FROM THE OFFICE OF PUBLIC AFFAIRS

Thank you, Representative Kolbe, for that introduction. As Chairman of the Treasury-Postal Subcommittee on appropriations, you have been a key partner for Treasury and a leader on that committee - in bringing much-needed attention to enforcement concerns and especially Customs, and in working to ensure that this crucial part of Treasury's mission is adequately funded. And you have been critical to ensuring that the IRS has the funding it needs to carry through major reform and restructuring.

Let me also offer my thanks to Representative Pastor, who is a leader in his district, just up the road from here, and an important partner to the Administration back in Washington - particularly on issues affecting the border; to Deputy Assistant Secretary Lynda de la Vina, who has helped to organize this event; to our gracious hosts, University of Arizona Senior Vice President and Provost Paul Sypherd; and, most of all, to the community leaders, businesspeople, and representatives of non-governmental organizations who are here today for this important dialogue on the challenges we face in this part of the country.

I am delighted to be helping to kick off the first of four border forums to be held by the President and Vice-President's Task Force on the Economic Development of the Southwest Border. Not so long ago, it would have been surprising for a Treasury Secretary to be asked to chair such a Task Force. Today, after nearly 7 years of Treasury efforts to bring capital and private enterprise to every region in America, it seems the most natural thing in the world.

Let me address three topics:

• First, the outlook for the United States economy as whole.

• Second, broadening our economic success to include more of the people of the border region.

• Third, the challenge of strengthening protection of the border and its communities.

We meet at a time of remarkable prosperity in our country, a time when the things that should be up are up - and the things that should be down are down.

• At a little more than 4 percent, the unemployment rate is lower than it has been in 30 years - and female unemployment is the lowest in 46 years. Yet inflation remains at low rates.

• Our economy has created nearly 20 million new jobs since the beginning of 1993. Productivity is growing faster than any could have expected even a few years ago. And for the first time in a generation, real wages in almost ever income group are rising.

• Business investment has surged, with purchases of equipment and software growing at double-digit rates for six years in a row. Indeed, real investment as a share of GNP is today higher than it has been at any time since World War II.

• Welfare rolls and national crime rates are the lowest in 30 years. And 5 million Americans have been lifted out of poverty since this Administration began.

These new developments reflect an economy that is in many ways new and also a new national economic strategy - a strategy based on harnessing the power of markets and establishing a framework in which markets can operate.

New technologies have forced profound changes in the way economic life is organized - changes for which our economy has turned out to be superbly well equipped.

• Our traditions of flexibility and market competition have helped build a venture capital sector in which entrepreneurs may raise their first $100 million before buying their first suits.

• And they have helped to create a post-industrial economy where Americans are leaders in almost every area: from fast food to accounting, from management consulting to retailing, from higher education to mass entertainment.

At the same time, a new economy could not emerge except on a foundation of old virtue. Our economic success has been made possible by President Clinton and Vice President Gore's determination to forge a new national consensus in support of sound macro economic policies - especially when it comes to the management of our nation's budget.

In 1992, the Federal deficit was $290 billion and projected to rise. In the fiscal year just completed, we recorded a surplus of $123 billion, the first time we have achieved two budget surpluses in a row since 1957. As a result of this move from deficit to surplus, $1.7 trillion that was predicted to be consumed by government borrowing when President Clinton took office has instead been invested in our future - in America's businesses, its workers and its communities.

Americans can rightly feel proud of the unrivaled success of their economy as the end of the century draws near. But we know that to continue that success we need to make it deeper and we need to make it reach more of our people.

Widening the circle of economic opportunity to include all of our poorest regions and cities is what the President's New Market tours have been about - the most recent of which ended earlier this month in Chicago with a joint statement of priorities by the President and Speaker Hastert.

And that is what the Southwest Border Task Force is about. We spend a lot of time at Treasury thinking about emerging markets - but there are no more important emerging markets than the ones here at home.

Let me spend the rest of my time today on the two greatest challenges that the border region faces: generating economic opportunities and strengthening enforcement.

One does not need to spend long in Tucson or Phoenix to see that many in Arizona have been part of the longest peacetime expansion in American history. At the same time, we also know that too many have been left out.

It cannot be right that at a time of such remarkable national economic opportunity:

• About one third of the countries in the Southwest border have an unemployment rate of more than 10 percent, and in some counties as many as one in four of the workforce is out of work.

• Nearly half a million people living on the border live in colonias without running water, sewers, electricity or paved roads. This translates into a 6 times higher rate of tuberculosis among border residents than the national average - and a 5 times higher incidence of Hepatitis A. Yet an estimated 3 million residents of the area are uninsured.

Today we are delivering to the Vice President an interim report of the Task Force highlighting these and other problems and what we are doing to address them. This will be disseminated on the Treasury website, in its new pages for Southwest Border Task Force information. And in April, the Task Force's first Annual Report will outline key policy options for promoting sustainable development in the border region that must guide the Task Force going forward.

As today's Report makes clear, generating growth and opportunities is a complex and many-sided effort. But any consideration of America's recent economic performance would highlight two key ingredients for economic success in the new global economy:

• The first is successful integration with that economy - giving businesses and workers the capacity to seize the opportunities and manage the risks.

• The second is an effective financial system - ensuring ready access to capital to anybody with a good idea and the capacity to make it work.

Let me briefly discuss each of these with reference to the particular difficulties they pose to this region - and the Administration's efforts to address them.

President Clinton and Vice President Gore have supported a more open and economically integrated global economy because it helps generate increased opportunities and rising living standards here at home - and because it helps to build a more stable and prosperous world. But we all recognize that trade cannot be taken in isolation.

As the President has said: "working people will only assume the risks of a free international market if they have the confidence that the system will work for them." At a time when the world is coming together and barriers to trade are coming down - it becomes vital to prevent a race to the bottom. That is why our approach to integration needs to be a balanced approach, one that marries the opening of markets to the development of tools to respond to broader social and environmental concerns and support our deepest values.

In this context, two Administration initiatives here in the border region deserve special mention.

The first is the North American Development Bank and its sister organization, the Border Environment Cooperation Commission, which we worked to establish at the time of NAFTA with regional leaders and our partners in Mexico. Both of these institutions have made good progress in fulfilling their mandate. Notably the NADBank has now authorized almost $155 million in loans and grants - representing a total investment in environmental infrastructure along the border of over $550 million.

But we all recognize that the border's environmental infrastructure needs are far from being met. That is why we are working to bring the NADBank's energy and commitment to bear on some of the other environmental health problems facing the region: for example, to include improving the accessibility to water and sewage services in homes that currently lack them. We look forward to dialogue on changing its mandate, where necessary, to make this possible.

The second initiative is the Community Adjustment Investment Program, which we worked with Congress to create to help to address directly the short-term employment impact of expanding trade. To date, the CAIP has provided financing through direct loans and the subsidy of loan guarantee fees from other government programs, leading to a total of 160 loans in the region amounting to nearly $50 million - loans which have helped to create or retain around 1500 jobs.

Last year Congress appropriated $10 million dollars to enhance the CAIP, and we are now collecting applications from communities and organizations that wish to access these funds. To that end, I am pleased to note that eligibility for CAIP programs has been expanded: to cover 40 border counties instead of four, and to include a direct grant and technical assistance program.

Every part of the country and every type of business with the capacity to earn a fair return ought to have an opportunity to receive capital it needs. The first lady is right: it does take a village to raise a child. And it takes capital to build a successful village.

The Community Development Financial Institutions Fund - created early in this Administration with the strong personal backing of the President - aims to provide capital for worthwhile investments in areas that the private capital tends to leave behind. Since 1996 it has provided more than $14 million for new lending and investment in under-served markets along the border.

One example of the CDFI Fund's work right here in Tucson is the PPEP Microbusiness and Housing Development Corporation. Since 1986, PPEP has provided a wide range of financing and training services to its rural southern Arizona target market. Support provided to the PPEP in the past three years from the CDFI Fund has helped it to expand and develop new loan products across the border region - including a mortgage loan pool that will be capitalized by a $1 million investment from the CDFI Fund.

Let me tell you one person's story: that of Daniel Renteria, who is here in the audience today.

Daniel started a small auto-mechanic business in 1987, after ten years as a mechanic at a gas station in Nogales, Arizona. At that time he applied for a $1000 loan to buy an air compressor from PPEP Micro in Tucson. That began a virtuous circle of growth, increased need for capital, and more PPEP loans that enabled further growth. The most recent $50,000 loan granted last year will help Daniel expand his business from six bays to ten - and will cement his membership of the local Chamber of Commerce.

Daniel is an example for others to follow - and an example of the way that the right kind of public policy can help to unlock private sector potential. We must work to ensure there are many more stories like these in the future.

There is no greater obstacle to growth than the absence of a fully functioning rule of law. And nowhere is the rule of law more important than at our border, where we must help to encourage lawful, productive commerce while preventing smuggling of the most destructive substances.

To be sure, none of us at Treasury can afford to take for granted the contribution that Customs makes to our economy in facilitating free and legal trade across our borders. That is one reason why we have been working so hard, with the leadership of Commissioner Kelly and the support of Representative Kolbe, to make sure that the Customs Service is as strong as it can possibly be.

The challenges facing our US Customs Service and other law enforcement agencies on the Southwest Border may be greater today than they ever been. Let me highlight just two of these challenges, and the way that enhanced interagency coordination is helping us to combat them.

The Southwest border remains the principal entry point for smuggling drugs, and firearms into the United States. And every day, drugs are destroying hundreds of young lives in border communities: indeed, I gather that the Dallas Morning News has recently been reporting on rising number of teenage drug smugglers in this region.

As those articles attest, the war on drugs has not yet been won. But if we are winning more battles than we were five years ago - many of those are being won on the border.

Let me take one recent example: Operation Impunity. This involved Customs, the Drug Enforcement Agency and the Federal Bureau of Investigation working together in a two-year investigation resulting in the seizure of 13 tons of cocaine, 2.5 tons of marijuana, and $19 million in currency and the arrest of 93 individuals linked to the Amado Carillo Fuentes drug trafficking organization headquartered in Juarez, Mexico. This will substantially hinder the ability of this organization to move cocaine and other drugs into, and around, the United States in the future.

Enhanced coordination is also at the core of the success of the Border Coordination Initiative, (BCI), a year-old partnership between Customs Service and the INS and agencies operating at and between border ports of entry - including the Departments of Transportation, Justice, Agriculture, and Interior. This initiative is already having an effect: in fiscal year 1999, seizures of cocaine, marijuana and heroin were all up by 23 to 33 percent.

Money laundering is another growing threat. But in September, Attorney General Reno and I announced the first National Money Laundering Strategy, a comprehensive set of concrete actions we will take to address the problem. And just last week we sent to the Congress the Money Laundering Act of 1999.

If passed, that legislation will for the first time make it a crime to launder money derived from foreign official corruption. It will also make bulk cash smuggling of more than $10,000 a crime, give U.S. courts "long-arm" power over foreign banks that violate U.S. laws when conducting transactions in the United States and give law enforcement new tools to go after the largest known money laundering system, the Black Market Peso Exchange.

This bill is only the first concrete consequence of the National Money Laundering Strategy. In the coming months I expect to announce further far-reaching initiatives.

I have spoken about challenges we face and our approach to meeting them. But the real value of this gathering today is the contribution that each of you in the audience can make in the dialogues in which you will be engaged today, through your input. Because it is you who are living, working, and raising families along the border.

That is what this event is all about - to hear from you about what is working, what is not working, and how we can work together to help ensure that this region shares in the nation's prosperity. As the Chair of the Southwest Border Task Force I am determined to see that the action plan is carried out quickly and effectively. We want a border region with its own distinct and valuable culture and heritage, but also one that shares more of the economic characteristics of other parts of the nation. Thank you.