To the Congress of the United States:

The 1998 Budget, which I am transmitting to you with this message, builds upon our successful economic program of the last four years by balancing the budget while investing in the future.

My budget reaches balance in 2002 the right way-cutting unnecessary and lowerpriority spending while protecting our values. It strengthens Medicare and Medicaid, improves last year's welfare reform law, and provides tax relief to help Americans raise their children, send them to college, and save for the future. It invests in education and training, the environment, science and technology, and law enforcement to raise living standards and the quality of life for average Americans.

Over the last four years, my Administration and Congress have already done much of the hard work of reaching balance in 2002. We have reversed the trend of higher deficits that we inherited, and we have gone almost two-thirds of the way to reaching balance. Now, I want to work with Congress to achieve the final increment of deficit cutting and bring the budget into balance for the first time since 1969.

Building a Bridge to the 21st Century

For four years, my Administration has worked to prepare America for the future, to create a Government and a set of policies that will help give Americans the tools they need to compete in an increasingly competitive, global economy.

We have worked to create opportunity for all Americans, to demand responsibility from all Americans, and to strengthen the American community. We have worked to bring the Nation together because, as Americans have shown time and again over the years, together we can overcome whatever hurdles stand before us.

Working with Congress and the American people, we have put America on the right

path. Today, the United States is safer, stronger, and more prosperous. Our budget deficit is much smaller, our Government much leaner, and our policies much wiser.

The economic plan that we put in place in 1993 has exceeded all expectations. Already, it has helped to reduce the deficit by 63 percent-from the record $290 billion of 1992 to just $107 billion in 1996-and it has spurred a record of strong growth, low interest rates, low inflation, millions of new jobs, and record exports for four years.

While cutting the deficit, we also have cut the Federal work force by over 250,000 positions, bringing it to its smallest size in 30 years and, as a share of the civilian work force, its smallest since the 1930s. We have eliminated Federal regulations that we don't need and improved the ones we do. And we have done all this while improving the service that Federal agencies are providing to the American people.

We have cut wisely. We have, in fact, cut enough in unnecessary and lower-priority spending to find the resources to invest in the future. That's why we were able to cut taxes for 15 million working families, to make college more affordable for 10 million students, to put tens of thousands of young people to work through national service, to invest more in basic and biomedical research, and to help reduce crime by putting more police on the street.

My plan to reach balance in 2002 provides the resources to continue these important investments. We must not only provide tax relief for average Americans, but also increase access to education and training; expand health insurance to the unemployed and children who lack it; better protect the environment; enhance our investments in biomedical and other research; beef up our law enforcement efforts; and provide the needed funds for a thriving global policy and a strong defense.

Putting the Building Blocks in Place

When my Administration took office in 1993, we inherited an economy that had barely grown over the previous four years while creating few jobs. The budget deficit had hit record levels, and experts in and out of Government expected it to go higher. Savings and investment were down, interest rates were up, and incomes remained stagnant, making it harder for families to pay their bills.

We put in place a comprehensive set of policies that are bearing fruit. By cutting the deficit from $290 billion to $107 billion last year, my economic program (and the strong economy it helped create) has brought the deficit to its lowest level since 1981. As a share of Gross Domestic Product (GDP), we have our smallest deficit since 1974 and the smallest of any major industrialized nation.

Other parts of my economic policy also are helping to create jobs and raise living standards. With regard to trade, for instance, my Administration not only completed the Uruguay Round of the General Agreement on Tariffs and Trade and the North American Free Trade Agreement, but also more than 200 separate trade agreements, helping to raise exports to record levels. By opening overseas markets to American goods-by encouraging free and fair trade-we are creating high-wage jobs at home.

Taken together, our budget and trade policies have helped to create over 11 million new jobs in the last four years. After two decades of troubling stagnation, incomes have begun to rise again while inequality shrinks. Also, partly due to a strong economy (and partly to our policies), poverty, welfare, and crime are down all across America.

With strong growth, low interest rates, low inflation, millions more jobs, record exports, more savings and investment, and higher incomes, the Nation is enjoying what such experts as Alan Greenspan, the chairman of the Federal Reserve, have described as the healthiest economy in a generation.

Now, our challenge is to complete the job that we began in 1993-to bring the

budget into balance for the first time since 1969 while continuing to invest in the American people. My budget does that.

Improving Performance in a Balanced
Budget World

Led by the Vice President's National Performance Review, we are truly creating a Government that "works better and costs. less."

We have cut the Federal work force by over 250,000 positions, eliminated over 200 programs and projects, closed nearly 2,000 obsolete field offices, cut red tape, and eliminated thousands of pages of regulations while dramatically simplifying thousands more. We also are providing better service for Americans at the Social Security Administration, the Department of Veterans Affairs, and other agencies.

Our efforts to balance the budget will continue to put a premium on spending wisely. I am determined that we will provide the highest-quality service to Americans for the lowest price. And I will demand that agencies continue to search for better and better ways to achieve results for the American people.

As we move ahead, we plan to follow a series of strategies that build upon our successes to date. to date. We will, for instance, restructure agencies to make them more flexible and decentralized. We will work to ensure that Federal employees and their managers work together to achieve common goals. We will expand competition to ensure that agencies perform their functions as efficiently as possible.

Government cannot solve all of our problems, but it surely must help us us solve many of them. We need an effective Government to serve as a partner with States, localities, business and labor, communities, schools, and families. Only when we can show the American people that Government can, in fact, work better for them can we restore their confidence in it. And I am determined to do just that.