The Historic Economic Growth of the Clinton Years Edward Lynch

The State of the Economy Prior to the Clinton Administration. –In 1992, the budget deficit grew to $290 billion and was projected to reach $455 billion by the year –Trade with foreign markets was very limited. –Unemployment was up, new job creation was slow, and wages were low. –The economy in general was slowed down and needed to be revitalized.

Stabilizing the Economy ▪1993 Deficit Reduction Plan ▸ Passed without a single Republican vote. ▸ Accomplished deficit and debt reductions by cutting the deficit in half and by investing in education, healthcare, science, and technology research. ▸ Provisions set forth by the plan: –$500 billion to help ease the deficit –Tax breaks for the 15 million people that needed it the most –The first empowerment zones (tax breaks to businesses in a certain area) ▪Federal spending lowered from 22.2% in 1992 to 18% in 2000 ▪Interest payments on the debt reduced and Americans benefit from reductions. ▸ For example, a home with a $100,000 mortgage would save around $2,000 yearly due to low rates. ▪Lowered national debt allowed the private sector to thrive. ▸ With the government no longer taking fiscal resources out of capital markets, private investment began a period of unchecked growth.

Balancing the Budget ▪ Balanced Budget Agreement of 1997 ▸ Aspects of the plan to balance the budget were debated between the Democrats and Republicans, however, by the end of 1997, the two parties reached an agreement on a balanced budget. ▸ The balancing agreement called for: – Middle-class tax break of $500 per child in each household – The Hope Scholarship and Lifetime Learning tax credits for higher education – Children’s Health Insurance Program – Increase in Educational Funding – Twenty more empowerment zones – Continued welfare reform ▪Surplus: Reduction of the National Debt and Saving Social Security ▸ Clinton’s budget balancing policies led to a government surplus by ▸ There was debate over how the surplus should be used in 1998, and eventually Congress came to a consensual agreement to put the surplus towards lowering the national debt. ▸ As for Social Security, part of the surplus went to insuring its longevity. ▸ Clinton vetoed any Republican tax cut bills that posed a threat to the economic stability of the United States.

The Opening of World Markets to American Commodities ▪ In the early 1990's, American exports were very low, and the weak economy was in need of some trade stimulation to help revamp the United States economy. ▸ In 1993, Clinton signed the North American Free Trade Agreement which created the world’s largest free trade zone consisting of Canada, Mexico, and the United States. – As a result of NAFTA, trade with Mexico increased 109%, while exports with the rest of the world increased 49%. ▸ Permanent trade relations with China were established, and the US aided China into gaining entry to the World Trade Organization. – Chinese markets became available to the US, Chinese tariffs were lowered, and American workers and companies were protected against dumping. ▸ Trade opportunities on the internet – Clinton made numerous trade agreements on technology, kept international trade on the internet duty-free, and helped develop other global policies with the WTO that would help create a new economy. ▸ By the end of Clinton’s presidency, 300 free trade agreements were put into action.

Effects of Stimulating the Economy and Incresaing Exports ▪ The most exports in US history ▸ Between 1992 and 2000, the amount of US exports increased 74%, and for the first time in history, exports totaled over one trillion dollars. ▸ Jobs in exporting grew by 1.4 million between 1994 and 1998 – These jobs also played higher than most other jobs ▪ Major debt relief for third-world nations ▸ The Cologne Initiative was able to triple the amount of debt relief available to poorer countries by reducing their debts by 70%. ▸ Poor countries were allowed this relief only if they were to use the benefits to improve the lives of the people. ▪ US efforts to eliminate child labor and increase educational opportunities on the global level ▸ In 1999, Clinton went to the International Labor Organization, and there he gave his case against child labor and was supported in ending it around the world. Later that year, he gained support from the G-8 to push for universal basic education around the world. ▸ The US also became more environmentally conscious, and supported the fight to end HIV and AIDS.

Effects of Stimulating the Economy and Increasing Exports (continued) ▪ Clinton used the strong economy to help prevent international economic crises. ▸ In 1995, the financial markets in Mexico were in trouble. – Clinton appropriated $20 billion in emergency funds to stabilize Mexico, and Mexico repaid all of the money borrowed three years ahead of schedule. ▸ In 1997 and 1998, there was a similar crisis in Asia and Russia and the Clinton administration spearheaded a global attempt to re-capitalize the International Monetary Fund. ▪ The Clinton administration worked on promoting US competitiveness ▸ Able to achieve this by maintaining fiscal discipline, low interest rates, increased investment in the private sector, and high productivity.

Increased Income and Decreased Poverty ▪ The US saw higher incomes at all levels ▸ The poorest saw a 20% increase, while higher levels saw, on average, 16.3% in increases. ▸ Increased minimum wage 90 cents per hour. ▪ Lowest poverty rate seen since the 1970's ▸ Groups ranging from single mothers to the elderly to African Americans all have seen a decline in the poverty rate. ▸ Creation of the Earned Income Tax Credit – Gave the 15 million hardest working Americans tax cuts, and as a result, it lifted 4.1 million people out of poverty. ▸ Investment in America’s new markets – Places such as inner cities, rural areas, and Native American lands were invested in in order to revive these communities. ▪ The smallest welfare rolls since the late 1960's ▸ Between 1993 and 1999, the number of people on welfare decreased from 7.5 million to 6.6 million. – Clinton changed the welfare system completely in order to help achieve smaller welfare rolls. – The new welfare system gave recipients a specified period of time in which the recipient would have to find a stable job that would last.

Modernizing the New Economy ▪ Financial service laws ▸ Most laws in the financial service sector were very old and out-dated ▸ Clinton modified and modernized these laws to create competition among banks, insurance agencies, and other financial services – Modernization would allow for the consumer to have more choices at lower costs. ▪ Reforming Telecommunications ▸ Gave way to increased competition among local telephone providers, long distance providers, cable companies ▸ The V-chip was mandated ▸ E-Rate – Provided low cost internet access to schools, libraries, rural health clinics, and hospitals ▪ Electric Signatures in Global and National Commerce Act (2000) ▸ A bill that ensured consumers that their purchases over the internet are just as safe as they would be in the real world

Investment in Education and Training the American People ▪ Between 1990 and 1998, more high school students were preparing and enrolling in college than ever before. A lot due to increased investment in education. ▸ In this time frame, the number of high school students taking four years of English and three years of math, science, and social studies increased from 38% to 55% ▸ 66% of 1998 high school graduates enrolled in college compared to the 60% in ▪ College Tax Credits ▸ Largest investment in higher education since GI Bill – $1500 credit for first two years of college, $1000 Lifetime Learning tax credit also reimburses families for 20% of tuition and fees ▸ Doubled Financial Aid ▸ Direct student loans and more reductions on interest rates for student loans ▪ Stronger Education for elementary and secondary schools ▸ Improving America’s Schools Act and Goals 2000 Act – Both gave money to elementary and secondary schools for improvements – Trained teachers to maintain better standards of learning.

Easing Tax Burdens for Families that Need it ▪ The Clinton Years saw an revitalization and increase in the economy which resulted in many tax breaks for Americans. ▸ Lowest Federal Income Tax Burden in 35 Years ▸ Higher Incomes even after Taxes and Inflation ▸ Expansion in the Earned Income Tax Credit ▸ $500 per child tax credit ▸ Hope Scholarship Tax Credit ▸ Lifetime Learning Tax Credit ▸ Creation of Empowerment Zones ▸ Simplified Pension Rules and Tax Laws ▸ Protection of Taxpayer Rights ▸ Closed Tax Loopholes

Basic Overview of The Historic Economic Growth Seen in the Clinton Years ▪ Strong Economic Growth ▪ Most New Jobs Ever Created During A Single Administration ▪ Median Family Income Went Up $6000 ▪ Unemployment at Extremely Low Levels ▪ Lowest Inflation Rate Seen Since 1960's ▪ Highest Homeownership on Record ▪ Number of People Living in Poverty Gone Down By 7 Million

Works Cited  “The Clinton Presidency: Historic Economic Growth.” 5 June The White House.  Dowd, Ann Reilly. "How you're better off under Clinton (so far). (US economic conditions)." Money.v25.n8 (August 1996): p44(4). Student Resource Center - Gold. Gale.Xavier High School (NY). 5 June 2008 < Set=IAC- Documents&type=retrieve&tabI=T003&prodId=SRC- 1&docId=A &source=gale&srcprod&userGroup Name=xavierhs_main&version=1.0