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1989 AEI Economist 1 (1989)

handle is hein.amenin/aeieco1989 and id is 1 raw text is: the economist Arnerican Enter o'e institure for Pubic Policy researchl January 1989 Welcoming President Bush Dear Mr. President: In your inaugural address you said that we have more will than wallet. In fact, we have plenty of wallet. You were correct to go on to say but will is what we need. As you take office, the Gross National Product has just reached the annual rate of $5 trillion. That is a lot of money, even in 1989 dollars. In real terms it is 75 percent more than when you came to Washington as a congressman in 1967. It is 40 percent more per capita than in 1967. This is an enormously rich country. But to be rich is only a means to something; it is not an end in itself. What we get out of this huge national income tant thing you do as president. It will have a lasting effect on our security, on what kind of people we are, and on the conditions in which our children and grandchildren live. During the campaign and since you have indicated some of the directions in which your priorities for the use of the national output lie. Your interest in increasing productive investment was shown by your interest in reducing the budget deficit and by suggestions of means to raise private saving. You held yourself out as champion of a strong national defense. You said that you wanted to be the education president. Your call for a kinder and gentler nation implied a desire to do more to help the depends on what we do with it. As president of the United States, you will have a great influence on how we use this $5 trillion. You will in- fluence not only the $1 trillion or so that the federal government spends directly but also the $4 trillion that pri- vate people and state and local governments spend. You will in- fluence how much they spend for investment, how much for consump- tion, how much for edu- cation, and how much for health, for example. The way you exercise this influence will prob- ably be the most impor- TABLE 1: USES OF THE GROSS NATIONAL PRODUCT, 1967 AND 1988 (percent) 1967 19881 Personal consumption 61.7 66.3 Investment owned by Americansb 15.8 13.1 Defense 9.0 6.2 Other federal usesc 2.8 2.5 State and local uses 10.7 12.0 Total 100.0 100.0 NOTE: The right column does not add to 100 because of rounding. a. Based on first three quarters. b. Gross private domestic investment plus net investment of Americans abroad. c. Nondefense purchases of goods and services plus government payments of interest to foreigners and transfer payments to foreigners. SOURCE: Calculated by author from Department of Commerce National Income and Product Accounts. poor among us. The American people endorsed these priorities by electing you. These priorities are also im- plicit in the budget just submitted by Ronald Reagan. Agreement on these directions, however, leaves several questions that you will have to answer: - How far is it desir- able to go in the priority directions? * Is it sufficient to aim only at balancing the budget in 1993 after eight years of very large deficits, when private saving is very low and when we have our obli- The AEI Economist I I

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