AND NEARING THE LONGEST ECONOMIC EXPANSION IN U.S. HISTORY
Maintaining Fiscal Discipline
When President Clinton was elected seven years ago, America was burdened with a $290 billion deficit, and our national debt had quadrupled over the previous 12 years. Interest rates were high and growth was low. The President and the Vice President set a new path of fiscal responsibility, opening markets, and investing in our people and new technologies. We passed strong deficit reduction packages in both 1993 and in 1997, and made tough choices in each and every budget. This has put the nation on a course of fiscal discipline, while continuing to invest in our people and our future.
Now we see the results of the last seven years: the first back-to-back budget surpluses in 42 years; last year's surplus of $124 billion was the largest in our history. The latest numbers from the Treasury indicate the surplus for this year will be even larger. In just the last two years, we've already paid down $140 billion of the national debt. Because we've resisted efforts to push our nation off the path of fiscal discipline with large and irresponsible tax cuts, our debt is $1.7 trillion less this year than it was projected to be back in 1993.
Last year, the President asked the Congress to use every single dollar of our Social Security surplus to pay down the debt, and to use the interest savings from that debt reduction to lengthen the life of Social Security. This year the President has announced that because of the choices we have made, the budget he will submit for 2001 accelerates the date that we will be able to pay off our debt to 2013 -- two years earlier than we had originally planned. The President will do this by protecting Social Security funds, and dedicating the interest savings to Social Security, allowing us, in addition to paying off the debt, to extend the solvency of the Social Security trust fund to at least 2050. We will also be able to make Medicare secure now, through 2025. And we will be debt-free for the first time since 1835, when our nation just had 24 states and fewer than 15 million people.
Paying Down the Debt by 2013
In the State of the Union address, President Clinton will announce that his budget for 2001 would put America in a position to pay off the $3.6 trillion debt by 2013 2 years earlier than planned. The President will emphasize that this debt reduction would be accomplished by protecting Social Security funds and dedicating the interest savings to Social Security, allowing the Social Security solvency to be extended until at least 2050. In contrast, the Republican lockbox plans in Congress fail to extend the life of Social Security by even one day. The President also will announce that his budget will make Medicare secure through at least 2025 by devoting a substantial fraction of the surplus to Medicare solvency and debt reduction. The President's plan to pay down the debt will result in lower interest rates and stronger investment. For typical families it will mean lower mortgage payments and car payments. By strengthening the economy and eliminating the debt, the President's plan will help prepare the government -- and the Nation -- to meet the challenge of the retiring baby boomers.
Protecting and Strengthening Social Security
As he did in his 1998 and 1999 State of the Union addresses, the President will call on Congress to enact his plan to save Social Security first and strengthen it. For almost 65 years, Social Security has been an unshakable covenant among generations, between workers and retirees, between the disabled and the able bodied. For many Americans, Social Security, along with savings and pensions, is the foundation of retirement security. In his 1999 State of the Union Address, the President proposed a plan that would, building on our historic period of prosperity and budget surpluses, use debt reduction to extend the life of Social Security without damaging and unnecessary benefit cuts or tax increases. In the last session of Congress, the President proposed specific legislation that reserves the entire Social Security surplus for Social Security and debt reduction and, in addition, devotes the interest savings from paying down the national debt to extending the life of Social Security from 2034 to 2050. If the interest savings were prudently invested in equities, solvency would be extended to 2054.
Nearing the Longest Economic Expansion in U.S. History
The President's leadership on fiscal discipline and economic strategy has helped the put the economy on track for the longest expansion in American history. The strong economy has benefited Americans in the form of more jobs, higher wages, lower inflation, greater homeownership, and an increasing sense of optimism about the future:
- America is currently in the longest peacetime expansion in its history. By the end of February, the U.S. will have enjoyed 107 consecutive months of expansion the longest economic expansion in history.
- Since President Clinton took office in 1993, the economy has created 20.4 million new jobs the highest number of jobs ever created under a single President. These are overwhelmingly good jobs: according to a study by the Council of Economic Advisers and the U.S. Department of Labor, 81 percent of all new jobs are located in industry/occupation categories that pay above-median wages.
- The vast majority of the new jobs 18.8 million or 92 percent of the total were created by the private sector, the highest private sector share of job creation since Harry S. Truman was President.
- The unemployment rate in 1999 fell to 4.2 percent the lowest rate in 30 years. For African Americans, the unemployment rate fell to 8.0 percent the lowest on record. For Hispanics, the unemployment rate fell to 6.4 percent the lowest on record.
- The economy has expanded at 3.8 percent annually under President Clinton the fastest growth rate of any administration since President Johnson.
- As a result of the strong economy and investments in people, 7.7 million people have been lifted out of poverty under President Clinton. The poverty has fallen to 12.7 percent the lowest rate since 1979. For African Americans and African American children, the poverty rate is the lowest on record. For Hispanics, the poverty rate is the lowest since 1980. For single mothers, the poverty rate has fallen to the lowest level in history.
- In the third quarter of 1999, the homeownership rate rose to 67.0 percent the highest rate ever recorded. The homeownership rates for African Americans and Hispanics also reached record levels in 1999.
- The underlying core rate of inflation was 1.9 percent in 1999 the lowest rate since 1965.
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