FROM THE OFFICE OF PUBLIC AFFAIRS

It is a pleasure to speak with you today. I'd like to thank Jesse Jackson for inviting me to this Conference, and I'd also like to recognize his leadership for over 30 years in the effort to foster opportunity for all Americans.

On this day -- the anniversary of the birth of Dr. Martin Luther King -- we are reminded that to best honor the memory of this great man who fought so hard for justice, we must renew our efforts to fulfill his vision. At this conference, we gather to address an issue that goes to the heart of fulfilling Martin Luther King's dream for this country: giving every American the opportunity to join and succeed in the economic mainstream.

I have long held the belief that this country will fall far short of its full economic potential for all Americans, unless we make that opportunity a reality for all of our people. That is why I firmly believe that the issue you are addressing today is not simply a social issue or a moral issue, although it is that as well, but an economic issue of great personal importance to each of us, no matter what our income may be or where we may live.

Today, I'd like to begin with a look at our economy as a whole. I will discuss why I believe that inclusion is critical to the bottom line for individual companies and for our national economy. And then I'd like to discuss what can serve as one part of inclusion: the importance to our nation's economy of revitalizing our country's economically distressed communities.

First, let's start with the economy, because the prerequisite for addressing issues of inclusion and real economic opportunity for all is a strong national economy, which creates jobs and raises standards of living. It seems to me that, too often those who are focused on creating a good economy do not adequately recognize all else that is needed to enable everyone to have the opportunity to succeed in our economy, and conversely, those who are focused on issues of inclusion do not focus adequately on the imperative of a good economy to meet the objective of inclusion.

When President Clinton came to office, unemployment was 7.3 percent, high budget deficits kept interest rates high and confidence low, and job creation was slow. During the past five years, the deficit reduction plan of 1993, and the growth that deficit reduction was key in generating, brought down the deficit from nearly $300 billion 5 years ago to $22 billion in l997. Overall, deficit reduction was central to bringing interest rates down and increasing confidence, and that was central to generating and then sustaining the economic recovery.

Today, unemployment is 4.7 percent and has been under 6 percent for the last three years. The economy has generated over 14 million new jobs over the last five years, inflation has remained low and real wages are rising.

There are also some hopeful signs of renewal in America's cities, areas too often fraught with poverty and economic duress. Unemployment in the fifty largest cities is down to 6.5 percent from 9 percent in 1992. And crime is down substantially.

Having said all that, too many Americans are still not participating, or are not participating fully, in the economic well-being that most are sharing. And too many Americans who are participating in the mainstream economy still face barriers to fully achieving their potential.

Although government at all levels is important to addressing these issues, I believe corporate America has a vital role to play in its own self-interest in expanding opportunity for all Americans.

Inclusion is good for the bottom line. In today's highly competitive global economy, it is more important than ever to each company to hire and retain the best people it can get. There may be a tendency among businesses to hire and promote the type of people they have worked with in the past. Outreach to all, and recognizing and putting aside habits of doing what has been done before, makes good business sense for each company, and will lead to a stronger and more competitive economy for all of us.

The private sector, and each of us as individuals, can also help promote our country's economic growth by getting involved in helping the residents of our inner cities realize their potential. One approach involves tutoring inner city students or establishing internship programs at mainstream businesses -- large and small -- to help prepare the young of today to be the workers of tomorrow.

Another approach is to help small businesses or budding entrepreneurs through business mentoring, and here there is great opportunity for all sorts of programs. For example, I recently visited a program in Chicago, the Runners Club, which has brought together mentors from large and small business and from academia to support African American entrepreneurs in the area who want to build large businesses. A number of CDFIs use business mentoring, drawing on local business people to help small businesses or micro borrowers. We at Treasury have begun working on ways of promoting business mentoring networks.

More generally, at Treasury headquarters in Washington, D. C., we are directly involving ourselves in inner city economic development through an internship program we operate with local inner city high schools, through supporting a business career academy in a local high school, and through outreach to minority owned businesses in our procurement processes. Just yesterday, Treasury received the Small Business Development Award from the National Association of Black Procurement Professionals for its support of small, minority and women-owned businesses.

But of course, even if great progress is made with respect to the matters I just discussed, we still face the challenge of bringing the residents of our inner cities and other economically distressed areas into the economic mainstream. Many of these individuals lack the basic skills or job readiness attributes for successful involvement in the mainstream economy, or are located far from areas of economic activity and never get a chance to succeed. Again, this is a national economic issue of great importance to all of us. Just think of the profound difference in terms of productivity gains, reduced social costs, and economic growth if the residents of these areas became part of the economic mainstream.

And that objective is achievable. There are programs that work and strategies that succeed; the key is to identify those programs and strategies and replicate them in sufficient scale on sustained basis around the country.

More generally, I think of dealing with the economic issues of distressed areas, and their residents, as involving a three part framework.

The first is strengthening public safety. In addition to the human costs, high crime rates are a significant barrier to economic activity. The President has made this a high priority through the Brady Bill, the assault weapons ban and his program to put police back on the streets.

Second, and more importantly, is investing in people, through education and training, from pre-school to adults, and very importantly through improving the "job readiness" of the least advantaged.

Third is increasing access to private sector capital, and other measures to create economic activity in the inner cities. Despite the fact that financial markets in the United States are today the most innovative, the broadest, and deepest in the world, we still have a severe shortage of financial institutions and a shortage of credit to create housing and jobs in the inner city. Treasury has been bringing its broad expertise on capital markets to bear on these problems.

We've strengthened the regulations under the Community Reinvestment Act to encourage mainstream financial institutions to lend to creditworthy borrowers throughout their community. Over the last five years, in part because of these changes, private sector lending in distressed areas has increased enormously -- in 1996 alone, large commercial banks made $18 billion in community development loans -- funds used to produce affordable housing, finance small business, and develop retail and commercial revitalization projects. In the last four years, national banks have invested four times as much in community development as they did the in the previous thirty years.

We made permanent the low income housing tax credit, and, as the Vice President announced just this week, the President is proposing in his budget to expand the credit by over $1.5 billion over the next five years.

We launched two years ago the CDFI Fund to support a nationwide network of community development financial institutions. The President's 1999 budget includes $125 million for CDFI, and we will make it a top priority to work with Congress on the re-authorization that is required for this most useful program to continue.

We have introduced a new tax incentive to clean up abandoned industrial properties in economically distressed areas -- so called brownfields -- and we created new Empowerment Zones.

To conclude, the United States has had highly favorable economic conditions over the last five years, grounded in the private sector's great improvements in competitiveness and in a broad public economic strategy centered on deficit reduction, investment in our people through education and the like to promote future productivity, and leadership in the issues of the international economy, including opening markets abroad.

However, to maintain a robust economy in the years and decades ahead, we must successfully meet many challenges. In the broadest sense, that means both the private and public sectors carrying forward their effectiveness and strategies of recent years; and specifically, that means continuing to move forward towards the goal of full inclusion in the economy for all Americans, and as part of that, equipping the residents of distressed areas -- including the inner cities -- to join and succeed in the economic mainstream.

These goals are critically important not only to the immediate beneficiaries, but to the achievement of our country's full economic and social potential for all of us. Thank you very much.