THE WHITE HOUSE

Office of the Vice President

                   REMARKS BY VICE PRESIDENT AL GORE
                       AS PREPARED FOR DELIVERY
                      CENTER FOR NATIONAL POLICY

                        Thursday, June 18, 1998

Thank you for having me here today, to talk about a subject that is vital to any policy debate: how we keep our economy growing, and create more jobs and opportunities for the American people.

Nearly one year ago, I came before the Center for National Policy to make a simple case: that the new economic strategy President Clinton and I have pursued since 1993 was not only working, but that it represented something new in economic policy, and something new in our history; that it was helping to create a new economy -- but that we faced stiff challenges to that strategy, on every major front.

Back then, we were still fighting to balance the federal budget. We were still fighting for the strategic investments in training, in education, in technology and the environment that are so critical to growth. We were still fighting for American leadership and engagement in the world.

But above all, we were fighting those in the other party who simply refused to abandon the out-of-date dogmas of the past -- those who believed that the politics of raw ideology should take precedence over the policies that actually build and sustain prosperity.

We won those fights. In 1993, without a single Republican vote we enacted the new economic plan that virtually eliminated the budget deficit, and produced what many are now calling the strongest economy in our history. That laid the groundwork for the bipartisan balanced budget that helped us finish the job, and helped to keep our economy growing.

If there were any doubts then about the wisdom of our economic course, there should be none today. In the past 5 1/2 years, our economy has significantly raised standards of living and added more than 16 million new jobs. We have the fastest real wage growth in 25 years, the lowest unemployment in 28 years, the smallest national government in 35 years, the highest rate of small business formation in history, and the highest rate of private home ownership in history -- all with the lowest inflation in 32 years. No wonder the Chairman of the Federal Reserve called today's economic performance "as impressive as any I have witnessed in my near half-century of daily observation of the American economy...it is possible that we have, in a sense, moved 'beyond history.'"

Actually, you could call it the law of intended consequences. We worked hard for these results. Ours was a three-part strategy, merging elements that had never been combined before: strict fiscal discipline, strategic investments in the future, and international engagement. Of course, government didn't create all those new jobs and opportunities -- the American people did. But government helped lay the foundation. And at the heart of our efforts was a new way of thinking. From our first day in office, we said: let's abandon the failed orthodoxies of the past, and build our economic strength on what actually works.

Five and a half years ago, you couldn't have described that as a traditional Democratic strategy, and certainly not a Republican strategy. But it has been a winning strategy. It has not only changed the political debate, it has changed America for the better.

Today, once again, our progress is threatened. Despite all the evidence that our economic strategy is working, some in the Congressional majority are determined to work against it. They would unravel our fiscal discipline -- even at the risk of raising interest rates, shattering confidence in our economy, and squandering the resources we need to finally close the generational deficit. They would squeeze down on our strategic investments in job training and education, and research and development. They would widen the opportunity gap instead of closing it, denying us the highly-skilled workforce we need for the 21st Century. Some would even compromise our leadership in the world -- holding hostage our ability to stabilize the world economy, and defend our economic and security interests abroad.

Worst of all, I fear that some in the Congressional majority have become so blinded by politics that their primary goal is not economic progress, but partisan conflict.

So I come here today to issue a warning: if we allow risky, partisan schemes to disrupt American economic policy, we could jeopardize our economic recovery. We could lose our best chance to shape the 21st Century into the most prosperous and productive time the world has ever known.

First, let us remember how far we have already come. When President Clinton and I took office, America's economy was reeling from years of flabby budgets, phony numbers, and flimsy investments. From 1981 to 1987, when the other party held both the White House and the Senate, they put in place the most reckless economic plan our nation has ever seen: irresponsible tax schemes, made-up numbers, and massive deficits. I know it's hard to imagine it today, but they actually quadrupled America's national debt in less than 12 years -- an act of breathtaking contempt for future generations.

The result was a vicious cycle, with faltering growth leading to bigger deficits, and bigger deficits causing higher interest rates -- crowding out the private investment that is the real engine of growth and jobs. By the early 90's, we had deficits at record levels, $300 billion a year, stretching out as far as the eye could see. Every time businesses felt a little strength in the economy and borrowed money to invest and expand, the combination of their borrowing and the government's deficit financing would put pressure on interest rates and the recovery would stall.

For years, Americans heard there were only two choices: tax and spend, or cut and run. We knew there was a third way: invest and grow.

As I said last month in Detroit, we replaced the vicious cycle with a virtuous cycle -- lower interest rates, more investment, more jobs, more growth -- which then fueled even greater investment in our future. And this is about more than spreadsheets and statistics -- it's about providing the opportunity that has always been the heart of the American dream. It's about giving every child a chance at a better, brighter future.

That is why, at every step of the way, we tried to reach across party lines -- to build what should have been a new bipartisan consensus on economic policy. It didn't quite work out that way -- and not just in 1993. In 1995 and '96, the other party shut down the government rather than agree to the strategic investments we believed our economy needed.

But then, chastened by the outrage of the American people, the Republican leaders were forced to accept President Clinton's priorities. Still, in 1997, it took months of intense negotiations to produce a bipartisan balanced budget agreement based on those priorities. And it saddens me to say that now we are seeing that partisanship again, on three major fronts:

First, there are some in the Congress who would risk our economy by allowing the first balanced budget in a generation to become our last balanced budget.

By trying to use the budget surplus before it even rolls in -- and by recklessly voting to eliminate the entire tax code, with no way to replace it -- they would jeopardize everything we have fought for these past 5 1/2 years: low interest rates, and a stable climate for investment. Our chance to tackle tough, long-term challenges like saving Social Security and Medicare. And the confidence of world financial markets, which could be damaged even before these risky plans pass through the Congress -- simply because of the prospect of new deficits.

Our economic power comes from a vote of confidence in America, a vote cast in markets around the world that evaluate every government's policies every day, through billions of transactions.

Today's economy operates on the information standard, not the gold standard. If investors think you're playing fiscal games, interest rates climb almost instantly.

That is why, barring an economic reversal, a national emergency, or a foreign crisis, I believe we should balance the budget this year, next year, and every year. Not through a Constitutional Amendment that would clog up the courts -- that was always just a cop-out for those who couldn't make the hard decisions to do it the right way -- but through the resolve of our national leaders.

Without that fiscal discipline, we will never cross the next great budgetary frontier -- saving Social Security for our children. So when President Clinton saw that we would have the first budget surplus in 30 years, he challenged leaders of both parties to reserve every penny of any surplus until we save Social Security first.

At first Congressional leaders embraced that pledge. And anyone who doubts the commitment of our own party to fiscal discipline and serious entitlement reform should note this fact: today, many of the most progressive Democrats have signed on to save Social Security first.

But in the Congressional majority, some have tried to back away -- proposing that the surplus be squandered on large, risky, and indiscriminate tax schemes, with no regard for our long-term fiscal future.

Last October, in testimony before the House Budget Committee, Speaker Gingrich was practically licking his chops over the first hint of a surplus -- proposing that it be used for everything from military projects to highways to reducing the debt, and a large tax cut to boot. Then, this April, before the House Ways and Means Committee, he announced that he'd seen the light, and said "I support the President's call to use every penny of the surplus to save Social Security."

The attacks came pretty quickly from within the GOP; one prominent Republican accused him of "hiding behind a 'wait-and-see' posture" rather than calling for more tax cuts. And just two days later, in early May, the Speaker couldn't take the pressure from his right-wing anymore, so he changed his mind and said he wanted to go back to using half the surplus for tax cuts. Barely two weeks after that, the Speaker supported the President's pledge again.

Ladies and gentlemen, we need an unbreakable commitment to save Social Security first -- not every other day, but every day.

Ways and Means Chairman Bill Archer's position has been more consistent. He has said all along that a large part of the surplus should be spent on tax cuts, because "the surplus is surging out of control." Think about that: a surplus that's "out of control." At least that's better than a Congressional majority that's out of control.

I recognize that it is easy -- sometimes irresistible -- to squander every penny the moment it becomes available. Some would say it's good politics. But it is dangerous fiscal policy. We've solved the budget deficit, but closing the generational deficit will take even greater fiscal resolve.

Yesterday, in one of the most irresponsible political schemes we have yet seen, the Republican House voted to abolish the tax deduction for college scholarships, voted to abolish the tax deduction for child care, and voted to abolish the tax deduction for health care for millions of families. It was a vote to raise the cost of home mortgages for struggling young families. It was a vote to make it impossible for any family or business to invest in the future with certainty or stability.

That may be why the non-partisan Tax Executive Institute said scrapping the code "illustrate[s] the folly of making tax policy by sound bite and should be rejected."

The Washington Post called it "a way to posture on the cheap in an election year...They've stopped producing bills in favor of producing bumper stickers."

The Chief Economist of the Chamber of Commerce calls the idea "more than a little dangerous." And now the National Association of Manufacturers is against it, too.

No wonder business thinks this idea is nutty -- because predictability and stability are essential for business planning. But then, stability is not a prized principle in today's Republican Party politics.

Let me be clear: we support tax reform -- which is why we have proposed the most sweeping set of IRS reforms and taxpayer rights since the tax code was first enacted. We support tax cuts -- tax cuts that are carefully targeted and fully paid for. Both of our major deficit reduction plans -- in 1993 and in 1997 -- contained targeted tax cuts. Today, taxes for middle-income families are the lowest they have been in two decades. But we do not support tax reform by wrecking ball. And we do not support using the budget surplus as a Congressional candy jar, which would only revive the runaway deficits of the past, and endanger the recovery we have worked so hard to sustain.

Let us keep the fiscal discipline our economy demands. Let us join together, across party lines, to save Social Security first -- and let's keep that commitment until the problem is solved.

Our economy faces a second threat. There are some in the Congress who would cut the strategic investments that give us faster growth and safeguard our prosperity for the 21st Century.

Through lean fiscal management -- and because of our efforts to reinvent government, eliminating more than 200 outdated programs, reducing the federal workforce by more than 330,000, and saving $137 billion -- President Clinton has proven that we can balance the budget and invest in the future at the same time. And I believe there are three kinds of priority investments for our future: investments in people; investments in places; and investments in productivity.

Especially in this New Economy and Information Age -- fueled by innovation, driven by new technology, shaped increasingly by minds and not just by matter -- we need an aggressive commitment to invest in our people. That starts with education and job training -- for the highly-skilled workforce that is already in short supply. According to one recent survey, over 60% of corporate leaders say that the number-one barrier to sustained economic growth is the lack of skilled workforce. We must invest more in a world-class education for every American -- from pre-school to college to job training and retraining. We need quality health care, and a Patients Bill of Rights -- because a healthy workforce is a productive workforce. We need measures to strengthen families, because that's where people find fulfillment and healing.

We must also invest in the places where families live -- our cities, towns, and communities -- to make them safe, clean, sustainable places for economic growth. That means aggressive action to clean up our environment and protect our precious open spaces. It means more police and safer streets. It means empowering communities, especially our poorest areas -- because we know they have the most untapped potential. It means metropolitan strategies for development -- encouraging regions to work together to create jobs, clean our environment, and prevent urban and suburban sprawl.

And we must make investments in productivity, by funding cutting-edge research and technology, to fuel innovation and expand electronic commerce. That is why we are investing in 21st Century scientific research, and in the Next Generation of the Internet, moving at speeds 1,000 times faster than today.

Last year, we struck a bipartisan agreement for strategic investments in America's future. But the budget resolution that has now passed the House breaks the spirit of that agreement. It would mean severe and unnecessary cuts in areas that are essential to our economic future.

It could force deep cuts in job training and college scholarships. It could threaten Medicare and Medicaid, and even food safety. It could cut child care, and critical efforts to move people from welfare to work. It would cut efforts to ensure clean water and delay the clean-up of dangerous toxic waste sites. It could completely eliminate our 21st Century Research Fund, to invest in path-breaking scientific inquiry and new technology. It could even cut our efforts to put more police on the streets, all across America.

We don't know the full details of this smoke-and-mirrors budget; its savings and cuts are so vague, the New York Times concluded that it "fails the basic integrity test." But here is what we know to be true: a budget scheme that cuts training and education means we will not have the skilled workforce we need for the 21st Century. A budget scheme that cuts police and the environment means we will not have safe, clean communities to attract new investment and jobs.

Don't take it from me. One respected budget expert went so far as to say that the House Republican budget is "just a mockery." That was Senator Pete Domenici, Chairman of the Senate Budget Committee. I would guess that quite a few Republicans share that view.

There is one more investment -- one that is especially important to me, and to our children's future -- that has now fallen victim to partisan politics. And that is the fight against youth smoking.

When the Senate Commerce Committee, the very committee on which I used to serve, considered this issue, an overwhelming bipartisan majority -- nineteen to one -- voted for a comprehensive bill to dramatically reduce youth smoking, save lives, and save our economy tens of billions of dollars. Then something happened: the mighty tobacco industry decided to kill it. That's when the partisan parlor games began.

The Republicans said they wanted a tax cut in the bill -- so a tax cut was included. They said the bill spent too much on social programs -- so the spending was cut. They said the lawyers' fees were too high -- so the fees were cut.

For too many Republicans, those complaints were nothing but a smokescreen. Even with all those changes, last night the Republican Senate tried to kill the tobacco bill. Of course, 14 courageous Republicans joined 43 of the 45 Senate Democrats in supporting the bill. But that was still three shy of the 60 we needed to move the bill along.

Let me be clear: every Senator who voted to kill the tobacco bill voted against a tax cut for middle income families; against new measures to crack down on drugs; against life-saving research into cancer and other diseases. Every Senator who voted to kill the tobacco bill voted not to save one million American lives.

I know it must have been a difficult decision by the Republican leadership to kill the tobacco bill, not only because most Americans believe that it was morally wrong to do so, but also because they must have known it would cause a huge change in the people's perception of the Republican Party, and they must have decided that it was worth it anyway. And I'm sure people will get used to the new image -- the same way people got used to the Sugar Bowl on New Year's Day becoming the Nokia Sugar Bowl, the Fiesta Bowl becoming the Tostitos Fiesta Bowl, and the Independence Bowl becoming the Poulon Weedeaters Independence Bowl. Now, we're all going to have to get used to the Republican Party becoming the RJ Reynolds Republican Party.

America needs a comprehensive, bipartisan bill to reduce youth smoking. It's time for the RJR Republican Party to stop playing politics with American lives. And we're going to keep pushing this fight again and again, until we win this victory for our children.

There is another reason why we must support all these strategic investments in our future. Only by making our economy work for everyone -- only by sharing and extending prosperity here at home -- can we build and sustain a consensus for open markets, for international engagement, and for aggressive leadership in the world.

There are some in the Congressional majority who would risk our economy by shutting out the world, instead of leading and engaging it.

Above all issues, American leadership used to be the greatest bipartisan preserve. Today, a dangerous and growing isolationism -- a willingness to play politics at home with our interests around the world -- could push our prosperity over the edge. It is an abandonment of a great and longstanding internationalist tradition in the other party. And it is one of the single greatest threats to our continued economic strength.

We have seen this Congress drag its feet on IMF funding, while the Asian financial crisis deepens, affecting not only the markets of Europe, but also our own.

We have seen this Congress withhold our dues to the United Nations in order to play politics with a woman's right to choose. In the process, they are jeopardizing our progress in reforming the U.N., and potentially costing us our vote in the U.N. General Assembly at the end of this year.

Is that any way to honor the legacy of internationalism left by President Eisenhower, President Nixon, and President Bush?

We have been working hard, within the Democratic Party, to try to fashion a third way on trade -- to aggressively open markets while advancing labor rights and environmental protections around the world. But most do agree that with one-third of our growth tied to exports in the past five years, we must move forward in opening markets.

In the past few months alone, we launched a new trade partnership with the European Union, and new trade talks with Latin America. A major agreement to keep global electronic commerce duty-free. A landmark international anti-corruption convention. And as you know, I believe we must do still more to open up markets.

I also believe, as the President told the World Trade Organization last month, that competition among nations must never become a race to the bottom -- in environmental protections, consumer protections, or labor standards. Our goal must be to help more people benefit from the enormous possibilities of the global economy.

But our entire party can agree on this: if we shut ourselves off from the world; if we give up our seat at the table of world affairs; if we walk away from the most urgent financial crises for the sake of politics, our own economy and our own workers will suffer. And we will lose the leverage to fight for freedom -- freely-elected governments, the free flow of ideas, the free movement of products and people -- which is the surest route to prosperity both at home and around the world.

Consider the IMF. One look at this morning's trade numbers shows why the Congressional majority is wrong to undermine it. When Asian economies are hurt -- when foreign customers can't buy our products -- when foreign currencies lose their value, and our competitors try to flood the marketplace with cheap, devalued goods -- we are the ones that are hurt. We need the IMF to work with countries that are at risk, before the risk spreads to us. The IMF needs reform of its own. But to cut off IMF support now is like shutting down the Fire Department when the house next door is on fire.

It is one of the great and tragic ironies of our history that we are sometimes prone to turn inward when our power is greatest, when our economy is strongest, when our interests are most secure. That is why it is so wrong for Republicans to retreat into isolationism at the very brink of a new American century -- and that is why we are grateful to those brave few in the other party who are fighting for the IMF, and for paying our dues to the U.N., and for engagement in the world. Today, our ability to lead and shape the world economy is at its peak. We waste that power at our own peril.

Taken together, the postures and positions taken by this Congressional majority are as astonishing as they are irresponsible: removing all predictability from the tax code and squandering the surplus. Squeezing down on the education and training our workers and businesses need. Blocking our efforts to stabilize the global financial markets that are essential to our economy.

Consider this: the Republican Party of 1998 has achieved the remarkable feat of being simultaneously anti-labor and anti-business.

You all know about the new hit movie, "The Truman Show." When it comes to this Congress, I think we could use more Truman, and less show.

For 5 1/2 years, President Clinton and I have sought to build a new economic consensus in this country -- one that reaches beyond the false choices and rigid politics of the past. After so much success, why would we go back to failed old economic dogmas? Why would we unravel the strategy we worked so hard to build?

I am still hopeful that we can forge a bipartisan solution to our economic challenges, and put prosperity before partisanship, once and for all. I am still hopeful that we can appeal to the great, lost traditions of the other party -- of economic growth, of fiscal discipline, of international leadership. But with jobs and incomes at stake, hope is not enough. The American people must be on notice. It is, after all, their economy. After sixteen million new jobs, and year after year of unbroken economic growth, we owe it to them to keep it strong. Thank you.