[Economic Report of the President (1996)]
[Administration of William J. Clinton]
[Online through the Government Publishing Office, www.gpo.gov]

[DOCID: f:erp_p2._]
Economic Report of the President - - - - - - - - - - - - H. Doc. 104-161
[From the online service of the U.S. Government Printing Office]
[wais.access.gpo.gov]


ECONOMIC REPORT
OF THE PRESIDENT




ECONOMIC REPORT OF THE PRESIDENT

To the Congress of the United States:

FIFTY YEARS AGO, the CONGRESS passed and President Truman signed the
Employment Act of 1946, which committed the U.S. Government to promote
policies designed to create employment opportunities for all Americans.
I am proud that my Administration has made President Truman's commitment
a reality. Over the past 3 years, we have created a sound economic
foundation to face the challenges of the 21st century.

Strong Economic Performance

Overall, the American economy is healthy and strong. In the first 3
years of this Administration nearly 8 million jobs were created, 93
percent of them in the private sector. The so-called ``misery index''--
the sum of the inflation and unemployment rates--fell last year to its
lowest level since 1968. Investment has soared, laying the basis for
future higher economic growth. New business incorporations have set a
record, and exports of American-made goods have grown rapidly. Ours is
the strongest and most competitive economy in the world--and its
fundamentals are as sound as they have been in three decades.
This turnaround occurred because of the hard work and ingenuity of
the American people. Many of the new jobs are high-wage service sector
jobs--reflecting the changing structure of the economy. The
telecommunications, biotechnology, and software industries have led the
high-tech revolution world-wide. Traditional industries, such as
manufacturing and construction, have restructured and now use technology
and workplace innovation to thrive and once again create jobs. For
example, in 1994 and 1995, America was once again the world's largest
automobile maker.
Our 1993 economic plan set the stage for this economic expansion and
resurgence, by enacting historic deficit reduction while continuing to
invest in technology and education. For over a decade, growing Federal
budget deficits kept interest rates high and dampened investment and
productivity growth. Now, our deficit is proportionately the lowest of
any major economy.
Today, our challenge is to ensure that all Americans can become
winners in economic change--that our people have the skills and the
security to make the most of their own lives. The very explosion of
technology and trade that creates such extraordinary opportunity also
places new pressures on working people. Over the past two decades,
middle-class earnings have stagnated, and our poorest families saw their
incomes fall. These are long-run trends, and 3 years of sound economic
policies cannot correct for a decade of neglect. Even so, we are
beginning to make some progress: real median family income increased by
2.3 percent in 1994, and the poverty rate fell in 1994 for the first
time in 5 years.

Addressing Our Economic Challenges

I am firmly committed to addressing our economic challenges and
enhancing economic security for all Americans. People who work hard need
to know that they can and will have a chance to win in our new and
changing economy. Our economic agenda seeks both to promote growth and
to bring the fruits of that growth within reach of all Americans. Our
overall strategy is straightforward:
 Balancing the budget. In the 12 years before I took office,
the budget deficit skyrocketed and the national debt quadrupled.
My Administration has already cut the budget deficit nearly in
half. I am determined to finish the job of putting our fiscal
house in order. I have proposed a plan that balances the budget
in 7 years, without violating our fundamental values--without
undercutting Medicare, Medicaid, education, or the environment
and without raising taxes on working families. The plans put
forth by my Administration and by the Republicans in the
Congress contain enough spending cuts in common to balance the
budget and still provide a modest tax cut. I am committed to
giving the American people a balanced budget.
 Preparing workers through education and training. In the
new economy, education is the key to opportunity--and the
education obtained as a child in school will no longer last a
lifetime. My Administration has put in place the elements of a
lifetime-learning system to enable Americans to attend schools
with high standards; get help going to college, or from school
into the workplace; and receive training and education
throughout their careers. We expanded Head Start for
preschoolers; enacted Goals 2000, establishing high standards
for schools; created a new direct student loan program that
makes it easier for young people to borrow and repay college
loans; gave 50,000 young people the opportunity to earn college
tuition through community service; and enacted the School-to-
Work Opportunities Act. Now we must continue to give our people
the skills they need, by enacting my proposals to make the first
$10,000 of college tuition tax deductible; to give the top 5
percent of students in each high school a $1,000 merit
scholarship; and to enact the GI Bill for Workers, which would
replace the existing worker training system with a flexible
voucher that workers could use at community colleges or other
training facilities.
 Increasing economic security. We must give Americans the
security they need to thrive in the new economy. We can do this
through health insurance reforms that will give Americans a
chance to buy insurance when they change jobs or when someone in
their family is sick. We can do this by encouraging firms to
provide more extensive pension coverage, as I have done through
my proposals for pension simplification. In addition, we should
make work pay by increasing the minimum wage and preserving the
full Earned Income Tax Credit (EITC), which cuts taxes for hard-
pressed working families to make sure that no parents who work
full-time have to raise their children in poverty.
 Creating high-wage jobs through technology and exports. We
must continue to encourage the growth of high-wage industries,
which will create the high-wage jobs of the future. We have
reformed the decades-old telecommunications laws, to help spur
the digital revolution that will continue to transform the way
we live. We must continue to encourage exports, since jobs
supported by goods exports pay on average 13 percent more than
other jobs. My Administration has concluded over 200 trade
agreements, including the North American Free Trade Agreement
and the Uruguay Round of the General Agreement on Tariffs and
Trade, seeking an open world marketplace and fair rules for
exporters of American goods and services. As a result,
merchandise exports have increased by 31 percent.
 A government that is smaller, works better, and costs less.
A new economy demands a new kind of government. The era of big,
centralized, one-size-fits-all government is over. But the
answer is not the wholesale dismantling of government. Rather,
we must strive to meet our problems using flexible,
nonbureaucratic means--and working with businesses, religious
groups, civic organizations, schools, and State and local
governments. My Administration has reduced the size of
government: as a percentage of civilian nonfarm employment, the
Federal workforce is the smallest it has been since 1933, before
the New Deal. We have conducted a top-to-bottom overhaul of
Federal regulations, and are eliminating 16,000 pages of
outdated or burdensome rules altogether. We have reformed
environmental, workplace safety, and pharmaceutical regulation
to cut red tape without hurting public protection. And we will
continue to find new, market-based ways to protect the public.

The Need to Continue with What Works

As The Annual Report of the Council of Economic Advisers makes
clear, this is a moment of great possibility for our country. Ours is
the healthiest of any major economy. No nation on earth is better
positioned to reap the rewards of the new era. Our strategy of deficit
reduction and investment in our people has begun to work. It would be a
grave error to turn back.
Our Nation must reject the temptation to shrink from its
responsibilities or to turn to narrow, shortsighted solutions for long-
term problems. If we continue to invest for the long term, we will pass
on to the next generation a Nation in which opportunity is even more
plentiful than it is today.
William J. Clinton

The White House

February 14, 1996