[Congressional Record Volume 141, Number 1 (Wednesday, January 4, 1995)]
[Extensions of Remarks]
[Pages E28-E29]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                        PROGRESS ON THE ECONOMY

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                       Wednesday, January 4, 1995
  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, October 26, 1994, into the Congressional Record.
                        Progress on the Economy

       One of the top concerns of Hoosiers remains the economy and 
     the economic outlook. Hoosiers are concerned about the budget 
     deficit, our international competitiveness, and especially 
     jobs and job security. At the same time, most recognize that 
     progress is being made and that the economy is doing better 
     now than it has for years. Over the last two years we have 
     made major progress on the budget deficit. That in turn has 
     given a significant boost to the economy. We need to build on 
     these successes and continue the basic policies that have 
     helped turn things around. Certainly there is still much room 
     for improvement in the economy, but there is little evidence 
     that our economic policy needs a major change in direction.


                        Progress on the economy

       In January 1993, both the federal deficit and federal 
     spending as a share of the economy were spiraling upward, 
     while the economy was in the slowest recovery of the postwar 
     era. The President and Congress passed the deficit reduction 
     package last year which led to a dramatic drop in the 
     deficit, and also has sparked a steady, sustainable economic 
     recovery. Critics were saying that the package would cause a 
     recession and higher unemployment. It has had just the 
     opposite effect, boosting the economy in several key ways.
       Deficit reduction: The $430 billion deficit reduction 
     package means that the deficit will decline for three years 
     in a row--the first time that has happened since the Truman 
     Administration. We are finally getting a handle on the 
     deficit--bringing it down from $290 billion in 1992 to a 
     projected $160 billion next year. That will make the deficit 
     as a share of the economy the lowest since 1979, and one of 
     the lowest of all the major industrialized countries.
       By 1998 the national debt will be $650 billion lower than 
     was projected before the passage of the deficit reduction 
     plan. (Two-thirds of this comes directly from the deficit 
     reduction package, the rest from the strengthened economy.) 
     That's $10,800 of reduced federal debt for each family of 
     four in Indiana. We need to continue these deficit reduction 
     efforts rather than reverse course.
       Growth: The U.S. economy is growing at a solid, sustainable 
     pace. The rate of economic 
     [[Page E29]] growth, which averaged 1.5% in the Bush 
     Administration, has more than doubled to 3.3% in the Clinton 
     Administration. The U.S. economy is growing faster than any 
     other major industrialized country. Our projected growth rate 
     of around 3% is about where we want it--much slower and it 
     would lead to rising unemployment, much faster and it would 
     reignite inflation.
       Unemployment: The unemployment rate has come down from 7.1% 
     in January 1993 to 5.9% today. Some 4.6 million new jobs have 
     been created since January 1993, compared to 2.4 million over 
     the previous four years. 92% of these jobs have been in the 
     private sector, compared to 54% during the Bush 
     Administration. American job growth this year will exceed job 
     growth of all the other major industrialized countries 
     combined.
       In Indiana, the unemployment rate has dropped from 5.9% in 
     January 1993 to 5.1%. The number of Hoosier jobs has grown by 
     155,000 in the last two years, after declining by almost 
     100,000 in the three previous years.
       This is solid progress on the jobs front, and we need to 
     continue the deficit reduction lower interest rates, and 
     strong economic growth that have helped bring it about.
       Productivity: Higher productivity is key to an increased 
     standard of living for American workers. Productivity has 
     increased at an annual rate of 2.2% since the beginning of 
     1993--a significant improvement over the record of the 1980s. 
     The lower interest rates resulting from deficit reduction 
     have boosted investment and productivity.
       Inflation: It has been a significant accomplishment that we 
     have done so well in boosting economic growth and lowering 
     unemployment without reigniting inflation. Inflation since 
     January 1993 has averaged 2.8%--the lowest level in 30 years.
       Income growth: Income growth is one aspect of the recovery 
     that remains disappointing. Median family income has not kept 
     up with
      inflation in recent years. It grew slightly last year, but 
     after adjusting for inflation actually declined by about 
     1%. This is a slight improvement over the previous four 
     years, but still disappointing. Family incomes in Indiana 
     did not decline like the rest of the country, but they did 
     not grow either.
       This has made many people skeptical about overall progress 
     on the economy since they have not felt it much in their 
     paychecks. Although most workers saw a modest increase in 
     their total compensation--wages plus benefits--during the 
     past decade, it was much less than in earlier decades and 
     most of the increase recently has gone for higher employee 
     health insurance premiums. So workers have not seen much 
     increase in their paychecks. Making real progress on takehome 
     pay will require continued strong economic growth, increased 
     investment, as well as meaningful health care reform that 
     reins in escalating health care costs.
       Trade deficit: A second disappointment is the trade 
     deficit. Since the mid-1970s, the U.S. has been importing 
     more goods and services than it has exported. The trade 
     deficit in goods and services, which peaked at $150 billion 
     in 1987, fell to $30 billion in 1991. Since then, severe 
     recessions in Europe and Japan have reduced their ability to 
     buy U.S. products, driving our trade deficit up to the $80-90 
     billion range. This should turn around as Europe and Japan 
     recover.


                               Conclusion

       Certainly we need to continue to focus on improving our 
     country's economic future, but we have made significant 
     progress in shoring up the economy during the past two years. 
     An independent study recently found that the U.S. now has the 
     world's most competitive economy, overtaking Japan for the 
     first time since 1985. Federal Reserve Chairman Alan 
     Greenspan said earlier this year that because of the deficit 
     reduction effort, ``. . . the foundations of the economic 
     expansion are looking increasingly well-entrenched''. We need 
     to continue the policies that have made the difference--
     meaningful deficit reduction, moderate interest rates, and an 
     emphasis on productive investment. These policies are working 
     and we should stick with them.
     

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