Remarks at the Annual Meeting of the National Governors' Association in Cincinnati, Ohio

August 8, 1988

Thank you all very much, and thank you, Governor Sununu. And I know someplace here with us are two Congressmen who came out with me, Gradison and McEwen from Ohio. And a special thanks to you, John, for your leadership in restoring the balance of Federal-State relations.

Before I begin my prepared remarks, I have a piece of very good news for you. The United Nations Secretary-General will announce later today a cease-fire in the Persian Gulf. This is news the world has waited for and the United States has pressed for -- news that we may finally see an end to that long and bloody war.

Although this is only a first step, it's an affirmation of a policy of strength and commitment. Our forces in the Persian Gulf and those of our allies have demonstrated that we have the resolve and the staying power in the Gulf, as well as in the Security Council when it comes to securing peace. On behalf of all Americans, I applaud and encourage the efforts of Secretary-General Perez de Cuellar in bringing an end to this tragic war, and I send him this message: The hopes of the world are with you.

It's always with a special affection that I appear before the National Governors' Association. It seems just like yesterday that I was sitting where you're sitting, and I was talking about the need to get the Federal Government off the backs of the States and to let those who were closest to the people serve the people as the people tell them they want to be served.

Now that I'm approaching the end of my Presidency, I have to be careful about these waves of good feeling and where they might carry me. That's why I keep reminding myself of a trip that Nancy and I made to Ireland. We were in Cashel Rock, where Saint Patrick is supposed to have raised the first cross in Ireland. And a young Irish guide was showing us through the ruins of the old cathedral where that took place, and then he took us through the ancient cemetery. And we came to one huge tombstone there, and the inscription on that tombstone was: ``Remember me as you pass by, for as you are, so once was I. And as I am, you too will be, so be content to follow me.'' And that had proven too much for some Irishman who had scratched underneath the inscription on the stone: ``To follow you I am content. I wish I knew which way you went.'' [Laughter]

I hope that history will record that this former Governor went on to practice what he'd preached and to fight the use of Federal dollars, first as bait and then as a club, and to return power and responsibility to the States, where they belong. And I am confident that history will also find that the States were up to the challenge and that, in these years, America entered a new era of democracy and had a new birth of freedom.

Yes, a new era, a new beginning, a rediscovery -- in this time when we hear so much about competitiveness, we also hear about the necessity for businesses to do what some call flattening hierarchies. Simply put, this means that company presidents listen to and work with the men and women on the shop floor, in the stores, and driving the trucks.

Along these lines, scholars tell us that one of the great advantages entrepreneurial firms have over giant corporations is that they do this better. And as we all know, the vast proportion of America's new jobs and much of our new technology come from entrepreneurial firms, firms less than 5 years old and firms beginning with 100 or fewer employees, which only proves that those advantages are big advantages. The most modern business consultant has rediscovered a wisdom known to our Founding Fathers: that the genius of America, whether in governing ourselves or in providing our daily bread, is in the ordinary man and woman. America's strength and wisdom have never come from the power and cleverness of those on top, but from the strength and wisdom of the American people. And after years of skepticism, the wisdom of our founders is once more the accepted guide to practice in Washington.

In the last 7\1/2\ years, we've broken the Federal Government of its compulsion to control every breath the States take. We've consolidated dozens of categorical grants into nine block grants, putting power that was once in the hands of Federal agencies back into the hands of Governors and State legislatures. We've loosened Federal controls on the States in a number of other areas. We've required that Federal agencies consult more often and in greater detail with State and local officials on issues dealing with Federal grants and economic development aid to their areas. We've issued uniform rules governing grants and cooperative agreements. And we have listened -- too often in the past when Washington listened to the States, it heard only what it wanted to hear.

It was like the story of a fellow who went off to the Army and learned marksmanship. And he won a medal for it and came home on leave very proud. When he got to the edge of town, he saw a wall, and on the wall someone had chalked dozens of bull's-eyes. And in the middle of each bull's-eye was a bullet hole. The fellow had to find out who shot like that, and pretty soon he did. It was a six-year-old boy. And the fellow said, ``How did you do that?'' And the boy replied, ``Simple. I take this rifle, and I shoot at the wall. And then I take this chalk, and I draw a circle around the hole.'' [Laughter]

Well, that's how on target Washington used to be when it responded to the States. Today things are different. When Governors talk, we not only listen but we hear. We've been listening especially closely since John Sununu wrote to me almost 2 years ago with your suggestions for improving how we run Federal assistance programs. And as we reported to you in February, many of these suggestions have either been put into practice or will be soon. Now we have a second round of suggestions, and you saw the results of that yesterday in phase two of the regulatory reform report that you received.

Nowhere has this partnership been closer than in responding to the current drought. From the NGA's June conference in Chicago, which Secretary Lyng attended, to your Washington meeting in early July with the administration and congressional leaders to the consultations Secretary Lyng has had with so many of you, we have worked side by side to meet this crisis. You have advised, and we responded. America's farmers are getting help.

But at the heart of this new era in American government is not the idea that the Federal Government will merely let the States toss ideas into a suggestion box, but that we in Washington will also honor the leadership role the States have to play. And from education to transportation to helping America's poor and homeless, you have led. While Washington has been caught up in partisan intrigue, you've gone out and done the job.

Almost 6 years ago, I proposed that America's most depressed areas should receive an extra dose of hope and opportunity, and I asked Congress to enact enterprise zone legislation. Despite some minor moves last year, Congress still has failed to pass meaningful enterprise zone legislation. Over half the States have gone forward with their own enterprise zones, and today those zones are credited with creating hundreds of thousands of jobs and saving hundreds of thousands of others. In fact, this city, Cincinnati, has an Ohio enterprise zone. Across the river, Kentucky has established an enterprise zone in Covington. And up the road, Indiana has one in Richmond. The way I look at it, if enterprise zones are good enough for Ohio and good enough for Kentucky and good enough for Indiana, good enough for so many others, they should be more than good enough for the Congress, too.

Welfare reform is another field in which you've been way out front. Congress today is still debating a welfare reform package years after States started taking advantage of the greater flexibility we gave them. One State after another has returned to the basic, homespun, enduring wisdom that the best way to learn to work is to work. And the best way to get people to work is to make sure they have the incentives to work. Once we gave you the flexibility, you abandoned the destructive and bizarre prejudices that had crept into programs designed and administered from Washington -- prejudices such as that public assistance carried no obligations for the recipient, or that, if one had a choice, it was as acceptable to live on welfare as to be independent.

Now even more ambitious experiments have begun. Over the years, Congress has come up with program after program that was advertised as a way to wean long-term welfare recipients from their dependence on the government check. All those programs had one thing in common: They failed. And that's why just over a year ago we said it was time to stop looking for another program from Washington. We said that it was time for Washington to show a little humility, that in 50 States and thousands of communities across our land there are millions of sparks of genius. Why not kindle them into flames?

And so, we asked for State proposals for treating public assistance programs as an integrated system and for using that system to help recipients climb up from dependency. And we said we would approve any State proposal that had a chance of reducing dependency as long as it ensured that needs continued to be met, it created no net increase in Federal costs, and it could be soundly evaluated.

Well, I don't have to tell you what happened next. So far we have approved proposals from New Hampshire, New Jersey, New York, North Carolina, Ohio, Washington State, West Virginia, and Wisconsin. We're reviewing proposals from Georgia, South Carolina, Illinois, New Mexico, Arizona, and California. By the end of the year, we expect that at least half the States will have proposals approved or under consideration. And over a quarter of all AFDC recipients in the Nation will soon be involved in projects already approved or pending. AFDC -- we're so used to initials in Washington, maybe I should say that's Aid for Dependent Children. And let me make a prediction here: After decades of Washington flailing from one dependency-producing welfare program to another, I believe that the States will find the way truly to help welfare families become independent and productive and to put them on the ladder of opportunity that we call the American dream.

All this vitality in our States couldn't have come forth, of course, if our nation had remained stuck in the era of inflation and stagnation of a decade ago. State and local receipts have doubled in the last decade -- dollar for dollar, a bigger climb than we had in Federal revenues. Some of this was because -- with our 1981 tax cuts, with tax reform in 1986, and by restraining some Washington eager beavers -- we've broadened the tax base of the States and either stopped the Federal Government or kept the Federal Government from preempting State revenue sources.

But more than that, our States, like our citizens, have known the blessings of the longest peacetime economic expansion on record. You know the story. Since our recovery began, America has created -- and forgive me, John -- is more now than 17 million jobs, and the percentage of the labor force employed this year is the highest not only in our history but in the peacetime history of the industrial world.

Now, at the same time, unemployment is at the lowest level in 14 years; and the income of the typical American family, after dropping almost 7 percent between 1977 and '81, has soared nearly 10 percent in these last 8 years. Some talk about the declining middle class, and it turns out that the middle class is smaller not because more people are poor but because more people have become better off.

Since 1982 manufacturing production has risen at a faster rate than Japan's. One authority on manufacturing said not long ago that we had become the most competitive manufacturing nation in the world. As a result, we are today exporting chopsticks and Hondas to Japan; highly processed high-tech sand to Egypt; and all in all, more goods and services than ever before in our history.

Here in Cincinnati, I met this morning with some of the men and women who had pushed our exports to the highest level in history. U.S. Precision Lens makes more than two-thirds of its sales to foreign companies. And meeting the men and women there, I just couldn't help remembering what General George C. Marshall said when asked why he was so confident that we would win the Second World War. ``We have a secret weapon,'' he said, ``the best blankety-blank kids in the whole world.'' Well, we, too, have a secret weapon: the best blankety-blank workers in the whole world.

You've seen the result when, as our nation's most effective sales men and women, you've gone on trade missions overseas. From Japan to Germany, you've persuaded international business to invest in America and create new jobs here and, in the process, have seen the respect and awe the American economy commands around the world. By the way, because you asked for it, we've made major revisions in the foreign trade data the Federal Government collects. Soon you will have better tools for keeping pace in the international economy.

But State Governments see the sunshine of our expansion in other ways as well. Next door to Ohio, in Indiana -- thanks to the strong rises in the financial markets since 1982 -- the assets and earnings of the State employee pension fund have nearly tripled. Indiana has made up for what was lost in the stagnation and inflation of the seventies, has increased the benefits to its retired State employees in each of the past 6 years, and has more assets available to pay future benefits than ever before.

With few exceptions, the story is the same all over the Nation: State and local pension funds have shared in the growth of America in these years. Since 1981 total assets in State and local government pension funds have more than doubled. Guiding the policies that have given America what one economic writer has called the silent boom is the same old, as well as modern, wisdom that, as I said, has guided Federal-State relations in our 7\1/2\ years. Flattening hierarchies; less power for Washington, more for the people -- however you describe it, it has produced in America a blooming of entrepreneurship, investment, innovation, and opportunity unlike what the world has ever seen.

Some say this blooming has gone hand in hand with a rise in greed. But every Governor can point to just the opposite: to the record highs in charitable contributions; to the growing endowments of schools, universities, and museums. Yes, thanks to this silent boom and to a rediscovered initiative, State and local governments, together with private charities and churches, have done more for those indeed than ever before. Last year total private cash giving -- cash -- was over $94 billion.

Looking at all this, I can't help thinking that, while much of the 20th century saw the rise of the Federal Government, the 21st century will be the century of the States. I have always believed that America is strongest and freest and happiest when it is truest to the wisdom of its founders. In Federalist 45, James Madison wrote that ``The powers delegated by the Constitution to the Federal Government are few and defined. Those which are to remain in the State Government are numerous and indefinite.'' Or to put it another way, ``We the People.'' As long as we remember these words -- ``We the People'' -- and make them our guide, so long as we remember that America has always drawn its inspiration from the people and has always been governed best when governed most by those governments closest to the people, America will remain strong and free, the envy of the world.

Thank you all, and God bless you.

Note: The President spoke at 12:50 p.m. in the main hall at the Dr. Albert B. Sabin Convention Center. He was introduced by Gov. John H. Sununu of New Hampshire, president of the National Governors' Association. Following his remarks, the President returned to Washington, DC.