[Budget Supplement]
[The Budget Message of the President]
[From the U.S. Government Printing Office, www.gpo.gov]


                                     


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                                    RECEIPTS, OUTLAYS, AND SURPLUS OR DEFICIT                                   
                                            (In billions of dollars)                                            
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                                                                              Estimate                          
                                            1995  --------------------------------------------------------------
                                           Actual    1996     1997     1998     1999     2000     2001     2002 
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Receipts................................   1,355    1,427    1,495    1,578    1,653    1,734    1,820    1,912 
Outlays.................................   1,519    1,572    1,635    1,676    1,717    1,761    1,812    1,868 
                                                                                                                
Surplus/Deficit (-).....................    -164     -146     -140      -98      -64      -28        8       44 
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[[Page 3]]
 
                   THE BUDGET MESSAGE OF THE PRESIDENT

  To the Congress of the United States:
  The 1997 Budget, which I am transmitting to you with this message, 
builds on our strong economic record by balancing the budget in seven 
years while continuing to invest in the American people.
  The budget cuts unnecessary and lower priority spending while 
protecting senior citizens, working families, and children. It reforms 
welfare to make work pay and provides tax relief to middle-income 
Americans and small business.
  Three years ago, we inherited an economy that was suffering from 
short- and long-term problems--problems that were created or exacerbated 
by the economic and budgetary policies of the previous 12 years.
  In the short term, economic growth was slow and job creation was weak. 
The budget deficit, which had first exploded in size in the early 1980s, 
was rising to unsustainable levels.
  Over the longer term, the growth in productivity had slowed since the 
early 1970s and, as a result, living standards had stagnated or fallen 
for most Americans. At the same time, the gap between rich and poor had 
widened.
  Over the last three years, we have put in place budgetary and other 
economic policies that have fundamentally changed the direction of the 
economy--for the better. We have produced stronger growth, lower 
interest rates, stable prices, millions of new jobs, record exports, 
lower personal and corporate debt burdens, and higher living standards.
  Working with the last Congress in 1993, we enacted an economic program 
that has worked better than even we projected in spurring growth and 
reducing the deficit. We have cut the deficit nearly in half, from $290 
billion in 1992 to $164 billion in 1995. As a share of the Gross 
Domestic Product, we have cut the deficit by more than half in three 
years, bringing the deficit to its lowest level since 1979.
  While cutting overall discretionary spending, we also shifted 
resources to investments in our future. With wages increasingly linked 
to skills, we invested wisely in education and training to help 
Americans acquire the tools they need for the high-wage jobs of 
tomorrow. We also invested heavily in science and technology, which has 
been a strong engine of economic growth throughout the Nation's history.
  For Americans struggling to raise their children and make ends meet, 
we have sought to make work pay. We expanded the Earned Income Tax 
Credit, providing tax relief for 15 million working families. And we 
have given 37 States the freedom to test ways to move people from 
welfare to work while protecting children.
  As the economy has become increasingly global, prosperity at home 
depends heavily on opening foreign markets to American goods and 
services. With this in mind, we secured legislation to implement the 
General Agreement on Tariffs and Trade and the North American Free Trade 
Agreement, and we have completed over 80 other trade agreements. Under 
our leadership, U.S. exports have grown to an all-time high.
  With these policies, we have helped pave the way for a future of 
sustained economic growth, low interest rates, stable prices, and more 
opportunity for Americans of all incomes. But our work is not done.
  Looking ahead, as I said recently in my State of the Union address, we 
must answer three fundamental questions: First, how do we make the 
American dream of opportunity for all a reality for all Americans who 
are willing to work for it? Second, how do we preserve our old and 
enduring values as we move into the future? And, third, how do we meet 
these challenges together, as one America?
  This budget addresses those questions.
[[Page 4]]

Creating an Age of Possibility

  I am committed to finishing the job that we began in 1993 and finally 
bringing the budget into balance. In our negotiations with congressional 
leaders, we have made great progress toward reaching an agreement. We 
have simply come too far to let this opportunity slip away.
  A balanced budget would reduce interest rates for all Americans, 
including the young families across the land who are struggling to buy 
their first homes. It also would free up funds in the private markets 
with which businesses could invest in factories and equipment, or in 
training their workers.
  But we have to balance the budget the right way--by cutting 
unnecessary and lower priority spending; investing in the future; 
protecting senior citizens, working families, children, and other 
vulnerable Americans; and providing tax relief for middle-income 
Americans and small businesses.
  My budget does that. It strengthens Medicare and Medicaid, on which 
millions of senior citizens, people with disabilities, and low-income 
Americans rely. It reforms welfare. It cuts other entitlements. And it 
cuts deeply into discretionary spending.
  But while cutting overall discretionary spending, my budget invests in 
education and training, the environment, science and technology, law 
enforcement, and other priorities to help build a brighter future for 
all Americans. We should spend more on what we need, less on what we 
don't.

Projecting American Leadership

  Across the globe, we live in a time of great opportunity and great 
challenge. With the end of the Cold War, the world looks to the United 
States for leadership. Providing it is clearly in our best interest. We 
must not turn away.
  My budget provides the necessary resources to advance America's 
strategic interests, carry out our foreign policy, open markets abroad, 
and support U.S. exports. It also provides the resources to confront the 
emerging global threats that have replaced the Cold War as major 
concerns--regional, ethnic, and national conflicts; the proliferation of 
weapons of mass destruction; international terrorism and crime; 
narcotics trading; and environmental degradation.
  On the diplomatic front, our successes have been numerous and 
heartening, and they have made the world a safer and more stable place. 
Through our leadership, we are helping to bring peace to Bosnia and the 
Middle East, and we have spurred progress in Northern Ireland. We also 
encouraged the movement toward democracy and free markets in Russia and 
Central Europe, and we led a successful international effort to defuse 
the nuclear threat from North Korea.
  On the military front, we have deployed our forces where we could be 
effective and where it was in our interest to promote stability by 
ending bloodshed (such as in Bosnia) and suffering (such as in Rwanda). 
We also have used the threat of force to ease tensions, such as to 
unseat an unwelcome dictatorship in Haiti and to stare down Iraq when it 
threatened again to move against Kuwait.
  This budget provides the funds to sustain and modernize the world's 
strongest, best-trained, best-equipped, and most ready military force. 
Through it, we continue to support service members and their families 
with quality-of-life improvements in the short term, while planning to 
acquire the new technologies that will become available at the turn of 
this decade.

Creating Opportunity and Encouraging Responsibility

  The Federal Government cannot--by itself--solve most of the problems 
and address most of the challenges that we face as a people. In some 
cases, it must play a lead role--whether to ensure the guarantee of 
health care for vulnerable Americans, expand access to education and 
training, invest in science and technology, protect the environment, or 
make the tax code fairer. In other cases, it must play more of a 
partnership role--working with States, localities, non-profit groups, 
churches and synagogues, families, and individuals to strengthen 
communities, make work pay, protect public safety, and improve the 
quality of education.
[[Page 5]]
  To restore the American community, the budget invests in national 
service, through which 25,000 Americans this year are helping to solve 
problems in communities while earning money for postsecondary education 
or to repay student loans. We want to create more Empowerment Zones and 
Enterprise Communities to spur economic development and expand 
opportunities for the residents of distressed urban and rural areas. We 
want to expand the Community Development Financial Institutions Fund to 
provide credit and other services to such communities. With the same 
goal in mind, we want to transform the Department of Housing and Urban 
Development into an agency that better addresses local needs. And we 
want to maintain our relationship with, and the important services we 
provide to, Native Americans.
  In health care, our challenge is to improve the existing and largely 
successful system, not to end the guarantees of coverage on which 
millions of vulnerable Americans rely. My budget strengthens Medicare 
and Medicaid, ensuring their continued vitality. For Medicare, it 
strengthens the Part A trust fund, provides more choice for seniors and 
people with disabilities, and makes the program more efficient and 
responsive to beneficiary needs. For Medicaid, it gives States more 
flexibility to manage their programs while preserving the guarantee of 
health coverage for the most vulnerable Americans, retains current 
nursing home quality standards, and continues to protect the spouses of 
nursing home residents from impoverishment. My budget proposes reforms 
to make private health care more accessible and affordable, and premium 
subsidies to help those who lose their jobs pay for private coverage for 
up to six months. It also invests more in various public health 
services, such as the Ryan White program to serve people living with 
AIDS, and research and regulatory activities that promote public health.
  Because America's welfare system is broken, we have worked hard to fix 
those parts of it that we could without congressional action. For 
instance, we have given 37 States the freedom to test ways to move 
people from welfare to work while protecting children, and we are 
collecting record amounts of child support. But now, I need the help of 
Congress. Together, in 1993 we expanded the Earned Income Tax Credit for 
15 million working families, rewarding work over welfare. Now, my budget 
overhauls welfare by setting a time limit on cash benefits and imposing 
tough work requirements, and I want us to enact bipartisan legislation 
that requires work, demands responsibility, protects children, and 
provides adequate resources to get the job done right--with child care 
and training, giving recipients the tools they need.
  More and more, education and training have become the keys to higher 
living standards. While Americans clearly want States and localities to 
play the lead role in education, the Federal Government has an important 
supporting role to play--from funding pre-school services that prepare 
children to learn, to expanding access to college and worker retraining. 
My budget continues the strong investments that we have made to give 
Americans the skills they need to get good jobs. Along with my ongoing 
investments, my budget proposes a Technology Literacy Challenge Fund to 
bring the benefits of technology into the classroom, a $1,000 merit 
scholarship for the top five percent of graduates in every high school, 
and more Charter Schools to let parents, teachers, and communities 
create public schools to meet their own children's needs.
  As Americans, we can take pride in cleaning up the environment over 
the last 25 years, with leadership from Presidents of both parties. But 
our job is not done--not with so many Americans breathing dirty air or 
drinking unsafe water. My budget continues our efforts to find solutions 
to our environmental problems without burdening business or imposing 
unnecessary regulations. We are providing the necessary funds for the 
Environmental Protection Agency's operating program, for our national 
parks and forests, for my plan to restore the Florida Everglades, and 
for my ``brownfields'' initiative to clean up abandoned, contaminated 
industrial sites in distressed urban and rural communities. And we are 
continuing to reinvent the regulatory process by working collaboratively 
with business, rather than treating it as an adversary.
[[Page 6]]
  With science and technology (S&T) so vital to our economic future, our 
national security, and the well-being of our people, my budget continues 
our investments in this crucial area. To maintain our investments, I am 
asking Congress to fulfill my request for basic research in health 
sciences at the National Institutes of Health, for basic research and 
education at the National Science Foundation, for research at other 
agencies that depend on S&T for their missions, and for cooperative 
projects with universities and industry, such as the industry 
partnerships created under the Advanced Technology Program.
  To attack crime, the Federal Government must work with States and 
communities on some problems and lead on others. To help communities, we 
continue to invest in the Community Oriented Policing Services (COPS) 
program, which is putting 100,000 more police on the street. We are 
helping States build more prisons and jail space, better enforce the 
Brady bill that helps prevent criminals from buying handguns, and better 
address the problem of youth gangs. At the Federal level, we are leading 
the fight to stop drugs from entering the country and expand drug 
treatment efforts, and we are stepping up our efforts to secure the 
border against illegal immigration while we help to defray State costs 
for such immigration.
  For many families, of course, the first challenge often is just to pay 
the bills. My budget proposes tax relief for middle-income Americans and 
small businesses. It provides an income tax credit for each dependent 
child under 13; a deduction for college tuition and fees; and expanded 
individual retirement accounts to help families save for future needs 
and more easily pay for college, buy a first home, pay the bills during 
times of unemployment, or pay medical or nursing home costs. For small 
business, it offers more tax benefits to invest, provides estate tax 
relief, and makes it easier to set up pensions for employees. It also 
would expand the tax deduction to make health insurance for the self-
employed more affordable.

Making Government Work

  As we pursue these priorities, we will do so with a Government that is 
leaner, but not meaner, one that works efficiently, manages resources 
wisely, focuses on results rather than merely spending money, and 
provides better service to the American people. Through the National 
Performance Review, led by Vice President Gore, we are making real 
progress in creating a Government that ``works better and costs less.''
  We have cut the size of the Federal workforce by over 200,000 people, 
creating the smallest Federal workforce in 30 years, and the smallest as 
a share of the total workforce since before the New Deal. We are ahead 
of schedule to cut the workforce by 272,900 positions, as required by 
the 1994 Federal Workforce Restructuring Act that I signed into law.
  Just as important, the Government is working better. Agencies such as 
the Social Security Administration, the Customs Service, and the 
Veterans Affairs Department are providing much better service to their 
customers. Across the Government, agencies are using information 
technology to deliver services more efficiently to more people.
  We are continuing to reduce the burden of Federal regulation, ensuring 
that our rules serve a purpose and do not unduly burden businesses or 
taxpayers. We are eliminating 16,000 pages of regulations across 
Government, and agencies are improving their rule-making processes.
  In addition, we continue to overhaul Federal procurement so that the 
Government can buy better products at cheaper prices from the private 
sector. No longer does the Government pay outrageous prices for hammers, 
ashtrays, and other small items that it can buy cheaper at local stores.
  As we look ahead, we plan to work more closely with States and 
localities, with businesses and individuals, and with Federal workers to 
focus our efforts on improving services for the American people. Under 
the Vice President's leadership, agencies are setting higher and higher 
standards for delivering faster and better service.
[[Page 7]]
Conclusion

  Our agenda is working. We have significantly reduced the deficit, 
strengthened the economy, invested in our future, and cut the size of 
Government while making it work better for the American people.
  Now, we have an opportunity to build on our success by balancing the 
budget the right way. It is an opportunity we should not miss.

                                                      William J. Clinton
    
March 1996