PRESIDENT CLINTON AND VICE PRESIDENT GORE:
HELPING TO BUILD THE NEW ECONOMY
February 24, 2000
Today in his Granoff Lecture at the University of Pennsylvania, the
President will outline his vision of the new economy, highlighting the
role that fiscal discipline and information technology have played in
producing the longest expansion in U.S. history. The President will
announce that he will convene a major White House conference on April
5th in order to draw insights on the new economy from the Nation's
leading economists, CEOs, and experts. The conference will focus on the
most cutting edge issues facing the new economy, in an effort to come to
a better understanding of strategies to build on America's strengths
while addressing continuing challenges.
FISCAL DISCIPLINE HAS PLAYED A KEY ROLE IN UNLEASHING PRIVATE
INVESTMENT. Between 1980 and 1992, the debt quadrupled. In 1992 the
budget deficit was a record $290 billion and projected to rise. Seven
years of fiscal discipline have turned this around:
Largest surplus in history. In early 1993, CBO projected that the
deficit would grow to $455 billion in 2000. Instead, the budget surplus
is projected to be $167 billion -- the largest surplus in history and
the third consecutive surplus, for the first time since 1947-49. As a
result, the government is draining $622 billion less in capital from
private markets in one year alone.
Paying down the debt. We are on track to pay down $297 billion in
Federal debt held by the public over three years, the largest three-year
debt pay-down in history.
Longest and strongest investment growth on record. The American
economy has enjoyed seven consecutive years of double digit growth in
real productive equipment and software investment for the first time on
record. Investment has expanded at a 12.1 percent annual rate under
President Clinton, the fastest rate of any President on record.
INFORMATION TECHNOLOGY HAS HELPED TRANSFORM THE ECONOMY AND FUEL RECORD
GROWTH. Information technology has made a crucial contribution to the
new economy, helping to fuel record growth, higher wages, and changes in
the way business is done throughout the economy.
Information technology and the economy. Information technology (IT)
accounts for only 8 percent of total jobs but has been responsible for
nearly one-third of U.S. economic growth. Wages in the IT industry are
77 percent higher than the private-sector average. Declining IT prices
have lowered the overall inflation rate by nearly one percentage point.
Rapidly rising information technology investment. Information
technology now accounts for nearly half of business investment.
Adjusted for inflation, American companies invested three times more in
IT in 1999 than in 1992.
Transforming business practices. Information technology has diffused
throughout the economy, changing the way companies do business.
Business-to-business e-commerce could reach $1.3 trillion by 2003,
saving companies money and improving the efficiency of the economy.
Improved inventory control techniques have helped reduce economic
volatility, bringing the ratio of inventories to sales to the lowest
level on record.
What the Clinton-Gore Administration has done to strengthen America's
high-tech competitiveness and promote e-commerce and the Internet:
Opened up foreign markets for high-tech goods, cracked down on
foreign piracy and liberalized export controls on computers and
telecommunications equipment. This includes the Information Technology
Agreement (ITA), which will eventually eliminate tariffs on $600 billion
worth of goods and the World Trade Organization's Basic
Telecommunications Agreement which will promote competition and
privatization in a global telecommunications services market worth $1
Extended the Research and Experimentation tax credit, including a
5-year extension last year, the longest extension ever.
The first comprehensive telecommunications reform legislation in over
sixty years in order to lower prices, increase customer choice, and
speed the deployment of technology.
Every budget the President has submitted has increased investments in
research and development, helping to develop the ideas that will be
reflected in productivity growth for decades to come.
A market-led approach on e-commerce that relies on self regulation
Connecting our children to the future. President Clinton and Vice
President Gore have set the goal of ensuring that every child is
technologically literate. The number of classrooms connected to the
Internet has increased from 4 percent in 1994 to 63 percent in 1999.
The "e-rate" is providing $2.25 billion each year in 20 to 90 percent
discounts to connect schools and libraries to the Internet. Total
investment in educational technology at the Federal level (including the
e-rate) has increased from $23 million in 1993 to $3 billion today.
THE PRESIDENT OUTLINES A STRATEGY TO MAINTAIN AMERICA'S ECONOMIC
MOMENTUM. The President's proposed policies continue the successful
economic strategy that has contributed to sustained and shared growth:
Maintaining fiscal discipline. The President's budget maintains
our fiscal discipline, uses the benefits of debt reduction to extend the
life of Social Security and Medicare, invests in key priorities, and
pays down the debt by 2013, for the first time since Andrew Jackson was
Investing in people. Since 1993, the President has nearly
doubled investment in education and training -- increasing it from $25.5
billion in 1993 to $49.1 billion in 2000. In his FY 2001 budget the
President proposes more increases, including a $1 billion increase in
Head Start, the largest increase ever, and a $30 billion College
Opportunity Tax Cut.
Opening markets abroad. Since 1992, the United States has
negotiated over 270 separate trade agreements. The President is
fighting to bring China into the WTO, forcing China to play by the same
rules that we do, opening virtually every sector of the Chinese economy
-- from agriculture to automobiles to high-technology products -- to
Opening New Markets in America. The President's New Markets
initiative is designed to provide incentives for businesses to invest in
the parts of the country that have not fully shared in our prosperity.
This initiative includes a New Markets tax credit and extended and
expanded Empowerment Zone tax incentives. In total, the President's
proposals would stimulate $22 billion of new investment in America's
Advancing the frontiers of science and technology. To spur
advances across all disciplines, the President's FY 2001 budget proposes
an unprecedented $3 billion increase for America's 21st Century Research
Fund -- the largest increase in civilian research in a generation.
Closing the digital divide. Households with incomes $75,000 and
higher are twenty times more likely to have access to the Internet than
those at the lowest income levels and more than nine times as likely to
have a computer at home. To help bridge this digital divide, the
President has proposed a range of programs to expand access to the
Internet, train teachers in new technologies, and provide tax incentives
to encourage corporations to help bridge the Digital Divide.
STRONG AND SHARED GROWTH. The experience of the last seven years is
dramatic proof that President Clinton and Vice President Gore's strategy
of fiscal discipline, investing in people and technology, and opening
markets abroad is working:
Longest economic expansion in history. The United States economy is
in its 107th month of economic expansion -- the longest period of
sustained growth in U.S. history.
Nearly 21 million new jobs. Since January 1993, the economy has
created 20.8 million new jobs -- the most jobs ever created under a
single President and substantially more than the 18.5 million new jobs
created in 12 years under Presidents Reagan and Bush. Under President
Clinton, 19.2 million -- 92 percent -- of the new jobs were created in
the private sector, the highest share since Harry Truman was President.
Lowest unemployment rate in three decades. In January 2000, the
unemployment rate was 4.0 percent -- the lowest in thirty years. In the
last year, unemployment rates for African Americans and Hispanics have
dipped to the lowest levels on record.
Strongest growth in over three decades. Under President Clinton, GDP
has grown at a 3.9 percent annual rate -- the strongest growth of any
President since Johnson.
Highest homeownership on record. The homeownership rate reached 66.8
percent in 1999 -- the highest homeownership rate on record.
Homeownership rates for African Americans and Hispanics was also the
highest on record.
Lowest poverty rate in two decades. The poverty rate was 12.7
percent in 1998 -- the lowest poverty rate in two decades. Including
the Earned Income Tax Credit, there were 7.7 million fewer people in
poverty in 1998 than 1993. The poverty rate for African Americans is
the lowest on record.
Broadly shared income growth. Under President Clinton all groups
have enjoyed strong income gains, with every quintile seeing its real
income rise by about ten percent. In contrast, in the 1980s only the
top of the income distribution saw its real income rise.