Remarks to the Granoff Forum at the University of Pennsylvania in Philadelphia, Pennsylvania

Weekly Compilation of Presidential Documents, Feb 28, 2000

But first, how did we get here? There are several reasons for this long economic expansion. I want to focus in detail on two, and then I will mention the others as well. First, fiscal policy was important. In an era where worldwide capital markets dominate the ability to get money and the price people pay for money, nations can no longer purchase prosperity on the cheap by running continual big deficits and piling up debts.

By 1993, we had quadrupled the debt of America in the previous 12 years. It had given us enormous interest rates, a stagnant economy, a deep recession, and then a jobless recovery. One economics expert characterized it as a triple dip economy.

I think it's important to understand why that happened. In 1981, we had a difficult economy, and there was an argument for some economic stimulation, which traditionally, going all the way back, certainly to President Roosevelt from the time of the Depression, had entailed either tax cuts or public spending or a combination of both. But everyone understood that in order for that to work when the economy started going again, you had to cut the deficit. And we just never did it, I think, partly, because we had this dominant idea that somehow Government was the enemy in America, that it would always mess up a two-car parade, that there was no such thing as taxes that were too low, and that the deficit really didn't matter. But plainly, it did.

I never will forget the first day before I was even sworn-in that my then-designed for Secretary of the Treasury, Senator Lloyd Bentsen, the chairman of the Finance Committee, announced our economic plan. Just by announcing it, the bond market shot up, interest rates shot down, and the economy began to take off.

Then, as had already been said, we basically took two big bites out of this apple. We passed a plan designed to cut the deficit by $500 billion. It actually did almost double that. It passed by one vote in the House, one vote in the Senate. The Vice President cast the tie-breaking vote in the Senate. As he says, whenever he votes, we win. [Laughter] And I signed it in August of '93.

It was a painful vote. A lot of Members of Congress were defeated for casting the vote, including Marjorie Margolies Mezvinsky, who's here today. She gave up her seat in Congress to turn the American economy around. And the people who did it deserve the thanks of the American people, because it made all the difference in the world. And anybody who says that it didn't make any difference doesn't remember what interest rates were or what the level of investment was before it occurred.

Then in 1997 we took another bite at the apple, and we passed the Balanced Budget Act. This time, it passed with a majority of both parties in both Houses, big majorities. And we had a national consensus for fiscal responsibility for the first time in 16 years.

Now we've enjoyed the first back-to-back budget surplus in 42 years. We will pay about $300 billion off our national debt by the end of this year. We've actually been buying in some of the debt early, for the first time, as far as I know, in the history of the Republic.