By: Bill Clinton
Date: January 23, 1996
Source: Clinton, Bill. State of the Union Address. January 23, 1996. Available online at http://clinton2.nara.gov/WH/New/other/sotu.html; website home page: http://clinton2.nara.gov (accessed June 5, 2003).
About the Author: President William Jefferson "Bill" Clinton (1946–; served 1993–2001) rose to power in Arkansas serving as leader of the centrist Democratic Leadership Council, which provided research, leaders, and policy recommendations for his moderate Democratic administration of the 1990s. He served two terms as the forty-second president of the United States.
At the start of the 1990s, the U.S. economy faced serious short-and long-term challenges. Under the administrations of presidents Ronald W. Reagan (served 1981–1989) and George H.W. Bush (served 1989–1993), new economic policies were implemented that led to massive annual government deficits and huge increases in the total federal debt. In the wake of the recession of 1990–1991, Bill Clinton and Al Gore teamed up with other veterans of the Democratic Leadership Council to pare down spending, balance the annual budget, and lay the groundwork to pay down the federal debt. Clinton declared himself a "New Democrat" who would not rely on ever increasing government spending, would work with American businesses, and would seek to restore prosperity for all Americans.
The first step Clinton took after assuming office in January 1993 was to call for an economic summit meeting of government officials, bankers, financiers, corporate managers, and small business people to discuss possible economic policies for the future. The Little Rock, Arkansas, summit was broadcast on national television, received wide press coverage, and later published verbatim transcripts of the meeting. Clinton and Gore sought to promote increased productivity, millions of new jobs, and prosperity for all Americans. Clinton used the occasion of his fourth State of the Union address before a joint session of Congress to showcase the economic revival of the 1990s before the American public. Attempting to combine traditional values of economic opportunity, hard work, and community, Clinton realized that as the leader of a new generation of centrist Democrats he would have to shrink the role of the federal government and rely more on individual and private-sector institutional activities to restore growth. Perhaps the most famous words of this January 1996 speech came when a Democratic president announced that "the era of big government is over"—moving away from the central point of Democratic policy making since the New Deal of the 1930s. His appeal to Americans of all social classes and both political parties reflected Clinton's moderate approach to economic policy making that left some role for the federal government but a much bigger role for working Americans and businesses.
Since the end of World War II in 1945, American economic policy had rested on the foundations of what came to be called a "mixed economy." The New Deal response to the Great Depression and massive spending for the wartime mobilization of 1941–1945 showed the role that federal spending could play in investing taxpayer money when individuals either could not or would not. Yet during and after the war, business leaders and conservative politicians had called for a restoration of free enterprise, private investment, lower taxes, and as small a role for the federal government as possible in promoting mass production and mass consumption. The postwar economy of abundance created historically high rates ofproductivity, employment, and consumption that led to a truly middle-class American way of life only glimpsed in the prewar years. Defense spending for the cold war in the 1950s and for the social programs of the Great Society and the anticommunist crusade in Vietnam in the 1960s maintained a high level of economic growth that Americans began to take for granted.
Yet after price inflation began in the late 1960s and the oil price shocks of the 1970s shattered Americans' confidence in the future, policy makers, politicians, and economic leaders began debating the need for new policies that could bring back the golden age of the postwar years. Some argued that a new age of limits was upon America and there was no going back. Others argued for increased investment by individuals and businesses that could become possible with tax cuts, lowered interest rates, speeded-up tax depreciation laws, and government loans and loan guarantees. These would spark new technologies, products, and consumer demand. In the 1990s, the United States followed economic policies that sparked renewed investment, productivity gains, and wage and salary gains for many American workers in the private sector. By the mid-1990s, the American economic renaissance had begun. In the late 1990s, some of those gains began to trickle down to most American individuals and families whose standard of living had deteriorated considerably since the early 1970s. Clinton's 1996 speech reflected renewed hope and optimism among Americans who at the start of the decade had seen little to get excited about.
Primary Source: President Clinton's State of the Union Address January 23, 1996 [excerpt]
SYNOPSIS: President Bill Clinton describes the state of the U.S. economy in his 1996 State of the Union Address before a joint session of Congress.
The state of the Union is strong. Our economy is the healthiest it has been in three decades. We have the lowest combined rates of unemployment and inflation in 27 years. We have created nearly 8 million new jobs, over a million of them in basic industries, like construction and automobiles. America is selling more cars than Japan for the first time since the 1970s. And for three years in a row, we have had a record number of new businesses started in our country.
Our leadership in the world is also strong, bringing hope for new peace. And perhaps most important, we are gaining ground in restoring our fundamental values. The crime rate, the welfare and food stamp rolls, the poverty rate and the teen pregnancy rate are all down. And as they go down, prospects for America's future go up.
We live in an age of possibility. A hundred years ago we moved from farm to factory. Now we move to an age of technology, information, and global competition. These changes have opened vast new opportunities for our people, but they have also presented them with stiff challenges. While more Americans are living better, too many of our fellow citizens are working harder just to keep up, and they are rightly concerned about the security of their families.
We must answer here three fundamental questions: First, how do we make the American Dream of opportunity for all a reality for all Americans who are willing to work for it? Second, how do we preserve our old and enduring values as we move into the future? And, third, how do we meet these challenges together, as one America? We know big government does not have all the answers. We know there's not a program for every problem. We have worked to give the American people a smaller, less bureaucratic government in Washington. And we have to give the American people one that lives within its means.
The era of big government is over. But we cannot go back to the time when our citizens were left to fend for themselves. Instead, we must go forward as one America, one nation working together to meet the challenges we face together. Self-reliance and teamwork are not opposing virtues; we must have both.
I believe our new, smaller government must work in an old-fashioned American way, together with all of our citizens through state and local governments, in the workplace, in religious, charitable and civic associations. Our goal must be to enable all our people to make the most of their own lives—with stronger families, more educational opportunity, economic security, safer streets, a cleaner environment in a safer world.
To improve the state of our Union, we must ask more of ourselves, we must expect more of each other, and we must face our challenges together.
Here, in this place, our responsibility begins with balancing the budget in a way that is fair to all Americans. There is now broad bipartisan agreement that permanent deficit spending must come to an end.
I compliment the Republican leadership and the membership for the energy and determination you have brought to this task of balancing the budget. And I thank the Democrats for passing the largest deficit reduction plan in history in 1993, which has already cut the deficit nearly in half in three years.
Since 1993, we have all begun to see the benefits of deficit reduction. Lower interest rates have made it easier for businesses to borrow and to invest and to create new jobs. Lower interest rates have brought down the cost of home mortgages, car payments and credit card rates to ordinary citizens. Now, it is time to finish the job and balance the budget.
Though differences remain among us which are significant, the combined total of the proposed savings that are common to both plans is more than enough, using the numbers from your Congressional Budget Office to balance the budget in seven years and to provide a modest tax cut.
These cuts are real. They will require sacrifice from everyone. But these cuts do not undermine our fundamental obligations to our parents, our children, and our future, by endangering Medicare, or Medicaid, or education, or the environment, or by raising taxes on working families.
I have said before, and let me say again, many good ideas have come out of our negotiations. I have learned a lot about the way both Republicans and Democrats view the debate before us. I have learned a lot about the good ideas that we could all embrace.
We ought to resolve our remaining differences. I am willing to work to resolve them. I am ready to meet tomorrow. But I ask you to consider that we should at least enact these savings that both plans have in common and give the American people their balanced budget, a tax cut, lower interest rates, and a brighter future. We should do that now, and make permanent deficits yesterday's legacy.
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AUDIO AND VISUAL MEDIA
The Clinton Years. PBS Home Video. VHS, 2001.