SWAN
SONG REPORT FOCUSES ON NEW ECONOMY
BY
JULIANNE MALVEAUX
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Each year, I eagerly await receipt of the
Economic Report of the President. The law requires the President to
transmit the volume to Congress in January or February of each year.
Each year, when I receive it, it brings back memories of the days when
I worked as a junior staff economist at Council of Economic Advisors
in the Carter White House. Back then, before fast-pace Internet
research was the norm, the fact checking the junior staff did was
grueling work. The result was the report that reflected the President’s
economic concerns and priorities from the previous year.
This year’s report transmitted on January 12, makes good reading. It is not only a statement of the year past, but a swan song report and reiteration of the Clinton Administration’s accomplishments for the last 8 years. Not surprisingly, the entire report focuses on the "new economy." Despite current tumult in the technology sector, the Council of Economic Advisors thinks the new economy is here to stay, especially because innovations from the new economy have seeped into the old one, and labor-saving technology, even in the manufacturing sector, has boosted productivity. No sector has been immune to technological change. Indeed, it is fair to say that our nation will never be the same again because of differences in the ways we communicate, provide compensation (with more companies offering stock options as part of compensation than ever before), shop, bank, and do business. Too, the Economic Report suggests that an array of Clinton-imposed policies, especially fiscal discipline, have been responsible for sustaining the vibrant new economy. The unstated down side, in my opinion, is that the Clinton Administration has left an unfinished agenda, especially for those at the periphery. The Reports suggests that we invest in our transportation and educational infrastructure, but the Clinton commitment to fiscal discipline meant that much of this spending was postponed during the Clinton administration. The report says that globalization is a key part of the new economy, and that "participation in the global economy has made a vital contribution toward US economic performance." Indeed, an international trade and an open economy have been a centerpiece of the Clinton Administration’s economic policy, and both technology and a new trade climate have changed methods of information transmission and production globally. The report acknowledges the challenges, especially in developing countries, that come from the new economy, primarily in terms of the global digital divide. But globalization has had other, problems, as was evidenced by a series of protests against the World Bank, World Trade organization and other international institutions. Protests will continue as long as the gains of globalization are uneven, and as long as labor activists and environmentalists feel that they are losers because of globalization. The last chapter of the Economic Report, "Living in the New Economy" talks about some of those at the periphery, and how they fit in the new economy. In this chapter, the Council of Economic Advisors crows about the controversial welfare reform legislation that transformed the way public assistance is delivered in our nation. While many in the Clinton administration see welfare reform as an achievement, I see welfare deform as a travesty that further frayed an already tattered safety net. The final chapter of the report also looks at issues of education and health care, making suggestions for future policy developments in those areas. Not surprisingly, the report speaks of the need for modern schools, noting that the average school was 40 years old in 1999, and the average school in poor or mostly minority school districts was even older. In a new economy, these schools are difficult to wire for the Internet, ensuring that their students will be lag behind others in the new economy. In discussing health care, the report asserts that technological innovation has changed the way health care is delivered, but that this high-tech health care is unevenly available. Indeed, 42.6 million Americans still have no health insurance, and government clearly has a role to play in making health care more available. The 2001 Economic Report of the President was the Clinton Administration’s last chance to set the record straight on the economy. It brims over with pride of accomplishment (the word "extraordinary" is used excessively), but is a good synthesis of the ways the economy has transformed, structurally, in the past 8 years. The report is also an implicit challenge to the incoming Bush Administration. "If we maintain our current economic strategy," writes President Clinton in his letter accompanying the report, "we can sustain our prosperity, expand the circle of opportunity . . .and provide our children the chance to live their dreams." While Mr. Bush is unlikely to maintain Mr. Clinton’s economic policies, can he match his record? Business and Economics Back |