Remarks on the 2001 Economic Report and an Exchange With Reporters

Weekly Compilation of Presidential Documents, Jan 15, 2001

January 12, 2001

The President. Good morning. Today I'm sending my eighth and final economic report prepared by the Council of Economic Advisers. I want to thank Dr. Martin Baily, Katheryn Shaw, Robert Lawrence, and the CEA staff for their fine work in analyzing America's new economy.

I also want to thank Secretary Summers, Gene Sperling, Jack Lew, Sylvia Mathews, my entire economic team for all they have done these last 8 years to turn our country around and move us forward together.

Over the last 8 years, these annual economic reports have helped to tell America's story--a story of prosperity and progress, of the hard work of our people, and the results of policies rooted in common values and common sense. The message of this final report is clear: The economy remains strong, on a sound foundation, with a bright future.

Eight years ago it was a very different story, with 10 million of our fellow citizens out of work, high interest rates, low confidence, a deficit that was $290 billion and rising, a debt that had quadrupled in the previous 12 years. The new course we charted to eliminate the deficit, invest in education and the American people's future, and open overseas markets for America's products has worked. Year-in and year-out, we have resisted politically attractive but economically unwise temptations to veer from the path of fiscal discipline.

We have in the course of this effort turned the record deficits into record surpluses and produced the longest economic expansion in history. We have not only had 22 1/2 million new jobs and the lowest unemployment in 30 years; we've been able to add to the life of both Medicare and Social Security to help ease the burden on future generations, and make the long-term solutions less difficult in the present. And we're on track that was unimaginable 8 years ago when I first came here, to get America out of debt at the end of this decade.

The evidence in this report shows that maintaining the path of fiscal discipline is critical to keeping America on the path of economic progress. Fiscal discipline has allowed the energy and entrepreneurship of the American people to increase investment, productivity, and living standards. Fiscal responsibility has given us lower interest rates, which by the end of the year will be--excuse me--has given us not only lower interest rates; it's given us surpluses that by the end of the year will have permitted us to pay down about $560 billion off the national debt. And I think all of us are very proud that we can leave that legacy to the incoming administration and to the children of this country.

More important in an economic sense, perhaps, is that it has lowered interest rates. By having the Government pay back debt instead of borrow more money, you have lower interest rates for business loans, college loans, home loans, car loans. It amounts, on the average, to $2,000 in mortgage payment savings a year for the average family, $200 in car payments, $200 in college loan payments. It has also given us higher growth.

Now, over the last couple of years, the economy was growing at a blistering pace. Everyone knew that the rate of growth would ease off. But that is not to say that the evidence suggests anything other than that the expansion will and should continue.

So that's the context in which we have tried to work for 8 years and the options that we leave to our successors. And there are many options. I have repeatedly said America can afford a tax cut. But I do not believe that the tax cut plus whatever spending plans there will be should be so large as to take us off the path of fiscal discipline, for a simple reason--paying down the debt keeps interest rates lower. That means stronger businesses, higher incomes, more jobs, a stronger market. Keeping those long-term rates down is profoundly important.

So what I would hope for the future when the Congress deliberates this and the President makes his proposal--the details are up to them; I'm moving out of the policy business in just a few days here--but I would hope that the combined total of the tax cut and the spending plans would not be so large as to call our commitment to fiscal discipline into question in a way that would run the risk of returning to on-budget deficits, higher interest rates, and in the process, would drain away the savings that will be needed to deal with the Social Security and Medicare challenges the retirement of the baby boomers will present.

Eight years of responsible budgets and fiscal responsibility have put our country in a position to take advantage of our long-term opportunities and to meet our long-term challenges. It's a path that I hope we'll be able to stay on. I would like it very much if our country were debt-free by the end of this decade, for the first time since 1835.

Even more, I would like it if we were able to free up 11 cents on the dollar of the Federal budget to deal with Social Security, Medicare, invest in education, and provide further tax cuts in the future.