Remarks Following a Meeting With the Economic Team

Attack in Littleton, Colorado

Thank you very much, please be seated. Ladies and gentlemen, let me begin by saying that we all know there has been a terrible shooting at a high school in Littleton, Colorado. Because the situation, as I left to come out here, apparently is ongoing, I think it would be inappropriate for me to say anything other than I hope the American people will be praying for the students, the parents, and the teachers. And we'll wait for events to unfold, and then there'll be more to say.

Domestic and International Economy

I have just met with my economic team to discuss the steps that we will be taking in the weeks and months ahead to continue to advance our prosperity at home and abroad. As you know, the economy continues to grow in ways that benefit ordinary citizens that are virtually unprecedented. This is happening thanks in no small measure to policies we instituted in 1993 to help to change America to meet the changing challenges of the new economy.

We recognized that the new economy demanded fiscal discipline, so we balanced the budget. Now we're working to use the surpluses to strengthen Social Security and Medicare. The new economy requires and rewards greater skills, so even as we reduce spending in many areas, we have almost doubled the National Government's investment in education and training.

In the new economy, we are linked to all the nations of the world in a web of commerce and communications. So we have worked to expand and to build—to expand trade and to build a 21st century trading and financial system that will benefit ordinary citizens in our country and throughout the world.

The financial crisis that began in Asia in 1997 put our progress at risk and presented a very severe test to the global system that we have worked so hard to build. Though our economy has continued to grow, we have been affected by the Asian financial crisis, as you can see by the trade figures, by what has happened in steel, and by the loss of markets by our farmers.

It's clear to me that we had to do something to contain the crisis, to restore growth, to prevent such crises from happening in the future. In September I went to the Council on Foreign Relations in New York and set out a strategy with concrete steps to speed the recovery. We joined with other major industrial nations to act to spur growth. Now, 7 months later, we see a growing number of signs that those steps have taken hold. Some economies once in crisis are beginning to turn the corner.

But substantial risks and challenges remain. This is not a moment for complacency. It's a moment to act to prevent financial crisis from reaching catastrophic stages in the future.

In a world of 24-hour markets, we will never be able to banish such crisis altogether, and no single proposal will solve all the problems we have seen over the last 2 years. But acting on the lessons we have learned from this experience, we can find a way to harness the benefits of an open global economy while taming the global cycles of boom and bust, just as we have found ways to moderate those swings in our own domestic economy. That is the central challenge we face on the financial front.

Working with the other industrial nations in the G-7, we have already taken several important steps, from developing a new contingent line of credit for countries with strong economic policies, to helping to restart the economies of Asia, to limiting the fallout of the crisis in Latin America.

Now the leading industrial nations must be prepared to take the next steps in the design of a strong financial architecture that can be a platform of prosperity for all of us in the next century. We have worked to shape an international consensus and to develop an agenda for long-term reform of the global financial system.

I know this is something that is very hard to grab headlines with, but if you think about what the world has been through in the last 2 years because of the problems in the global financial system, and if you account for the fact that 30 percent of our growth until last year has come from expanded trade, it is clear that for the United States, for ordinary citizens in the United States, and for their counterparts throughout the world, there are few more important things for leaders to be doing than working on building a stable financial architecture for the new century.

Tomorrow Secretary Rubin will outline in greater detail our proposals on a series of important initiatives. Starting with this weekend's gathering of financial officials in Washington, we will work to build support for these proposals among our colleagues at the summit of the world's leading economies in Cologne later this year. And eventually, we want to bring in all nations who have a stake in the health of the global economy.

The emerging national economies need to be a part of this dialog, and all of them need to be convinced that we are trying to do things that will improve the lives of average working families everywhere.

Our approach includes the following key elements:

First, we industrial countries should take steps to reduce the entire financial system's vulnerability to rapid capital flows and excess leverage. For example, we should strengthen bank regulations so they actually take into account the real risks of lending.

Second, we should continue to develop a better way to respond to crises, including appropriate sharing of responsibility by the private sector.

Third, developing countries should take more responsibility as well, by strengthening financial regulation and bank supervision and developing sustainable debt management policies, thus avoiding excessive reliance on short-term debt. We will seek to reinforce these policies through the actions of the international financial institutions.

Fourth, the international financial institutions should focus their efforts on encouraging developing countries to adopt sustainable exchange rate regimes and the macroeconomic policies necessary to support them.

Fifth, we must ensure that the most vulnerable citizens do not bear the brunt of these crises. That means the IMF and the World Bank must pay more attention to social safety nets, working with countries to lay strong foundations during good times and to maintain adequate protections during bad times. In moments of crisis, budgets for core social programs should be preserved or at least should not bear the full brunt of necessary cuts.

Sixth, we must remember that the poorest countries, nations that private capital flows are bypassing altogether, need help because they are burdened with unsustainable levels of debt. Last month I asked the international community to take actions to forgive $70 billion in global debt, at a meeting we had here with representatives of over 45 African countries. No nation committed to good governments and economic reform should be crushed by a debt burden that it is so heavy it will punish ordinary citizens and prevent growth, no matter what people do.

Now, if we take these steps, we can build an international marketplace that reflects our values. And we can achieve something that I think people in the United States want very badly: We can put a human face on the global economy. We can show people, here and around the world, that there won't just be economic numbers showing growth, but their lives will be actually improved by the work we do to draw closer together.

Thank you very much.