[Journal of the House of Representatives, 1994]
[Wednesday, February 23, 1994 (12), Para 12.18 Communication from the President--Economic Report]
[Pages 181-182]
[From the U.S. Government Publishing Office, www.gpo.gov]
Para. 12.18 communication from the president--economic report
The SPEAKER pro tempore, Mrs. CLAYTON, laid before the House a
communication from the President, which was read as follows:
To the Speaker of the House of Representatives and the
President of the Senate:
America has always thrived on change. We have used the
opportunities it creates to renew ourselves and build our
prosperity. But for too long and in too many ways, our Nation
has been drifting.
For the last 30 years, family life in America has been
breaking down. For the last 20 years, the real compensation
of working Americans has grown at a disappointing rate. For
12 years a policy of trickle-down economics built a false
prosperity on a mountain of Federal debt. As a result of our
national drift, far too many American families, even those
with two working parents, no longer dream the American dream
of a better life for their children.
In 1992, the American people demanded change. A year ago, I
sought your support for a comprehensive short-term and long-
term strategy to restore the promise of our country's
economic future. You responded, and together we replaced
drift and gridlock with renewal and reform. Together we have
taken the first necessary steps to restore growth in the
living standards of all Americans. We have created a sound
macroeconomic environment and strengthened the foundations of
future economic growth. As a result of our efforts, the
economy is now on a path of rising output, increasing
employment, and falling deficits.
establishing the fiscal conditions for sustained growth
For more than a decade, the Federal Government has been
living well beyond its means--spending much more than it has
taken in, and borrowing the difference. The resulting
deficits have been huge, both in sheer magnitude and as a
percentage of the Nation's output. Since 1981 the Federal
debt has been growing faster than the economy, reversing the
trend of the previous three decades. As a consequence of this
binge of deficit financing, Federal budget deficits have been
gobbling up an inordinate share of the Nation's savings,
driving up real long-term interests rates, discouraging
private investment, and impeding long-run private sector
growth.
On August 10, 1993, I signed the historic budget plan that
you passed several days earlier. It will reduce Federal
deficits by more than $500 billion. The plan is a balanced
package of cuts in spending and increases in revenues. The
spending cuts are specific, far-reaching, and genuine. They
will reduce discretionary spending by over 12 percent in real
terms in 5 years. The plan increases income tax rates for
only the top 1.2 percent of taxpayers, the group of Americans
who gained the most during the 1980s and are most able to pay
higher taxes to help reduce the deficit. At the same time, a
broad expansion of the earned income tax credit will help
make work pay for up to 15 million American families. Nine
out of ten small businesses will benefit from more-generous
tax breaks that will help them invest and grow. And new,
targeted capital gains tax relief will encourage investment
in new small businesses.
Our deficit reduction plan has been the principal factor in
the dramatic decline in long-term interest rates since my
election in November 1992. Lower interest rates, in turn,
have sparked an investment-driven economic expansion that has
created more private sector jobs during the last year than
were created during the previous four. The fact that
investment is leading the recovery is good news for living
standards, because investment is the key to productivity
growth and hence to growth in real incomes for all Americans.
investing in our nation's future
Laying the macroeconomic groundwork for sustained growth is
the government's first responsibility, but not its only
responsibility. Government also has a vital role to play in
providing some of the critical raw materials for economic
growth: science and technology, an educated and well-trained
work force, and public infrastructure. For much too long we
have underinvested in these areas, in comparison both with
our global competitors and with our own economic history. Our
overall budget deficit has masked another, equally disturbing
deficit--a deficit in the kinds of public investments that
lay the foundations for private sector prosperity.
Like private investments, well-chosen public investments
raise future living standards. As a consequence, deficit
reduction at the expense of public investment has been and
will continue to be self-defeating. That is why our budget
package increases much-needed public investment even as it
takes steps to reduce the budget deficit. One without the
other will not work.
With the help of the Congress, our public investment
initiatives in the areas of technology, infrastructure, the
environment, and education and training received about 70
percent of the funding we requested in fiscal year 1994. We
increased funding for such proven successes as Head Start and
the WIC program in the human resources area, and the Advanced
Technology Program of the National Institute of Standards and
Technology in the area of technological research. We also
launched a number of new initiatives, including the National
Service program, a new program of empowerment zones and
enterprise communities for urban and rural development, and
several new technology programs, including the Technology
Reinvestment Project, designed to help defense contractors
retool to serve civilian markets. We increased funding for
research into new environmental technologies. In addition, we
developed a comprehensive, cost-effective Climate Change
Action Plan, comprising nearly 50 initiatives to reduce U.S.
greenhouse gas emissions to 1990 levels by the year 2000.
As these examples bear witness, we have made significant
progress on our investment agenda, but much more remains to
be done. We will have to work together to find room to fund
essential new investments even as we reduce real government
outlays to meet tight annual caps on discretionary spending.
This will not be easy. But it is essential, for we face a
dual challenge--we must fundamentally change the composition
of discretionary spending even as we reduce it in real terms.
This year my Administration is requesting funding for
several new investment initiatives. Our Goals 2000 proposal
will encourage local innovation in and accelerate the pace of
school reform. It will link world-class academic and
occupational standards to grassroots education reforms all
across America. Our School-to-Work initiative will provide
opportunities for post-secondary training for those not going
on to college. Our reemployment and training program will
streamline today's patchwork of training programs and make
them a source of new skills for people who lose their jobs.
Finally, our proposed welfare reform will provide the
support, job training, and child care necessary to move
people off welfare after 2 years. That is the only way we
will make welfare what it ought to be: a second chance, not a
way of life.
reforming our health care system
This year we will also make history by reforming the
Nation's health care system. We face a health care crisis
that demands a solution, both for the health of our citizens
and for the health of our economy over the long run. The
United States today spends more on health care relative to
the size of its economy than any other advanced industrial
country. Yet we insure a smaller fraction of our population,
and we rank poorly on important overall health indicators
such as life expectancy and infant mortality. Over 15 percent
of Americans--nearly 39 million people--were uninsured
[[Page 182]]
throughout 1992. And tens of millions more have inadequate
insurance or risk becoming uninsured should they lose their
jobs. Meanwhile health care costs continue to climb,
increasing premiums and medical bills for American families
and aggravating budget crises at all levels of government.
Both the Office of Management and Budget and the
Congressional Budget Office have concluded that unless the
system is reformed, rising health care costs will begin
pushing the Federal budget deficit back upward as this
century comes to a close.
Piecemeal approaches to solving our health care crisis will
not work. If we simply squeeze harder on Federal health
spending, without attempting systemwide reform, more of the
costs of covering health services guaranteed by the
government will be shifted to the private sector, and medical
care for the elderly, the disadvantaged, and the disabled
will be put at risk. Similarly, if we attempt to provide
universal coverage without complementary measures to improve
competition and sharpen incentives for cost-conscious
decisions, costs will continue to escalate.
Our health care reform proposal, while bold and
comprehensive, builds on the strengths of our current,
market-based system. Our approach preserves consumer choice
and our largely employer-based private insurance
arrangements. It relies on market competition and private
incentives, not price controls and bureaucracy, to provide
health security for all Americans, to rein in health care
costs, and to solve our long-run budget deficit problem.
opening foreign markets
Raising the living standards of all Americans is the
fundamental economic goal of my Administration. That is why
all of our initiatives in international trade share a common
purpose: to open markets and promote American exports. This
emphasis on exports is driven by two simple facts. First,
America is part of an increasingly integrated world economy
and must adapt to this new reality if we are to stay on top.
There is simply no way to close our borders and return to the
insular days of the 1950s. To try to do so would be an
exercise in futility, doomed not only to fail but to lower
living standards in the process. Second, export industries
offer the kind of high-wage, high-skill jobs the country
needs. By shifting production toward more exports, we will
shift the composition of employment toward better jobs. In
short, to realize our goal of higher living standards for all
Americans, we must compete, not retreat.
The year just past will go down in the history books as a
watershed for trade liberalization. With your help, we
enacted the North American Free Trade Agreement, which links
the United States, Canada, and Mexico together in the world's
largest marketplace. We also successfully completed the
Uruguay Round of the General Agreement on Tariffs and Trade,
which promises to add as much as $100 billion to $200 billion
to the Nation's output by the end of a decade. And we are now
on a course of increasing trade and investment liberalization
with the rapidly growing economies of East Asia and the
Pacific, which will be a major source of new export
opportunities for American products in the coming years. At
home we have eliminated much of our export control system and
have rationalized our export promotion activities to help our
producers, workers, and farmers increase their sales around
the world.
improving the efficiency of government
My Administration is committed to improving the Federal
government's efficiency across the board. The National
Performance Review (NPR), completed under the bold leadership
of Vice President Gore, provides a road map for what must be
done. The NPR's report shows how substantial budgetary
savings can be realized by making existing programs more
efficient and cutting those that are no longer necessary. As
a result of our efforts to reinvent how the government
performs, we will reduce the Federal bureaucracy by 252,000
positions, bringing it down to the lowest level in decades.
My Administration is also committed to reducing the burden
of government regulations by improving the regulatory review
process. My Executive Order on Regulatory Planning and Review
requires that all new regulations carefully balance costs and
benefits, that only those regulations whose benefits exceed
their costs be adopted, and that in each case the most cost-
effective regulations be chosen.
This year we will also work with the Congress to develop
the new regulatory framework required to encourage the
development of the national information superhighway. We must
cooperate with the private sector to connect every classroom,
every library, and every hospital in America to this highway
by the year 2000. Rapid access to the most advanced
information available will increase productivity and living
standards, help to educate our children, and help health
providers improve medical care for our citizens.
the economic outlook
An economic strategy built on long-run investments will not
bear fruit overnight. But there are already signs that our
policy initiatives are beginning to pay off. Prospects for
sustained economic expansion look far brighter now than they
did a year ago, when my Administration first asked for your
support. Growth of real gross domestic product increased
steadily over the course of 1993, and the economic expansion
has continued into 1994. Consumer spending should remain
healthy because of continued gains in employment and output,
and investment spending should remain strong because of low
long-term interest rates and increasing levels of demand. Low
interest rates will also continue to support the recent
expansion in residential construction. The Administration
forecasts that the economy will grow at 3 percent in 1994 and
will remain on track to create 8 million jobs over 4 years.
As 1994 begins, our economy is strong and growing stronger.
With continued deficit reduction, more public investment, a
reformed health care system, increased exports, and a
reinvented government, we can create the foundations for an
even more prosperous America.
William J. Clinton.
The White House, February 14, 1994.
By unanimous consent, the communication was referred to the Joint
Economic Committee and ordered printed (H. Doc. 103-178).