Good morning. I've just returned from Europe where I commemorated the 50th anniversary of the Marshall plan, which joined America's investment to Europe's commitment to rebuild and, in so doing, helped to spark 50 years of prosperity, not only for Europe but for America as well.
I also had the opportunity to discuss with leaders of Europe the present success of our economy and what we can do together to promote prosperity in the new democracies of Central and Eastern Europe in ways that will ensure their prosperity and ours for the next 50 years.
This morning I want to talk with you about the new economic policy we brought to America for the last 4 1/2 years and how our balanced budget and tax cut plans can help in creating jobs, raising incomes, strengthening business, and moving America forward in the years to come.
Recall for a moment what America's economy looked like 4 years ago: high unemployment, few new jobs, stagnant wages, exploding budget deficits. I took office determined to replace trickle-down economics with invest-and-grow economics. There were three principal elements to our strategy: reduce the budget deficit; and invest in the education, training, and security of working men and women and our children; and open new markets for American-made goods and services through tough trade agreements. I believe all three were necessary to create the conditions for private sector prosperity and to ensure that all our people have the opportunity to reap the rewards of growth.
We made tough, often controversial decisions in 1993 and afterward to implement our new invest-and-grow economic policy. Some fine Members of Congress lost their seats because they had the courage to change course and vote for the future. But just look at the results. Today our confidence has returned and our economy leads the world.
In 1992, the deficit was $290 billion. Today, we expect it to drop to $67 billion, a 77 percent reduction. In 1992, unemployment averaged 7.5 percent. Today, it's 4.9 percent, the lowest in 24 years. In 1992 there were few new jobs. Since then, the economy has produced 12.1 million of them, including the most ever in a single Presidential term. And while the years before our plan took effect saw sluggish growth, yesterday we learned that in the first quarter of this year the economy grew at a 5.8 percent rate, the highest in a decade. Inflation is at a 30year low; business investment, a 30-year high. Each year we've had a record number of new businesses started. Wages are rising. In the last 2 years, over half the new jobs have paid higher than average wages and inequality among working people has seen the biggest drop since the 1960's. Our economy is the healthiest in a generation.
All this didn't just happen. We've had better managed, more competitive businesses; more productive working people; the entrepreneurial spirit of small business; a Federal Reserve committed both to low inflation and to economic growth; and continued advances in technology. Americans' hard work and high energy, smart decisions in tough choices, and our invest-andgrow strategy, all these have worked together to produce this success.
Now, in the coming months, America will have to decide whether to stick with this strategy. Will we continue to engage the world economy by continuing to give normal trading status to China? Will Congress give the President the tools necessary to open new markets abroad for American products through tough new trade agreements? And above all, will we finish the job of balancing the budget while protecting our values?
Earlier this month, I reached agreement with the leaders of Congress on a bipartisan balanced budget plan that will continue our economic strategy into the next century. This is a balanced budget plan that also is in balance with our values. It will eliminate the budget deficit by 2002, honor our parents by securing the Medicare Trust Fund for a decade, preserve our environment through strong enforcement and the cleanup of 500 toxic waste sites, and protect the next generation by extending health insurance coverage to as many as 5 million uninsured children. And most important of all, it will invest in the skills of our people through the most significant increase in higher education since the GI bill half a century ago, the expansion of Head Start, and an investment in higher national academic standards for our children.
Both Houses of Congress moved forward on this budget before they left town for the Memorial Day recess. I was pleased that a strong majority of both parties supported this bipartisan plan. When Congress gets back to work, it's time to finish the job of enacting the broad outlines of the budget plan. Then in the weeks to come, Congress will fill in the details and begin writing this budget and its tax cut into law. I want a tax cut that helps families raise their children and send them to college and keeps the economy growing. That's my goal.
I look forward to continuing to work together with the Republican and Democratic Members of the tax writing committees in Congress to meet this goal as we write the details of the tax cut into law. As that process begins, I want to tell you three of the things this final tax cut plan should include.
First, with education our most important goal, our tax cut must help open the doors of college to every American. Our bipartisan budget plan includes $35 billion in tax relief, targeted to help families pay for higher education. Our HOPE scholarship is a $1,500-per-year tax cut to help pay for the first 2 years of college and open them to all Americans. I will also recommend that students who already receive Pell grant scholarships can still receive the HOPE scholarship for education costs beyond those covered by their Pell grant. With this step, we'll make sure that our tax cut reaches all those who want to take responsibility for their own lives and go on to college. Beyond that, I favor a tax deduction for the cost of any education after high school for people of any age.
Second, as many families as possible should have a chance to receive the dividend created by economic growth. Our plan will give families a $500 child tax credit. This is the kind of tax relief we need, targeted to helping families raise their children and meeting the competing demands of work and family. As we craft this tax cut, I believe it's especially important that we make sure that the child tax credit is fair to working families, especially those with lower incomes.
Third, the tax cuts must be consistent with a balanced budget and must not be written in such a way that they reopen the deficit and bust the budget in years to come. This was absolutely key when we reached a budget agreement, and I will continue to insist on it as we write the agreement into law. Fiscal responsibility helped to produce a strong economy. Fiscal irresponsibility will surely undo it. We cannot put our prosperity at risk through time-bomb tax cuts that explode the deficit in 5 or 10 or 20 years. We must continue with discipline. We tried it the other way before, and it failed.
We are now nearly 5 years into our economic strategy of invest and grow, and it is working, well beyond our most optimistic expectations. We have now an historic chance to continue this growth and give the American people the dividends of expansion through a tax cut. We can protect our values as we expand our economy. The American people deserve a tax cut, and they need a balanced budget. We can give them both. If we make sure that this tax cut helps all working families, that it opens wide the doors of college, and that it never, never throws the budget out of balance, we can propel our country into the 21st century even stronger than it is today.
Thanks for listening.