The Budget Message of the President

To the Congress of the United States:

The 1996 Budget, which I am transmitting to you with this message, builds on the Administration's strong record of economic progress during the past two years and seeks to create a brighter future for all Americans.

When I took office two years ago, the economy was suffering from slow growth, inadequate investment, and very low levels of job creation. We moved quickly and vigorously to address these problems. Working with Congress in 1993, we enacted the largest deficit reduction package in history. We cut Federal spending by $255 billion over five years, cut taxes for 40 million low-and moderate-income Americans, and made 90 percent of small business eligible for tax relief, while increasing income tax rates only on the wealthiest 1.2 percent of Americans. And while we placed a tight "freeze" on overall discretionary spending at 1993 levels, we shifted spending toward investments in human and physical capital that will help secure our future.

As we fought for our budget and economic policies, we moved aggressively to open world markets for American goods and services. We negotiated the North American Free Trade Agreement with Canada and Mexico, concluded negotiations over the Uruguay Round of the General Agreement on Tariffs and Trade, and worked with Congress to enact implementing legislation for both.

Our economic plan helped bring the deficit down from $290 billion in 1992, to $203 billion in 1994, to a projected $193 billion this year—providing three straight years of deficit reduction for the first time since Harry Truman was President. Measured as a percentage of our economy—that is, Gross Domestic Product (GDP)—our plan will cut the deficit in half.

By reassuring the financial markets that we were serious about getting our fiscal house in order, our plan also lowered interest rates while holding inflation in check. That helped to stimulate private investment and exports, and sparked the creation of 5.6 million new jobs—more than twice the number in the previous four years.

Now that we have brought the deficit down, we have no intention of turning back. My budget keeps us on the course of fiscal discipline by proposing $81 billion in additional deficit reduction through the year 2000. I am proposing to save $23 billion by reinventing three Cabinet departments and two other major agencies, to save $2 billion by ending more than 130 programs altogether, and to provide better service to Americans by consolidating more than 270 other programs. Under my plan, the deficit will continue to fall as a percentage of GDP to 2.1 percent, reaching its lowest level since 1979.

Despite our strong economic record, however, many Americans have not shared in the fruits of recovery. Though these Americans are working harder and harder, their incomes are either stagnant or falling. The problem is particularly acute among those with less education or fewer of the skills needed to compete in an increasingly global economy. To build a more prosperous America, one with rising living standards for all Americans, we must turn our attention to those who have not benefited from the current recovery.

My budget proposes to do that.

Promoting a Rising Standard of Living for All Americans

I am proposing a Middle Class Bill of Rights, which will provide tax relief to middle-income Americans. The Middle Class Bill of Rights includes a $500 per child tax credit for middle-income families with children under 13; expands eligibility for Individual Retirement Accounts and allows families to make penalty-free withdrawals for a range of educational, housing, and medical needs; and offers a tax deduction for the costs of college, university, or vocational education.

Also as part of my Middle Class Bill of Rights, I am proposing to revamp our confusing array of job training programs by consolidating some 70 of them. In my G.I. Bill for America's Workers, I propose to offer dislocated and low-income workers "Skill grants" through which they can make their own choices about the training they need to find new and better jobs.

The G.I. Bill for America's Workers is the final element of my effort to improve the education and skills of Americans, enabling them to compete in the economy of today and tomorrow. In the last two years, we enacted Goals 2000 to encourage States and localities to reform their education systems; revamped the student loan program to make post-secondary education affordable to more Americans; and pushed successfully for the School-to-Work program that enables young Americans to move more easily from high school to training or more education.

And I am proposing to pay for this Middle Class Bill of Rights with specific spending cuts. In fact, I am proposing enough spending cuts to provide more than twice as much in budget savings—$144 billion—as the tax cuts will cost—$63 billion—over five years.

Creating Opportunity and Encouraging Responsibility

By itself, the Federal Government cannot rebuild America's communities. What it can do is give communities some of the tools and resources to address their problems in their own way. My national service program provides incentives for Americans of all ages to volunteer their services in local communities across the country, and earn money for their own education. The budget proposes to invest more in our urban centers as well as in rural areas, and to continue our efforts to build stronger governmentto-government relations with American Indian and Alaska Native Tribes. And I will work with Congress to enact comprehensive welfare reform that embodies the principles of work and responsibility for abled-bodied recipients, while protecting their children.

My Administration has worked with State and local law enforcement agencies to help retake the streets from the criminals and drug dealers who, in far too many places, now control them. Congress enacted my crime bill last year, finally answering the cries of Americans after too many years of debate and gridlock. We pushed successfully for the "three strikes and you're out" rule for violent criminals, and we are making significant progress on my promise to put 100,000 more police on the street. Congress also passed the long-overdue Brady Bill, which provides for background checks that will keep guns out of the hands of criminals. In this budget, I am proposing new funds with which States and localities can hire more police, build more space in prisons and boot camps, invest in prevention programs for first-time offenders, and provide drug treatment for many more drug users.

My Administration inherited deep-seated problems with the immigration system, and we have gone a long way toward addressing them. This budget proposes the strongest efforts yet, including funds for over 1,000 new Border Patrol agents, inspectors, and support staff. While working to fulfill the Federal Government's responsibility to secure our borders against illegal immigration, the budget also proposes funds to assist States that are unduly burdened with the health, education, and prison-related costs associated with illegal immigrants.

We must redouble our efforts to protect the environment. My Administration has sought more innovative, effective approaches to do so, and this budget would build upon them. In particular, I am proposing to work more with State and local governments, businesses, and environmental groups on collaborative efforts, while seeking more funds for high-priority programs.

Because investments in science and technology pay off in higher productivity and living standards down the road, I am seeking significant new funding for the Advanced Technology Program at the Commerce Department's National Institute of Standards and Technology, NASA's New Technology Investments, the Defense Department's Technology Reinvestment Project, biomedical research at the National Institutes of Health, and research and development at the National Science Foundation. I am also seeking to strengthen

our coordinated efforts through the Administration's National Science and Technology Council and to improve the payment system for federally-sponsored research at colleges and universities.

I remain committed to comprehensive health care reform. The problems that prompted me to send Congress the Health Security Act in November 1993 have not gone away. Health care costs have continued to soar for individuals, businesses, and all levels of government. More Americans are losing their health coverage each year, and many others are staying in jobs only out of fear of losing their own coverage. I am asking Congress to work with me on a bipartisan basis, to take the first steps toward guaranteeing health care coverage to every American while containing costs.

Projecting American Leadership Around the World

We have begun the post-Cold War era and welcome one of its most significant fruits—the continuing efforts of Russia and the newly-independent states to move toward democracy and economic freedom. We propose to continue our support for this fundamental change that clearly serves the Nation's long-term interests.

My proposals for international affairs also promote and defend this Nation's vital interests in Central Europe, the Middle East, and Asia. The budget supports the important role we play in fostering our historic peace process in the Middle East.

With the global economy offering the prospect of new markets for American goods, we are redoubling our efforts to promote an open trading system in Asia, as well as in Latin America and the rest of the globe. I am, for instance, proposing increased funding for our trade promotion agencies, such as the Export-Import Bank, which strengthen our trade position. I am also asking for continued support for the bilateral and multilateral assistance to less-developed nations that can prevent humanitarian crises, as well as support for a strong American response to these crises.

Our military strength works in synergy with our foreign policy. Our forces defend our interests, deterring potential adversaries and reassuring our friends. My Defense Funding Initiative, a $25 billion increase in defense spending over the next six years, marks the third time that I have raised defense spending above my initial funding plan in order to support and maintain the most capable military force in the world. I am determined to ensure a high level of readiness of U.S. military forces, to continue to improve the pay and quality of life for the men and women who serve, and to ensure that our forces are modernized with new systems that will be available near the end of the century.

Making Government Work

None of our efforts can fully succeed unless we make Government work for all Americans. We have made great progress with the National Performance Review (NPR), which I established early in the Administration and which Vice President Gore has so ably run at my direction.

Specifically, departments and agencies across the Government have made substantial progress on each of the NPR's four themes: putting customers first, empowering employees to get results, cutting red tape, and cutting back to basics. The departments and agencies have established customer service standards and streamlined their operations. They also are working with my Office of Management and Budget to focus more on "performance"— what Federal programs actually accomplish. And they are doing all this while we are cutting the Federal workforce by 272,900 positions, bringing it to its smallest size since John Kennedy was President.

We also greatly improved the Federal regulatory system, opening it up more to public scrutiny. We plan to build upon our efforts, to make sure that we are protecting the public while not unduly burdening any one industry or group. We also overhauled the Federal procurement system, cutting mountains of red tape and enabling the Government to buy high-quality goods and services at lower cost.

Despite such progress, however, we are only beginning our efforts. I recently announced a major restructuring of the Departments of Housing and Urban Development, Energy, and Transportation, the General Services Administration, and the Office of Personnel Management. The budget contains details of these restructurings and our related proposals that affect hundreds of other programs.

In the coming months, the Vice President will lead Phase II of our crusade to reinvent Government—an effort to identify other agencies and programs to restructure or terminate, to sort out responsibilities among the Federal, State, and local levels of government, and to choose functions better performed by the private sector.

Conclusion

Our agenda is working. By cutting the budget deficit, investing in our people, and opening world markets, we have begun to lay the foundation for a strong economy for years to come. And by reinventing the Federal Government, cutting red tape and layers of management, we have begun to make Government more responsive to the American people.

This budget seeks to build upon those efforts. It seeks to spread the benefits of our economic recovery to more Americans and give them the tools to build a brighter future for themselves. It also seeks to continue our reinvention efforts—to eliminate or restructure agencies and programs, and to better sort out responsibilities among the Federal, State, and local levels of government.

These proposals will help us to create a stronger economy and more effective Government. I will ask for Congress's help in these efforts.

WILLIAM J. CLINTON

February 6, 1995