[Congressional Record Volume 142, Number 64 (Thursday, May 9, 1996)]
[Extensions of Remarks]
[Page E744]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           AN ECONOMIC AGENDA

                                 ______


                          HON. LEE H. HAMILTON

                               of indiana

                    in the house of representatives

                         Wednesday, May 8, 1996

  Mr. HAMILTON. Mr. Speaker, I would like to insert my Washington 
Report for Wednesday, May 8, 1996, into the Congressional Record.

                           An Economic Agenda

       One of the key questions facing policymakers today is what 
     can be done to help improve the standard of living for the 
     average American. I hear from people all the time who tell me 
     they are working harder and longer than ever, but they feel 
     squeezed and are just barely getting by. I believe we must 
     make a determined effort in this country for a higher rate of 
     economic growth. That must become one of our nation's top 
     priorities. Higher growth will come from more saving and 
     investment and from greater productivity, and it will do much 
     to improve the outlook for working Americans.


                            State of economy

       All of us know that the overall economy is doing reasonably 
     well. Growth and inflation are both around 2%. Many jobs are 
     being created and the unemployment rate is low. The deficit 
     is going down. Stock prices are at an all-time high. But at 
     the same time, there is tremendous unease about the economy. 
     Layoffs and downsizing are continuing as the inevitable 
     result of global competition and technological change. There 
     is job insecurity, enormous income inequality, and 
     significant pressure on families.
       I believe President Kennedy was right when he talked about 
     a rising tide lifting all boats. We must have stronger 
     economic growth.


                            Economic growth

       Economic growth is the rate at which the overall economy 
     grows from year to year. In 1994 our nation's total output of 
     goods and services (Gross Domestic Product) was $7.1 trillion 
     and in 1995 GDP was $7.25 trillion, for a growth rate last 
     year of 2.0%.
       The U.S. growth rate has slowed since the decades after 
     World War II. Economic growth averaged a robust 3.9% per year 
     in the 1950s and 4.3% in the 1960s, but it has dropped to 
     3.2% in the 1970s, 2.7% in the 1980s, and, with the 1990-91 
     recession, 1.8% so far in the 1990s. We need to do better. 
     Many economists believe that we should be striving for growth 
     of around 3.5% per year over the long term. They believe that 
     the structure of the economy has changed in recent years to 
     allow that kind of growth without reigniting inflation.
       Growth in the material standard of living is obviously not 
     the sole measure of success as a society. But strong, 
     balanced, and sustained economic growth helps in many ways. 
     Jobs multiply and wages rise during periods of solid 
     growth. Prior to the 1970s when we had strong economic 
     growth, wage growth was also solid. But as the economy has 
     slowed, wage growth has flattened out. Strong economic 
     growth also makes it easier to balance the budget, as the 
     growing economy boosts revenues and reduces social safety 
     net costs, and it makes it easier for Americans to tackle 
     a variety of domestic problems. Strong economic growth 
     alone cannot solve the nation's problems, but without it 
     they are likely to become increasingly difficult.
       We need, in short, an economy that will provide employment 
     for everyone willing and able to work, and an economy that 
     will provide opportunity for a consistently higher standard 
     of living for those employed. The only way I know to get that 
     is with strong private sector growth. That growth will come 
     from higher levels of investment and superior public 
     services.


                           pro-growth agenda

       I believe there are several parts to a pro-growth agenda. 
     First, we must balance the federal budget. Large federal 
     borrowing drains the pool of national savings available for 
     productive private sector investment and it drives up 
     interest rates. Progress has been made on the deficit, as it 
     has been cut in half over the last four years. We need to 
     build on that progress, put aside our partisan differences, 
     and balance the budget.
       Second, we need to reform the federal tax system so 
     economic growth becomes a much more central objective. That 
     means it has to do a much better job of encouraging saving 
     and investment. How it should be restructured to achieve that 
     is a matter of debate. We may need a variation of the flat 
     tax, a lower tax on capital, or a system of taxing 
     consumption instead of investment, but we must put at the top 
     of our national agenda a search for a tax system that 
     enhances growth.
       Third, we must expand our trade opportunities and open 
     foreign markets to U.S. products. Jobs in exporting 
     industries tend to be higher-paying, so our companies must 
     have fair access to the rapidly growing markets overseas. We 
     need to continually review and adjust U.S. trade policy to 
     make sure it is working in our national interest and is 
     helping to expand our economy and good-paying jobs.
       Fourth, we need to curb excessive and costly government 
     regulations. Many federal regulations provide important 
     health and safety protections. But overall we need to make 
     sure their benefits exceed their costs and they are carried 
     out in the latest burdensome way. Regulations should 
     recognize that a vibrant private sector is the best engine 
     for economic growth and jobs.
       Fifth, I also think we need higher levels of public 
     investment in infrastructure. Federal, state, and local 
     governments need to invest in more and better roads, bridges, 
     highways, water systems, sewer systems, harbors, ports, 
     airports and all the rest that helps make the private sector 
     more productive. We also need to promote investment in 
     research and technology, which boosts economic growth.
       Finally, we need greater attention to upgrading the 
     education and skills training of our workers. Improving 
     educational performance is an absolute priority in today's 
     world so all Americans--not just those at the top--can 
     prosper as the economy grows. Education is, of course, 
     primarily a state responsibility, but it is a national 
     problem. Access to higher education and more skills training 
     is a must.
       I do not suggest that such changes will come about easily. 
     We must be prepared to deal with the human problems that 
     emerge. We should do all we can, for example, to create a 
     system of portable pensions and portable health care to 
     cushion the transition for people who have to move from one 
     job to another. We must find ways of providing profit sharing 
     and stock ownership plans for employees, not just for the top 
     corporate management, so everyone has a greater stake in the 
     success of our companies.


                               conclusion

       In sum, our objective is simple: higher growth in the 
     American economy. That basic goal needs to become the much 
     more central focus of what the federal government does on a 
     variety of fronts--whether it be our budget or tax policy or 
     our trade, regulatory, and public investment policy. In the 
     end I think what is important for working people is for this 
     economic system of ours to grow and to create more good-
     paying jobs. We don't know all the answers about getting 
     higher growth, but we know some of them, and we should get 
     about the business of implementing them.

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