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Helping to Build the New Economy - February 24, 2000
THE WHITE HOUSE Office of the Press Secretary
For Immediate Release
February 24, 2000
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 trillion.
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 whenever possible.
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 President.
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 U.S. exports.
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 untapped markets.
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.