Clinton declares economy sound, trumpets fiscal discipline

January 12, 2001
Web posted at: 8:19 p.m. EST (0119 GMT)

WASHINGTON (CNN) -- President Clinton released his eighth and final economic report to Congress on Friday -- a massive 402-page analysis that declares the nation's economy strong, but counsels that continued budget discipline is the best way to safeguard against a much-feared recession.

Clinton: "We have resisted politically attractive but economically unwise temptations to veer from the path of fiscal discipline."

"The message of this final report is clear: The economy remains strong, on a sound foundation with a bright future," Clinton said during a new conference on the White House South Lawn.

The "2001 Economic Report of the President" credits remarkable advances in computer hardware, software and telecommunications as the catalyst for the unprecedented economic boom the United States has enjoyed under Clinton's tenure in office.

Clinton, seeking to safeguard his economic legacy in the history books, told reporters Friday: "We have resisted politically attractive but economically unwise temptations to veer from the path of fiscal discipline."

"In the course of this effort, we've been able to add to the life of both Medicare and Social Security, turned the record deficits into record surpluses, and produced the longest economic expansion in history. We have not only had 22.5 million new jobs and the lowest unemployment in 30 years," he added.

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The administration's official forecast, based on data collected in November 2000, calls for the continued growth of the gross domestic product (GDP), albeit at a slower rate. It projects a growth in the nation's total output of goods and services of 3.2 percent in 2001, compared to a 4.1 increase in 2000.

It estimates that consumer prices will rise 2.5 percent this year, compared to a 2.6 percent boost last year. The unemployment rate would rise slightly to 4.1 percent from 4.0 percent in 2000.

The report, along with Clinton's pronouncements that the economy is healthy, contrasts with a more pessimistic economic views held by President-elect George W. Bush. Bolstered by the fact that a number of private economists -- using more current data -- have predicted a less rosy economic future, Bush has used the words "soft landing" to describe his most pressing task in office.

The latest report from Blue Chip Economic Indicators, which surveys about 50 private economic forecasters each month, predicts a smaller GDP growth rate of about 2.7 percent for 2001. The slowdown, the Republican president-elect has argued, is the best argument for Congress to enact his $1.3 trillion plan for across-the-board tax cuts.

Clinton and his team of economic advisors have suggested that Bush is overreacting to the latest economic forecast, and have urged that continued balanced federal budgets and paying down the national debt are the best way to stave off recession.

"While the short-term growth outlook is somewhat weaker, the underlying economic fundamentals remain strong," Martin Baily, chairman of the president's council of Economic Advisors, said Thursday. "This is not the time to abandon fiscal discipline in favor of large tax cuts. Maintaining a fiscal surplus helps keep interest rates attractive for investment."

Although he has steadfastly opposed the size and scope of Bush's tax relief agenda, Clinton has said that the economy can sustain a tax cut larger than the 5-year, $250 billion targeted plan he proposed last year. House Minority Leader Richard Gephardt, D-Missouri, echoed similar sentiments earlier this month.

"I have repeatedly said America can afford a tax cut," Clinton said Friday. "But I do not believe that the tax cut plus whatever spending plans there will be should be so large it will take us off the path of fiscal discipline."

Ari Fleischer, Bush's designated press secretary, said Friday that Bush's tax cut proposals are meant to safeguard growth.

"The president-elect feels very strongly that one of the best ways we can help protect economic growth is to cut taxes," Fleischer said. "He believes we can and should cut taxes to help keep the economy strong, in addition to the fundamental values-laden initiative, which is it's the people's money, they have a right to keep it."

CNN Correspondent Eileen O'Connor contributed to this report