m. and 11:25 a.m. at the Carolyn P. Brown University Center. He was introduced by Jack E. Reese, chancellor of the University of Tennessee. Following the symposium, the President had lunch with students, faculty, and private sector representatives in the Executive Dining Room. He then traveled to Athens, TN.