[Congressional Record Volume 145, Number 20 (Thursday, February 4, 1999)]
[Senate]
[Pages S1254-S1255]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 1998 ANNUAL REPORT OF THE COUNCIL OF ECONOMIC ADVISERS--MESSAGE FROM 
                          THE PRESIDENT--PM 3

  The PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; which was referred to the Joint Economic Committee.

                    ECONOMIC REPORT OF THE PRESIDENT

To the Congress of the United States:
  I am pleased to report that the American economy today is healthy and 
strong. Our Nation is enjoying the longest peacetime economic expansion 
in its history, with almost 18 million new jobs since 1993, wages 
rising at twice the rate of inflation, the highest home ownership ever, 
the smallest welfare rolls in 30 years, and unemployment and inflation 
at their lowest levels in three decades.
  This expansion, unlike recent previous ones, is both wide and deep. 
All income groups, from the richest to the poorest, have seen their 
incomes rise since 1993. The typical family income is up more than 
$3,500, adjusted for inflation. African-American and Hispanic 
households, who were left behind during the last expansion, have also 
seen substantial increases in income.
  Our Nation's budget is balanced, for the first time in a generation, 
and we are entering the second year of an era of surpluses: our 
projections show that we will close out the 1999 fiscal year with a 
surplus of $79 billion, the largest in the history of the United 
States. We are on course for budget surpluses for many years to come.
  These eeconomic successes are not accidental. They are the result of 
an economic strategy that we have pursued since 1993. It is a strategy 
that rests on three pillars: fiscal discipline, investments in 
education and technology, and expanding exports to the growing world 
market. Continuing with this proven strategy is the best way to 
maintain our prosperity and meet the challenges of the 21st century.


                  THE ADMINISTRATION'S ECONOMIC AGENDA

  Our new economic strategy was rooted first and foremost in fiscal 
discipline. We made hard fiscal choices in 1993, sending signals to the 
market that we were serious about dealing with the budget deficits we 
had inherited. The market responded by lowering long-term interest 
rates. Lower interest rates in turn helped more people buy homes and 
borrow for college, helped more entrepreneurs to start businesses, and 
helped more existing businesses to invest in new technology and 
equipment. America's economic success has been fueled by the biggest 
boom in private sector investment in decades--more than $1 trillion in 
capital was freed for private sector investment. In past expansions, 
government bought more and spent more to drive the economy. During this 
expansion, government spending as a share of the economy has fallen.
  The second part of our strategy has been to invest in our people. A 
global economy driven by information and fast-paced technological 
change creates ever greater demand for skilled workers. That is why, 
even as we balanced the budget, we substantially increased our annual 
investment in education and training. We have opened the doors of 
college to all Americans, with tax credits and more affordable student 
loans, with more work-study grants and more Pell grants, with education 
IRAs and the new HOPE Scholarship tax credit that more than 5 million 
Americans will receive this year. Even as we closed the budget gap, we 
have expanded the earned income tax credit for almost 20 million low-
income working families, giving them hope and helping lift them our of 
poverty. Even as we cut government spending, we have raised investments 
in a welfare-to-work jobs initiative and invested $24 billion in our 
children's health initiative.
  Third, to build the American economy, we have focused on opening 
foreign markets and expanding exports to our trading partners around 
the world. Until recently, fully one-third of the strong economic 
growth America has enjoyed in the 1990s has come from exports. That 
trade has been aided by 270 trade agreements we have signed in the past 
6 years.


              ADDRESSING OUR NATION'S ECONOMIC CHALLENGES

  We have created a strong, healthy, and truly global economy--an 
economy that is a leader for growth in the world. But common sense, 
experience, and the example of our competitors abroad show us that we 
cannot afford to be complacent. Now, at this moment of great plenty, is 
precisely the time to face the challenges of the next century.
  We must maintain our fiscal discipline by saving Social Security for 
the 21st century--thereby laying the foundations for future economic 
growth.

[[Page S1255]]

  By 2030, the number of elderly Americans will double. This is a 
seismic demographic shift with great consequences for our Nation. We 
must keep Social Security a rock-solid guarantee. That is why I 
proposed in my State of the Union address that we invest the surplus to 
save Social Security. I proposed that we commit 62 percent of the 
budget surplus for the next 15 years to Social Security. I also 
proposed investing a small portion in the private sector. This will 
allow the trust fund to earn a higher return and keep Social Security 
sound until 2055.
  But we must aim higher. We should put Social Security on a sound 
footing for the next 75 years. We should reduce poverty among elderly 
women, who are nearly twice as likely to be poor as other seniors. And 
we should eliminate the limits on what seniors on Social Security can 
earn. These changes will require difficult but fully achievable choices 
over and above the dedication of the surplus.
  Once we have saved Social Security, we must fulfill our obligation to 
save and improve Medicare and invest in long-term health care. That is 
why I have called for broader, bipartisan reforms that keep Medicare 
secure until 2020 through additional savings and modernizing the 
program with market-oriented purchasing tools, while also providing a 
long-overdue prescription drug benefit.
  By saving the money we will need to save Social Security and 
Medicare, over the next 15 years we will achieve the lowest ratio of 
publicly held debt to gross domestic product since 1917. This debt 
reduction will help keep future interest rates low or drive them even 
lower, fueling economic growth well into the 21st century.
  To spur future growth, we must also encourage private retirement 
saving. In my State of the Union address I proposed that we use about 
12 percent of the surplus to establish new Universal Savings Accounts--
USA accounts. These will ensure that all Americans have the means to 
save. Americans could receive a flat tax credit to contribute to their 
USA accounts and additional tax credits to match a portion of their 
savings--with more help for lower income Americans. This is the right 
way to provide tax relief to the American people.
  Education is also key to our Nation's future prosperity. That is why 
I proposed in my State of the Union address a plan to create 21st-
century schools through greater investment and more accountability. 
Under my plan, States and school districts that accept Federal 
resources will be required to end social promotion, turn around or 
close failing schools, support high-quality teachers, and promote 
innovation, competition, and discipline. My plan also proposes 
increasing Federal investments to help States and school districts take 
responsibility for failing schools, to recruit and train new teachers, 
to expand after school and summer school programs, and to build or fix 
5,000 schools.
  At this time of continued turmoil in the international economy, we 
must do more to help create stability and open markets around the 
world. We must press forward with open trade. It would be a terrible 
mistake, at this time of economic fragility in so many regions, for the 
United States to build new walls of protectionism that could set off a 
chain reaction around the world, imperiling the growth upon which we 
depend. At the same time, we must do more to make sure that working 
people are lifted up by trade. We must do more to ensure that spirited 
economic competition among nations never becomes a race to the bottom 
in the area of environmental protections or labor standards.
  Strengthening the foundations of trade means strengthening the 
architecture of international finance. The United States must continue 
to lead in stabilizing the world financial system. When nations around 
the world descend into economic disruption, consigning populations to 
poverty, it hurts them and it hurts us. These nations are our trading 
partners; they buy our products and can ship low-cost products to 
American consumers.
  The U.S. proposal for containing financial contagion has been taken 
up around the world: interest rates are being cut here and abroad, 
America is meeting its obligations to the International Monetary Fund, 
and a new facility has been created at the World Bank to strengthen the 
social safety net in Asia. And agreement has been reached to establish 
a new precautionary line of credit, so nations with strong economic 
policies can quickly get the help they need before financial problems 
mushroom from concerns to crises.
  We must do more to renew our cities and distressed rural areas. My 
Administration has pursued a new strategy, based on empowerment and 
investment, and we have seen its success. With the critical assistance 
of Empowerment Zones, unemployment rates in cities across the country 
have dropped dramatically. But we have more work to do to bring the 
spark of private enterprise to neighborhoods that have too long been 
without hope. That is why my budget includes an innovative ``New 
Markets'' initiative to spur $15 billion in new private sector capital 
investment in businesses in underserved areas through a package of tax 
credits and guarantees.


               going forward together in the 21st century

  Now, on the verge of another American Century, our economy is at the 
pinnacle of power and success, but challenges remain. Technology and 
trade and the spread of information have transformed our economy, 
offering great opportunities but also posing great challenges. All 
Americans must be equipped with the skills to succeed and prosper in 
the new economy. America must have the courage to move forward and 
renew its ideas and institutions to meet new challenges. There are no 
limits to the world we can create, together, in the century to come.
                                                  William J. Clinton.  
  The White House, February 4, 1999.

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