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View from the Top:
Clinton on the New Economy
The worldand the economyhas
changed a lot since Bill Clintons last formal talk at the University
[Gazetteer, May 1992]. Back then, while still slugging it out for the
Democratic presidential nomination, he exhorted the mostly-Wharton audience
to help bring an end to the something-for-nothing ethic of the 80s;
fired pot-shots at the do-nothing president, George Bush; and talked
about the positive role that government could play in stimulating the
This past February, as the inaugural speaker of the
Granoff Forum, Clinton spoke on The New Economyand having presided
over the longest economic expansion in the history of the Republic, it
was a subject dear to his heart. The purpose behind the Granoff Forumin
the words of its sponsor, Michael D. Granoff C80, president and CEO of
Pomona Capital, a venture-capital groupis to catalyze a dialogue between
the business and the public-policy community that will lead to new ideas
that will shape the next century. And in the spruced-up, acoustically
friendly confines of Irvine Auditorium, Clinton discussed in detail both
the reasons for the booming economy (which included a fair amount of back-patting)
and his vision for maintaining it.
Bill Clinton speaks at the first Granoff Forum, while Philadelphia
Mayor John Street, Penn President Judith Rodin and Forum sponsor
Michael Granoff C80 (far right) listen.
The first factor Clinton
cited for the economic expansion was sound fiscal policyspecifically,
the nations willingness to cut the national debt through spending cuts
and taxes after having quadrupled it during the previous 12 years. The
budget that Congress passedby one votein 1993, he said, was designed
to cut the deficit by $500 billion; it actually did almost double that.
That and the Balanced Budget Act of 1997 have resulted in the first back-to-back
budget surpluses in 42 years.
Those deficit reductions,
he added, set in motion a virtuous cyclereducing interest rates, freeing
up an enormous pool of capital for private-sector investment, and enabling
people to borrow money and invest it in businesses, new technology, houses,
carseven a college education.
Along with the good monetary
policy coming out of the Federal Reserve, Clinton pointed to dramatic
productivity gains that have allowed unemployment to drop to 4 percent
without sparking inflation. Over the last four years, productivity has
grown at the rate of 2.8 percent a year, roughly twice the rate in the
seventies and eighties. And that surge in productivity, he said, was overwhelmingly
the result of technology investments, especially in the realm of information
industries and firms alone constitute less than 10 percent of our employment,
but have contributed about a third of our economic growth over the last
seven years, Clinton said. Generating jobs, parenthetically, that pay
about 80 percent more than average wages in America. And just as Henry
Fords mass-produced motorcars and the assembly line itself had broad
spillover effects on the productivity of the American economy, these new
information technologies are doing the same thingrifling through every
sector of the economy and increasing the power of American workers and
American firms to produce well, and to broadly share [in the profits].
fact, he said, is why everybody underestimated both the length and the
depth of this economic recovery. There are very few models which can capture
Clinton took credit for
a number of accomplishments, including an historic information-technology
agreement, which will eliminate tariffs from $600 billion worth of high-tech
products; the first comprehensive telecommunications reform in 60 years;
and having pushed for an extension of the research and experimentation
tax credit that increased the national science and technology budget
every single year over the last seven years.
But he also gave credit
for two decades of bipartisan support from the White House for open markets
in America, noting: Its not just exports that are good; imports can
be good, too. In addition to giving consumers more choice, he said, imports
have contributed to greater competition and kept down the rate of inflation.
In praising the role of
the nations sophisticated capital markets, Clinton noted that Americans
have been more able to get credit when they needed it for venture-capital
enterprises, which help build the new economy. But he also told the
audience that there ought to be more venture capital available to those
who havent had access to it.
To keep the economy roaring,
Clinton emphasized the importance of maintaining fiscal discipline, noting
that if the nation pays off all its publicly held debt over the next 13
years, it will be debt-free for the first time since Andrew Jackson was
president. That will give future generations a lower structure of interest
rates, he pointed out, and unless you believe that the process of globalization
is somehow reversible, and that global capital markets will somehow cease
to exist, that has got to be good policy.
In addition, he said,
we have to continue to improve the productivity and availability of the
American people, given the substantial numbers of people who are unemployed
and underemployed. Given that two thirds of the new jobs that are being
created [are] in the suburbs, and three quarters of the people who want
jobs are in inner cities and rural areas, he said, we have to take all
the people that are on public assistance of some kind or another and make
sure they all have education, training and access to jobs.
Clintons third piece
of advice was to continue to push for open markets and free trade, explaining:
Thats why I strongly support bringing China into the World Trade Organization.
If we do this, 20 years from now well look back and wonder why we even
debated it. And if we dont, 20 years from now, well still be kicking
ourselves in the seat of the pants.
In addition to urging
Congress to pass a new bill to open trade opportunities to places like
India, Africa, the Caribbean basin and Latin America, Clinton also said
the United States should do its part to relieve the debt of the worlds
poorest nations in return for a commitment to invest that money in certain
areas. A lot of them, he said, cant be our trading partners, cant grow,
cant stabilize, because theyre spending money they ought to be spending
on education and health care and economic development, paying interest
on debtsand theyll never catch up.
Finally, he said, weve
got to continue to deal with the full implications of this revolution
in science and technology. Sooner or later, he added, even the most
hard-headed rejectionists will have to acknowledge that the problem of
climate change is realand that we had better find a way to grow our economy
and improve our environment at the same time. When we do that, we will
realize that there is a $1 trillion potential market that will do wonders
for the American economyif we are out there with the products and services
necessary to save the planet.
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