U.S. Department of the Treasury

(Archived Content)

FROM THE OFFICE OF PUBLIC AFFAIRS

LS-946

Thank you. I am glad to be here.

This is as fortunate a moment to be American as any in our history. If in 1993 I had mentioned the figure seven percent you might have thought I was talking about the rate of unemployment or inflation. Yet today, seven percent is the combined total of both unemployment and inflation in the United States.

All American communities have benefited from this remarkable economic performance. In particular, Hispanic-Americans have made enormous progress since 1993. Consider:

• The Hispanic-American unemployment rate is on track toward the lowest annual average ever recorded now at its lowest annual rate ever recorded.
• Median income for Hispanic-American households was $30,735 in 1999 - the highest ever recorded.

These are impressive achievements. But we must not become complacent. We must make by making the most use of this moment of prosperity, by setting we can set the right priorities for our future and by prolonging so that we can prolong the economic expansion to the benefit of all Americans.

Today, I would like to reflect on what those priorities should be. Let me divide my remarks into three parts:

• First, why it is critical for all Americans that we continue on the path of fiscal discipline.
• Second, why we must continue to shape the right kind of conditions for the private sector to thrive.
• Third, why we must strive to achieve a more inclusive prosperity in the United States.

1. The Importance of Maintaining Fiscal Discipline.

A very clear philosophy of fiscal prudence has guided this Administration's approach since 1993. In the early 1990s, we had an economy where we were caught in a kind of vicious cycle - high deficits led to high interest rates, led to low levels of investment, led to slow rates levels of economic growth, led to reduced revenues, led to larger deficits -- and around and around again.

Through the policies that we as a country have pursued since then, during the 1990s, we have crossed a tipping point. And so today we enjoy a virtuous circle -- a virtuous circle of budget surpluses, lower interest rates, more investment, more growth, more revenues, larger budget surpluses, more investment, and around and around again. And that switch from vicious cycle to virtuous circle has unlocked the energy in this economy that has helped to make this expansion the longest in our country's history.

The benefits of fiscal discipline translate into real gains for American individuals and families. It is because of the productivity growth that has resulted from this virtuous circle that we have been able to raise the minimum wage to $5.15 an hour, benefiting 1.6 million Hispanic workers employees. And it is because of this remarkable expansion that the median inflation-adjusted real median weekly earnings offer Hispanic-Americans have increased rapidly.

That is why it is critical that we continue to pursue a strategy that emphasizes higher public saving. If we by maintaining our discipline, we can stay are on track to eliminate our national debt by 2012.

And doing that will probably make a greater contribution to the strength of our economy than anything else we can do.

Indeed, like a tax cut, debt reduction provides direct benefits to American taxpayers. Consider:

• Paying down debt operates like a tax cut because it reduces moves the future obligation to pay taxes for future principal and interest payments.
• By reducing the pressure on credit markets, taking the pressure off interest rates, paying down debt puts money in peoples' pockets directly provides the same kinds of benefits as a tax cut. Each one percentage point reduction in mortgage interest rates costs translates into more than $250 billion lower mortgage costs over the next decade.

1. Creating the Right Environment for Businesses to Flourish.

But fiscal discipline on its own is not enough. In an era where technology is transforming the basic dynamic of the economy, government has a critical role in helping businesses and entrepreneurs to flourish in a rapidly changing environment. That means a strategy that focuses is based on letting markets do all the things that they can do, and by the same token makes sure that the by having a public sector that does the things that it needs to do.

Letting markets operate means continuing to take steps like the one step that we took on a bipartisan basis last year when we repealed the Glass-Steagall Act and modernized the financial system, and allowed combinations to take advantage of synergies in the financial sector. It means taking steps to ensure that regulation does not stifle the growth of the Internet and electronic commerce.

Perhaps most importantly, it means providing the right kind of conditions for business to grow.

Let me highlight two areas of particular importance.

First, helping small business to start-up and grow in all our communities.

Our success as a nation ultimately depends on the vibrancy of the private sector. And the health of the private sector, in turn, hinges critically on the successful creation of small businesses by entrepreneurs from all our communities.

According to the Small Business Administration, the number of Hispanic-American businesses grew by 230 percent between 1987 and 1997. That is the fastest rate for any group in America. There are now almost 2 million Hispanic-American small businesses alone and a large proportion of these have been created in the last seven-and-a-half years.

Under the leadership of Administrator Aida Alvarez, the SBA has extended critical assistance to Hispanic and other minority businesses in the United States. For example:

• Last year the SBA granted nearly 4,000 loans to Hispanic entrepreneurs - nearly three times the number approved in 1992.
• The SBA recently licensed the first Hispanic-managed venture capital fund.
• And Vice-President Gore has announced an unprecedented agreement between SBA and the Big Three automakers to increase subcontracting awards to minority businesses by nearly $3 billion over the next three years - a 50 percent increase over current levels.

By providing both more capital and increasingly sophisticated technical advice to small businesses, we can look forward to even greater successes for Hispanic-American and other minority entrepreneurs in the years ahead.

Second, expanding access to international markets.

There was a time when America really was largely an island in the world, when imports and exports together represented only about 10 percent of GDNP. Today that figure is over 25 percent, and jobs in exporting are among the best jobs that our economy produces. If we encourage more exports, we are also encouraging the creation of better jobs. And we are also giving small businesses the scope to thrive.

Much of the growth has come from new trade with Latin America. Between 1991 and 1998, total U.S. trade (exports plus imports) with Latin America grew by 128 percent, substantially more than the 75 percent increase in U.S. trade with the rest of the world. Clearly, In that respect, Hispanic-American businesses are well positioned in a key position to further take advantage of the opportunities to expand markets with our neighbors.

Expanding international markets is critical to the health of our private sector:

• That is why it is important that we continue to work to open foreign markets as we have with the passage of the China WTO accession. And it is also why we support a Free Trade area for the Americas that would establish a western hemispheric trading area.
• And that is why it is important that we recognize that we as a country have an enormous stake in a successful global economy, because it will be a bigger market for our products, because it will be a safer world if it is a more prosperous world.

III. Working for a More Inclusive Prosperity.

We need to work to make sure that new technologies and the new markets they create work well for all of our people. This is a moral imperative. But in an economy where jobs are looking for people more than people look for jobs, and where bottlenecks make it hard to attract and retain workers, it is also an economic imperative.

To succeed in the new knowledge-based economy, traditional workplace skills are no longer enough. As Alan Greenspan has said, in the era of information technology, what you know matters much more than how much you lift. Clearly, it is critical that individuals have access to the knowledge and the capital that they need to succeed in the new economy.

In that regard, Hispanic-Americans and other minorities have made enormous progress over the last few years. With the help of the Administration's Hispanic Education Action Plan, the rate of college attendance -going rate among Hispanic Americans has increased by 50 per cent over the last six years. Over the same period, the Hispanic-American poverty rate has fallen to its lowest level since 1979.

But these dramatic successes only highlight how much more needs to be done. Consider:

• Hispanic Americans make up 11 percent of our population but hold only four percent of jobs in information technology.
• Too many Hispanic-Americans are still excluded from the financial mainstream. For example, about a quarter of Hispanic-American households do not possess a bank account - the basic passport to the broader economy.
• Only 45 percent of Hispanics own their own homes compared to 73.5 percent of non-Hispanic whites. Those families not only lose out on home ownership. But they also lack the most basic financial asset that can be leveraged into funds for education or starting a new business.

Let me mention three areas where we are working to include those who have been left behind in the circle of prosperity.

First, we are working to raise educational standards in all our communities.

We have an enormous opportunity now to perpetuate our prosperity in a knowledge-based economy by increasing our investments in the users and producers of information:

• My children are fortunate enough to attend public schools with good teachers and good facilities. All kids should have those same opportunities. They should not be in schools where the classrooms are converted closets; where lunch begins at 9:45 because facilities are inadequate to serve all kids. That is why major public investment in school construction is so high on the Administration's agenda. And we strongly support the bipartisan Johnson-Rangel bill that would help meet the construction needs of school districts around the country.
• One million teachers will retire in the next decade. To replace these teachers with the kinds of teachers we want, we need to make teaching a valued and honored profession and to pay our teachers well. That is why we are working hard on a bipartisan basis to support putting more teachers in classrooms, allowing better teachers to go into education, and reducing class sizes.

Second, we are taking steps to boost the level of personal individual and household savings.

Recent surveys suggest that more than half of all Americans have little or no idea how much they need to save for retirement. And, in spite of the fact that Social Security is only intended to provide a foundation for retirement income, roughly two-thirds of Americans rely on Social Security as their main source of income and almost a fifth as their sole source of post-retirement income.

That is why last April, I joined with dozens of major public and private organizations to launch the National Partners for Financial Empowerment (NPFE) to help improve personal finance skills, including money management, saving, investing and credit in the United States today:

• In this regard, I am pleased to announce that the National Partners are launching a new Spanish language version of the NPFE web site at www.npfe.org/espanol. Among other functions, this site will serve as a portal to information on the Internet for Spanish speaking people.
• As Co-Chair of the President's Task Force on the Economic Development of the Southwest Border, I am also pleased to announce the formation of the Committee on theBorder Saves Initiative of the NPFE, comprised initially of the U.S. Hispanic Chamber of Commerce, the U.S. Mexico Chamber of Commerce, the Latino Credit Union Network, the National Council of La Raza, the Consumer Federation of America, the American GI Forum, the International Bank of Commerce, and the League of United Latin American Citizens. This task force will formulate a financial literacy action plan for the Southwest Border. I urge others to participate.

Let me also briefly mention Treasury's efforts to encourage Hispanics to buy Savings Bonds, especially the Series I-Bonds. At a time when it is critical that American individuals save more and invest wisely, such bonds offer a good and safe return on investment and - in the case of I bonds - immunity against the uncertainties of inflation. I would like to thank the US Hispanic Chamber of Commerce for its help in promoting I Bonds and Savings Bonds among Hispanic-Americans.

Third, we are working to increase investment in our low-income communities.

The third key pillar of our approach is democratizing access to capital.

• Under a revitalized Community Reinvestment Act, since 1993 nearly over $800 billion in private capital flowed into low-income communities for home ownership, community development, and small business growth.
• And we have helped to expand the reach of the private sector by bolstering Community Development Financial Institutions that serve markets overlooked by traditional financial institutions.

At the same time, we know that there are other important barriers to attracting or creating businesses in our disadvantaged communities. Notably, a lack of access to equity and lack of the technical expertise business networks that firms in the mainstream economy can often take for granted.

• That is why the President launched the New Markets Initiative last year to unlock the potential of America's inner cities and rural areas at a time when the purchasing power of these communities is estimated to be about $700 billion. If enacted, New Markets would unleash $22 billion in new equity investment for business growth in these communities.
• That is why this Administration has launched the Southwest Border Task Force to better leverage existing efforts to lay the groundwork strengthen conditions for strong growth in the region by improving access to equity and capital.
• And that is why, through BusinessLINC, led by Vice President Gore, we are encouraging larger businesses to act as mentors to smaller firms in inner cities and rural areas. Today I am pleased to announce the formation of the Southwest Border BusinessLINC Coalition that will work to increase the competitiveness of border entrepreneurs and businesses.

Fourth, by promoting inclusion all the way up

Finally I would like to emphasize that America's strength is ultimately founded on the fact that it is a nation of immigrants. It is the diversity and talents of America's different communities that has provided the driving dynamic of our unprecedented economic success. And we must work to ensure that this diversity is reflected in all walks of life. By the middle of this century no one group will be in the majority in the United States and it is likely that President Clinton will be the last President who does not speak Spanish.

That is why President Clinton has built an Administration that reflects America's diversity so that it can better serve America. Indeed, the Clinton Administration has a much larger proportion of minorities than any of its predecessors and just last month, the President issued a proclamation designation the National Hispanic Heritage Month to celebrate the contributions of Hispanic-Americans to our society and economy.

It is only by encouraging the entrepreneurial skills of all our communities and widening the circle of prosperity to ensure that no American is left behind that we can maximize America's economic potential in the new century. It is my hope that we can continue to work together to achieve this important goal. Thank you.

 

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