[Congressional Record Volume 140, Number 16 (Wednesday, February 23, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 23, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
   EXECUTIVE COMMUNICATION FROM THE PRESIDENT OF THE UNITED STATES--
                    ECONOMIC REPORT OF THE PRESIDENT

  The SPEAKER pro tempore laid before the House the following 
communication from the President of the United States, which was read 
and, together with the accompanying papers, without objection, referred 
to the Joint Economic Committee and ordered to be printed:

                    Economic Report of the President

     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 
     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.

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