           Investing in the Future: Increasing Public Investment

We must invest more in our people, in their jobs and in the future...

Bill Clinton


Even after economic recovery is assured, our real economic challenges 
remain long term. The Administration's vision of public investment to 
improve our people's productivity involves initiatives in a wide range of 
critical physical and human capital priorities.


Rebuild America

Transportation

While our economic competitors have invested heavily in their 
infrastructure, we have not done as well. To regain our economic edge, we 
must invest more. We will upgrade our nation's roads, bridges, mass 
transit, and airports; support high-speed rail links between major cities; 
and create "information highways" that link homes, businesses, schools and 
libraries to databases and public records. These initiatives will put 
Americans back to work, spur productivity, and make transportation safer, 
faster and easier for all Americans.

DOT/Expand the Federal-aid highway program to the levels contained in the 
Intermodal Surface Transportation Efficiency Act (ISTEA). Full-funding of 
ISTEA will maintain conditions and performance on the nation's most 
important roads, the National Highway System. It calls for $2.6 billion in 
obligations in 1994 above baseline spending amounts. The total increase 
through 1997 is $5.6 billion in outlays, targeted to high priority 
projects. This initiative will create approximately 14,000 new jobs in 
1994, and about 150,000 over a four year period.

DOT/Accelerate "Smart cars/smart highways" (part of Federal-aid highway 
program). The Intelligent Vehicle-Highways Initiative (IVHS) (also known 
as "Smart cars/smart highways") will improve traffic control systems, warn 
drivers of dangerous situations, and make more efficient use of the 
existing highway infrastructure. It will combine state-of-the-art 
communications, warning systems, electronic displays, and computer 
technology. IVHS also has the potential to make innovative highway policy 
such as "congestion pricing" a reality. The new funding would increase 
advanced technology development (including artificial intelligence, 
machine vision, and other defense-related technologies) that will make the 
highways of the next century both safer and more efficient. 1997 
obligations will exceed the baseline by $100 million and 1994-1997 
obligations will exceed the baseline by $345 million, a 50 percent 
increase over the baseline.

DOT/Increase funding for mass transit capital improvements. This proposal 
implemented through the Federal Transit Administration's formula grant 
programs will upgrade rail facilities and equipment by beginning to 
eliminate a rail investment backlog recently estimated at $14 billion. The 
additional funds will also replace ancient buses, vans and rail cars still 
in the U.S. transit fleet. These newer vehicles will be not only safer and 
more efficient, but also more accessible to disabled persons. Over four 
years an estimated $1.2 billion will be invested (outlays), creating about 
83,000 jobs.

DOT/Investment in magnetic levitation (maglev) and high-speed rail 
transportation. Maglev and high-speed rail systems can meet the 
transportation needs of several of the nation's high-density corridors. 
These systems could relieve congestion, improve air quality, reduce 
consumption of petroleum-based fuels and improve safety. The funds could 
be used for construction of a maglev prototype and/or to support the 
start-up of private or State/local high-speed rail projects. Total 
increased outlays: over 1994-1997 about $646 million; 1997 $258 million.

DOT/Alcohol-related highway safety grants and other DOT capital. These 
grants to States will support programs that reduce alcohol-related traffic 
accidents and increase the use of safety belts and motorcycle helmets. 
Other DOT capital funds two important safety and environmental-protection 
projects in the maritime area: (1) state-of-the-art Vessel Traffic Systems 
(VTS) in busy ports and harbors, which reduce maritime accidents and the 
threat of hazardous materials and oil spills; and (2) replacement of 
seagoing and coastal buoy tenders many of which are over 50 years old. The 
new vessels carry oil recovery systems and require smaller crews, saving 
operating costs. Total increased outlays: over 1994-1997 $201 million; 
1997 $88 million.

DOT/Increase funding for airport grants. Investing in airport development 
projects at both large and small airports will speed air travel, link 
remote communities with opportunities elsewhere, and open up airports to 
different aircraft and aviation uses. These projects include building or 
expanding runways to increase capacity, removing obstructions to improve 
safety, or adding terminal facilities and airport taxiways to speed the 
movement of airplanes on the ground. Noise abatement projects permit these 
improvements to occur while minimizing the impact on surrounding 
communities. Outlays over 4 years: $108 million. 1997 outlays: $44 million.

DOT/Increase funding for air traffic control modernization. Growth in air 
travel is expected to result in more than a 25 percent increase in 
aircraft operations at our major airports in the next 10 years. The 
Federal Aviation Administration's multi-year air traffic control 
modernization program, which will help address this growth includes new 
radars, computers, controller workstations and communications equipment, 
and the supporting R&D. Benefits will include reduced air travel delays, 
more efficient aircraft routing, fewer accidents and the more 
cost-effective operation of the air traffic control system. Investment 
(budget authority) over 4 years: $720 million. 1997 investment: $200 
million. Over 2,000 jobs will be created.

DOT/Public land highways and Indian reservation roads. Many national 
parks, forests, and Indian reservations are located in rural areas of the 
country where roads are unpaved or impassable. Good roads ensure that 
visitors have safe access to national parks and forests, and are critical 
to economic development opportunities on Indian reservations. Investment 
in upgrading these roads will reduce the acknowledged backlog of projects 
in excess of $15 billion. Estimated outlays: $295 million in 1994-1997; 
$153 million in 1997.


Environment

A healthy environment means a better future for generations of Americans 
to come, and it also means jobs. The investments outlined here will create 
tremendous new opportunities for Americans to develop advanced systems to 
recycle, treat toxic waste and clean our air and water. Together, these 
investments prove that there is no choice between spurring economic growth 
and protecting the environment that we can and must do both at once.

EPA/Drinking water state revolving funds. Provide $599 million in 1994 and 
$1 billion per year for 1995 to 1997 in new grants for low-interest loans 
to help municipalities comply with the Safe Drinking Water Act (SDWA) 
which is estimated to require $10 billion in water infrastructure upgrades 
between now and 1998. Estimated outlays: over four years $1.3 billion; in 
1997 $692 million.

EPA/Clean water state revolving funds. Provide $1,198 million in 1994 and 
$2 billion per year for 1995 to 1997 under a new authorization for 
capitalizing Clean Water State Revolving Funds (SRFs). These SRFs would 
make low-interest loans to municipalities for construction of projects to 
address water quality problems. If these capitalization grants are 
leveraged in the financial markets (as allowed under the Clean Water Act), 
States could have up to $6 billion available annually for clean water 
project loans. Funding for waste water (as well as drinking water) 
projects in rural areas can be obtained also through USDA loans and 
grants. Estimated outlays: over four years 1994-1997 $2.7 billion; 1997 
$1.4 billion.

Interior and USDA/Natural resource protection and environmental 
infrastructure initiative. Building on the stimulus initiative, this 
proposal would protect and rehabilitate America's inventory of natural and 
cultural assets, restore the facilities that protect these resources, and 
improve public access to them. This funding would help to eliminate the 
backlog of resource protection projects, facility maintenance, 
rehabilitation and construction and other similar projects in rural and 
urban areas. The work would be located at resource areas managed by the 
Department of the Interior (National Park Service, Fish and Wildlife 
Service, Bureau of Land Management, and Bureau of Indian Affairs), and by 
the Department of Agriculture (Forest Service). This investment would 
create more than 5,500 jobs in 1994. It calls for an estimated investment 
of $1.5 billion in 1994-1997 outlays; $509 million in 1997 outlays.

Interior/Bureau of Indian Affairs (BIA) safety of dams. In 1989, the 
Department of the Interior's Inspector General reported that more than 
half of the high-risk dams on Indian reservations were in poor or 
unsatisfactory condition. This proposal will ensure that urgently needed 
rehabilitation and repair work can proceed. It calls for outlays of $59 
million in 1994-1997; $23 million in 1997.

Reduce backlog of water resource Corps of Engineers cyclic maintenance 
projects. Corps of Engineers water projects provide flood damage 
reduction, inland and harbor waterway transportation, hydropower, and 
environmental restoration benefits. The projects, though, are aging: more 
than 50 percent of these projects are over three decades old. Nearly one 
quarter exceed 50 years of age. In spite of a growing backlog, resources 
for these projects have stayed largely constant. Estimated expenditures: 
over four years $544 million; 1997 $160 million.

EPA/Watershed resource restoration. This proposal would double the current 
funding level of $50 million annually by 1995 for non-point source grants 
under Section 319 of the Clean Water Act. Non-point source pollution, such 
as runoff from farms, mining sites and city streets is now the largest 
cause of pollution in our Nation's waters. Reductions in non-point source 
pollution will help restore watersheds and estuaries, leading to increased 
numbers of fish and other aquatic life, and improving fishing and 
recreational opportunities in urban, suburban, and rural areas. Estimated 
outlays: over four years $139 million; 1997 $47 million.

DOE/Cleanup of non-defense sites and uranium enrichment facilities. The 
Department of Energy is responsible for the management and disposal of 
radioactive and hazardous wastes resulting from research and uranium 
enrichment activities conducted by the Department of Energy. The 
investment supported by this Administration reflects the emphasis that it 
places on reversing the imbalance in priorities, by placing more priority 
on the environment. Outlays will increase $220 million between 1994 and 
1997, and $107 million in 1997 alone.

USDA/Forests for the Future. Vice President Gore stated that "forests 
represent the single most important stabilizing feature of the Earth's 
land surface" in his book Earth in the Balance. The Administration 
proposes to invest $30 million in 1994 and $50 million in each of the next 
four years, towards the international goal of reducing world-wide 
deforestation. At the 1992 Rio "Earth Summit", the U.S. proposed that all 
countries join in doubling international forest assistance. This 
investment will be a down payment towards that commitment, to fund initial 
partnership activities with foreign nations and domestic and international 
non-governmental organizations. Funds would be used, in part, to support 
integrated resource management, assist scientific research on tropical 
forests and biodiversity, assist local communities in forest resource 
management, improve inventory and management of large forests, develop 
institutions that can attract private investment in forest conservation, 
and reforest degraded lands. Estimated outlays; over four years $170 
million; 1997 $50 million.

NOAA Weather Service modernization. NOAA is now in the process of 
modernizing National Weather Service systems. Under the Administration's 
plan, by the turn of this century, NOAA will operate one of the most 
advanced weather warning and prediction networks in the world. New 
observation systems such as doppler radars and weather satellites will 
provide for more accurate and timely forecasts of severe weather events 
and for more reliable forecasts. These improvements will translate into 
lives saved and damages averted. They will also benefit all sectors of the 
economy that rely on accurate warnings and forecasts for planning. 
Estimated investment (budget authority): $35 million in 1997; $293 million 
over 1994-1997.

EPA/Environmental technology. This proposal would increase funding for 
environmental engineering and technology development by $36 million in 
1994, a total of $626 million through 1998, and a total of $1.85 billion 
over nine years. EPA currently allocates about $120 million annually to 
these activities. The focus of this initiative will be long-term research 
and pollution prevention by EPA, other Federal agencies, and the private 
sector. The goal is to develop more advanced environmental systems and 
treatment techniques that can yield environmental benefits and increase 
exports of "green" technologies. This investment will aid in the 
transition away from a defense-oriented economy, by stimulating the 
increased use of private-sector R&D resources for environmental 
quality-related purposes. Estimated outlays: over four years 1994-1997 
$271 million; 1997 $127 million.

Expand EPA's voluntary "green" programs. EPA launched its "Green Lights" 
program two years ago to encourage Fortune 500 companies to convert 
profitably into more energy-efficient lighting, which will reduce 
electricity generation and greenhouse gas emissions. EPA identifies 
profitable opportunities for companies to conserve energy and enlists 
participants to install the energy conservation measures. As of October 
1992, Green Lights participants had committed over 2.8 billion square feet 
of facility space to the program the equivalent of all the office space in 
our eight biggest cities. EPA estimates that expanded "green" programs 
such as this one can reduce greenhouse gas emissions by 75-108 million 
metric tons of carbon by year 2000. Estimated outlays: over four years 
1994-1997 $69 million; 1997 $25 million.

USDA/Tree planting initiative. Reforestation on the huge tracts of poorly 
managed private, nonindustrial forests can result in increased 
environmental benefits such as removing more carbon dioxide from the air. 
These benefits of tree planting also make it important for urban forests 
because of their location in and around population centers. In addition to 
the environmental benefits, urban forestry programs can provide productive 
seasonal jobs for inner city youth. Estimated outlays 1994 $33 million; 
1994-1997 $246 million.

USDA/National research initiative (NRI) grants. Top flight R & D is needed 
to assure the continued competitiveness of U.S. agricultural products in 
global trade, ensure the food supply's safety and quality, and sustain 
natural resources. NRI grants are awarded competitively after a stringent 
peer-review process to ensure that the most qualified research proposals 
are chosen. The NRI funds research in animal and plant biotechnology 
(including genome mapping), food safety, sustainable agricultural 
production practices, and technologies to manufacture new agricultural 
materials. Because the competitive grants program focuses primarily on 
basic research, the results of many projects would be useful to scientists 
in other disciplines. Five hundred more projects will be funded each year 
by this increase. Estimated increased outlays: over four years $188 
million; in 1997 $110 million.

USDA/Forestry research initiative. Managing the Nation's forest resources 
relies increasingly upon scientific information and technology. This 
includes areas as diverse as understanding forest ecosystems and the 
wildlife/urban interface, to research on extending the use of wood as a 
raw material. This investment will allow the Forest Service and other USDA 
research agencies to increase the breadth and depth to which forestry 
research areas are investigated, providing the necessary information to 
help the Nation develop sound forest-related policies that will both 
provide resources to meet ever-increasing demands from the population and 
sustain forest ecosystems. The initiative would be funded at $287 million 
over four years. Estimated outlays: 1994 $16 million; 1994-1997 $261 
million.


Rural Development Initiative

Family farmers have made a unique contribution to this nation's growth, 
feeding our people and caring for our land. This initiative would provide 
resources to improve rural infrastructure, which provides the necessary 
underpinning for rural economic development. It would also directly assist 
rural communities and businesses to improve the quality of rural life and 
increase employment opportunities in rural areas.

USDA/Increase RDA rural water and waste water loans and grants. Federal 
and State regulators report that drinking water and sewage treatment 
systems serving small, mostly rural populations currently have the highest 
rates of noncompliance with Federal environmental standards. To comply 
with clean water standards set by EPA, rural America's water and waste 
water needs total roughly $10 billion by the year 2000. Often these small 
rural communities are unable to meet these expensive standards without 
Federal assistance. The Rural Development Administration (RDA) administers 
a water and waste water loan and grant program that targets rural 
communities of up to 10,000 in population whose average income is at or 
below 80 percent of State median income. This proposal increases RDA loan 
authority from $600 million to $780 million, and its grant authority from 
$390 million to $510 million in 1994; and to $900 million and $590 million 
respectively each year 1995 through 1997. Additional funding for drinking 
water and waste water construction is proposed through EPA for new 
drinking water and clean water grants to State revolving funds. Estimated 
RDA outlays: over four years 1994-1997 $331 million; 1997 $176 million.

Community and business assistance. This initiative would provide Federal 
assistance to rural communities, businesses, and individuals, by 
leveraging Federal investment to allow rural areas to help themselves. 
Farmers Home Administration (FmHA) direct loans for community facilities 
would be increased by $300 million in 1994, and $500 million thereafter, 
for construction of rural health care clinics, fire stations and 
equipment, and other vital facilities. Rural Development Administration 
(RDA) guaranteed loans for rural businesses and industries would be 
increased by $300 million in 1994 and $500 million thereafter to assist 
rural businesses in securing start-up capital and financing for expansion, 
creating jobs and helping diversify the rural economy. Additional rural 
business assistance would be provided through the RDA Intermediary 
Relending Program that provides one percent loans to State-sponsored rural 
development programs who, in turn, re-lend to rural businesses. These 
funds (an additional $150 million in 1994 loans, and an additional $250 
million in loans each year through 1997) would be targeted to small, 
emerging "micro-enterprises." In addition, RDA rural development grants 
would be increased by $30 million in 1994, and $50 million thereafter. 
Business assistance would be coordinated through RDA's existing State 
Rural Development Councils, whose members include representatives from 
Federal, State and local government agencies, as well as the private 
sector.

These investments would provide increased employment opportunities for 
rural individuals, and upgrade community infrastructure to improve the 
quality of life for all rural residents. The investment proposal also 
would improve the housing conditions of low-income, rural individuals. 
FmHA direct and guaranteed homeownership loans would be increased by $300 
million each in 1994, and by $500 million each year 1995 through 1998. 
Rental assistance in rural areas would also be provided through housing 
vouchers and grants for use in FmHA-financed rental units. Vouchers would 
be targeted for areas where rental units are available, but not currently 
affordable for low-income persons. A total of $150 million in additional 
rental assistance would be provided through these programs in 1994, and 
$300 million each year from 1995 to 1998. Estimated RDA outlays for 
community and business assistance; over four years 1994-1997 $1,115 
million; 1997 $454 million.


Energy

Without thoughtful energy policies, our nation will remain dependent on 
foreign oil and special interests. The Administration will launch 
initiatives to develop new, clean, renewable energy sources that cost less 
and preserve the environment. We will also encourage energy efficiency and 
conservation to lower the energy bill for middle-class Americans, and 
lessen our vulnerability to events outside our control.

DOE/Increase funding for renewable energy and energy conservation 
programs. The Energy Policy Act of 1992 contains new responsibilities for 
the Federal government including: (1) establishment of new energy 
efficiency standards; (2) authorization for enhanced research programs; 
and (3) new demonstration/commercialization programs for renewable energy 
and energy conservation. This initiative progressively increases funding 
in these areas, reaching an increase of $500 million in 1997, for a 
four-year total increase of $1.3 billion. The increased funding will be 
distributed roughly equally among the four major program areas: solar and 
renewable energy, and industrial, transportation, and buildings 
conservation R&D. The largest increases will go to technology transfer and 
commercialization, advanced materials (especially ceramics), industrial 
wastes and materials processing, electric and hybrid vehicles, and 
modeling of building systems interactions. By making a major effort to 
develop and commercialize these environmentally "clean" technologies, 
substantial energy cost savings will be realized by consumers while 
creating enormous opportunities for economic growth and increased jobs.

DOE/Increase weatherization assistance program. This Department of Energy 
program provides funds to States to help pay for home weatherization 
improvements for low-income citizens. The increase proposed here, $60 
million in 1994, and $100 million per year in 1995-97, would be 
distributed differently than the typical "formula grants," in order to 
increase the leverage received on taxpayer funds. Matching funds (at least 
1:1) will be required from States or utilities. This will encourage State 
weatherization programs to take advantage of utilities' demand-side 
management (rebate and discount) programs, and will ensure that the funds 
go to States that demonstrate a serious commitment to low-income 
weatherization activities. With 1:1 leveraging of these funds, an 
additional 450,000 homes will be weatherized over the currently projected 
number for the 1994-97 period.

Increase the energy efficiency of Federal buildings and facilities. 
Current Federal investment in energy efficiency improvements is running 
around $150 million per year. This initiative will increase spending to 
almost $500 million per year by 1996. The cumulative increase will be $1 
billion over four years. The four biggest energy-consuming agencies 
Defense, Energy, Veterans Affairs and the General Services Administration 
will receive increased funding for their in-house energy management 
programs directly. In addition, a fund will be established at the 
Department of Energy for energy efficiency improvements proposed by all of 
the remaining Federal agencies. Over 700 energy managers will be trained 
in 1994, and over 2,000 per year in 1995-98. Outside energy audit teams 
will review 600 Federal sites in 1994, starting with the largest energy 
consumers, and 1,000 sites per year in 1995-98. By 1997 these investments 
should payoff heavily, saving the Government about $350 million per year.

Provide increased funds for acquisition of alternative fuel vehicles for 
the Federal fleet, and for conversion of existing vehicles. This 
initiative provides $18 million in 1994, and $30 million per year from 
1995 through 1998 for the purchase and/or conversion of petroleum based 
gasoline powered motor vehicles to alternatively fueled vehicles. This 
expands upon the Alternative Motor Fuels Act (AMFA) purchases currently 
funded by appropriations to the Department of Energy.

DOE/Increase natural gas utilization R&D. This initiative will roughly 
double the combined natural-gas spending of the Conservation and Fossil 
R&D programs. A critical new feature is to involve segments of the natural 
gas industry in the design and operation of research programs. This will 
help ensure that the enhanced R&D is relevant to the needs of industry and 
the market place. It will also provide an opportunity for private sector 
cost-sharing, thereby increasing the overall level of gas research. In the 
combined programs, this initiative will increase spending on natural gas 
utilization by $14 million in 1994, increasing to $119 million in 1997, 
for a total of $263 million in additional spending over that four-year 
period.

Build an advanced neutron source a user facility for applied research and 
development. This proposal would fund the design and construction of a 
national user facility to produce rare isotopes for medical diagnosis, 
treatment and research and to perform applied research using neutron 
scattering and neutron irradiation techniques. The facility, called the 
Advanced Neutron Source (ANS), would be used by approximately 1,000 user 
groups each year. Users would come from industry, universities, and 
Federal laboratories. The medical isotopes produced could help tens of 
thousands of patients. Neutron scattering is a relatively new experimental 
technique with applications for materials science, metallurgy, 
crystallography, chemistry, industrial radiography, forensic detection of 
trace elements, biology, and biotechnology. The heart of the facility 
would be a new research reactor that would have the most intense beams of 
steady-state neutrons in the world approximately five to ten times higher 
than the current world leader at the Institute Laue-Langevin in Grenoble, 
France. The total projected cost of the facility is about $2.7 billion. 
The proposal adds $243 million in outlays over the baseline between 1994 
and 1997.

DOE/Increase funding for fusion energy research. Fusion offers the promise 
of abundant energy from readily available fuels with low environmental 
impact. The centerpiece of the research effort in magnetic fusion energy 
is a collaboration among the United States, the European Community, Japan, 
and Russia to build an International Thermonuclear Experimental Reactor 
(ITER). Design and construction of ITER will be a multi-billion dollar 
effort that could take two decades to complete. The United States must 
maintain a vital domestic research program to support our efforts on ITER. 
Yet, the U.S. has not commissioned a major new machine for fusion research 
since the early 1970s. This investment would fund moderate growth in the 
U.S. fusion energy program above inflation to allow construction of a new 
facility, the Tokamak Physics Experiment (TPX). Estimated additional 
spending 1994 and 1997 is $210 million in outlays; ($90 million in 1997).


Community Development and Defense Conversion

If we are going to rebuild our nation, we will have to do it from the 
bottom up. These initiatives will empower the Americans who create jobs 
and raise incomes small businesses, entrepreneurs, and the dreamers with 
an idea and the initiative to make it work. They will make sure that the 
skills of our defense workers are not lost, but harnessed to the peacetime 
projects our future demands. And these initiatives will create real 
opportunity in America's inner cities because America will not prosper 
until our urban areas once again become engines of economic growth.

HUD/Provide additional funding for Community Development Block Grants 
(CDBG). Community development projects are an important source of jobs and 
economic development both in the short- and long-term. States and local 
governments have a backlog of unfunded "ready to go" projects such as 
basic street and bridge work, painting and resurfacing, building 
rehabilitation, and public service projects. However, the State and local 
needs continue to exceed the existing Federal contribution. The 
Administration's proposal would provide an additional $690 million between 
1994-1998 to continue much-needed investment in America's communities. 
This additional funding would directly create about 60,000 jobs over the 
next five years, with even more jobs being created indirectly in the local 
economy. These funds are targeted at low- and moderate-income residents, 
providing assistance in areas with the greatest need. Because communities 
can select eligible activities most appropriate to their local 
circumstances, this additional funding will help communities where they 
need it most.

Enact enterprise zones legislation in order to promote investment and job 
creation in Federally-designated zones. The Administration's enterprise 
zone proposal will promote entrepreneurship and job creation in distressed 
urban and rural communities through a number of employment and investment 
incentives. The proposal includes such policies as an employer wage credit 
and an expansion of the targeted jobs tax credit in order to encourage 
low-income inner-city and rural residents to obtain employment, become 
self-supporting, and leave welfare. It also includes investment incentives 
designed to encourage individuals to invest in zones. Taken together, 
these incentives will be a critical factor in helping poorer cities and 
rural areas become economically more vital. Estimated outlays reach $2.4 
billion over four years, with 1.2 billion in 1997.

Community Development Banks. Many American communities face problems of 
deteriorating housing, loss of jobs, lack of private enterprise, and 
declining economic and social infrastructure. A network of community 
development banks will be created to provide loans for business and 
housing purposes in distressed communities that have previously been 
underserved by traditional lending institutions. Government investment and 
technical assistance would supplement private funds and expertise to 
ensure community development banks' effectiveness in restoring healthy 
economic development in these communities. Estimated cost: over four years 
$354 million; 1997 $110 million.

SBA/Increase Section 7(a) loan guarantees. This program helps small 
businesses struggling to attract bank lending because of the general 
weakness of the economy. Building on a stimulus proposal, increased 
funding levels will be extended to assure that creditworthy small 
businesses have access to capital. These funds will make about 14,000 
loans to individuals otherwise unable to expand or start small businesses. 
Estimated cost: over four years $501 million; 1997 $157 million.

Defense Conversion Program. With the end of the Cold War, the nation faces 
the challenge of the defense transition. How should we address the needs 
of the men, women, companies and communities who helped us win the Cold 
War but who now feel the impact of declining defense budgets? How do we 
best reinvest in the industrial, technological and workforce capabilities 
of the Cold War so they can play a role in our effort to make the nation 
globally competitive? Our economic plan is designed to face this challenge 
and to seize this opportunity.

Our defense conversion program builds on current efforts and increases 
investment funding. In the Department of Defense, we will propose 
additional funding for dual-use technology programs and for the community 
adjustment assistance activities of the Office of Economic Adjustment. In 
the Department of Labor, significant new investment funding will be 
requested to provide for the training and retraining of America's 
workforce, including those parts of the workforce displaced by defense 
spending reductions. In the Department of Commerce, we will request 
additional funding both for National Institute of Science and Technology 
programs helpful to industry and for the work of the Economic Development 
Administration supporting the economic diversification of communities hurt 
by defense reductions.

These programs will address the need for defense transition assistance in 
the industries, the workforce and the communities that experience the 
impact of declining defense budgets. In addition, our investment 
initiatives in high technology will help stimulate the "market pull" to 
provide new opportunities for high technology businesses and the highly 
skilled workforce currently in the defense market. To meet this goal, we 
are proposing spending for the Departments of Energy, Transportation and 
Commerce, and NASA, among others, on such technologies as high performance 
computing, aviation and aeronautics, transportation, space and 
manufacturing technology.

To ensure that the parts of this defense conversion program work together, 
activities will be coordinated through the Executive Office of the 
President and interagency committees.

This proposal provides additional funding of $555 million in 1997 for 
defense conversion, of which $480 million will go to the Department of 
Defense for dual-use technology and manufacturing programs. Funding of $20 
million will be provided to DoD's Office of Economic Adjustment and $55 
million to the Economic Development Administration in the Department of 
Commerce for community diversification. For the programs of the other 
agencies described above, additional initiatives in the investment package 
include about $2 billion for job training and $4 billion for the 
acquisition of high technology products and R&D. Estimated outlays of the 
Department of Defense and the Economic Development Administration parts of 
this proposal: over four years $1.5 billion; 1997 $520 million.


Revitalizing Technology

To move ahead of our competitors in technological research and 
development, this initiative will provide incentives to explore new 
technologies. It will create high-wage jobs and help push America toward 
the cutting edge of groundbreaking technologies. It will create markets 
that encourage the use of defense technology for civilian purposes and 
bring together businesses and universities in an effort to ensure that 
innovative products have the label "Made in America."

NSF/Enhancing university-based competitive science and engineering 
research in the U.S. Studies show that investments in research and 
development (R&D) tend to be the strongest and most consistent positive 
influence on productivity growth. Most of NSF's investments are in 
university-based R&D programs which are competitively selected on their 
merit by members of the science and engineering community. These 
activities contribute to the Nation's productivity by generating new 
scientific and engineering knowledge and contribute to the training of the 
next generation of scientists and engineers. In 1992, NSF had $1 billion 
of unfunded proposals that were rated excellent through peer review. Thus, 
it appears that NSF has the capacity to invest more funds in a broad range 
of important research areas, including strategically targeted research in 
improving our understanding of the climate system and improved engineering 
approaches to mitigate environmental problems; advanced computers and 
digital networks; biotechnology; materials processing; advanced 
manufacturing; math and science education; and smart highways, bridges, 
and other civil infrastructure. This proposal which adds $2.3 billion over 
four years, and $954 million in 1997 also includes funds to support the 
Nation's university-based research facilities and instrumentation.

Commerce/Increase civilian R&D at the National Institute of Standards and 
Technology (NIST). America's competitiveness rests ultimately with the 
private sector. Yet, the Federal Government has an important role to play 
in promoting economic growth, in part by supporting research and 
development. This proposal provides aggressive growth for the National 
Institute of Standards and Technology (NIST). NIST is the only Federal lab 
with the principal mission of supporting U.S. industry and has provided a 
steady stream of technology support to U.S. firms for over 90 years. This 
proposal provides for: 1) an increase of $138 million in 1994, rising to 
$680 million by 1997, for the Advanced Technology Program to provide 
matching grants for industry-led R&D projects, including funding for 
consortia like SEMATECH; 2) over 100 manufacturing extension centers 
nationwide by 1997 to assist manufacturers to modernize their production 
capability; and 3) doubling the amount of R&D performed in the NIST labs 
by 1998. This proposal would increase total NIST funding from $381 million 
in 1993 to $1.2 billion in 1997 (budget authority).

Commerce/"Information Highways" Demonstrations. The development of a 
broadband, interactive telecommunications network linking the Nation's 
businesses, schools, libraries, hospitals, governments, and others could 
pay enormous dividends to the U.S. economy. Engineers working on the same 
problem, teachers and students, and patients and doctors would all be able 
to communicate instantly no matter how much distance separated them. This 
proposal builds on the 1993 stimulus initiative by providing new seed 
money to "jumpstart" the development of these networks. In 1994, $54 
million will be made available to the Department of Commerce for grants to 
States, local governments, universities, school systems, and non-profits 
to link public facilities in such a network. Between 1995 and 1998, $150 
million annually would be made available.

Federal Coordinating Council for Science, Engineering, and Technology 
(FCCSET) initiatives. As the fields of science and technology have 
progressed, and as applications of scientific advances have improved, it 
has become obvious that a single field of science can have applications in 
numerous different areas, governed by different Federal departments and 
agencies. In order to coordinate scientific advances among agencies and to 
avoid duplication of efforts, the Federal Coordinating Council for 
Science, Engineering and Technology (FCCSET) has established interagency 
committees.

There are currently six specific areas, which have been identified as 
important national research and education activities. They are: improving 
our understanding of the climate system, advanced supercomputers and 
computer networks, math and science education, materials processing, 
biotechnology, and advanced manufacturing. The climate initiative, for 
example, is focused on understanding the processes involved in climate 
change and was a key component of the U.S. action plan in the recent 
"Earth Summit" negotiations. The advanced manufacturing initiative will 
focus on areas such as intelligent manufacturing cells and computer-based 
tools for production design. Over a dozen Federal agencies, including 
NASA, Defense, Energy, the National Science Foundation, Commerce, 
Agriculture, and the National Institutes of Health, have programs which 
address one or more of the six specific areas.

Crosscutting high performance computing (NSF/NIH/NASA/NIST). This 
investment builds directly on a stimulus program to develop applications 
which use advanced computers and communication networks to solve problems 
in health care, education, manufacturing, and more. For example, under a 
pilot test in Boston, a physician could transmit images (X-rays, CAT 
scans, photos) quickly to a specialist across town for immediate 
consultation. This program would be part of the multi-agency High 
Performance Computing and Communications program and would be coordinated 
by the Office of Science and Technology Policy's Federal Coordinating 
Council for Science, Engineering, and Technology (FCCSET). 1997 $320 
million; four year total $784 million.

NASA/Civil aviation. The quality of the air transportation system has a 
direct impact on the quality of life of every U.S. citizen. This 
investment option would expand NASA aeronautics research in its support of 
the aviation industry and its enhancement of the safety and capacity of 
the national airspace system. One area for investment, advanced subsonics 
research, would focus on developing technology that would increase the 
competitiveness of U.S. commercial transport aircraft and enhance the 
safety and productivity of the national aviation system. The other area 
for investment, high-speed research, would focus on resolving critical 
environmental issues and establishing the technology base for an 
economical, supersonic aircraft. These investments will help counter 
aggressive government-supported foreign competition. In addition, it will 
provide technologies that improve the environmental compatibility of 
existing and future aircraft by reducing noise and engine emissions. 
Funding will reach an additional $222 billion in 1997, for a four year 
total increase of $550 million.

NASA/Short-haul aircraft research. This initiative will expand NASA 
aeronautics research to develop technologies for short-haul aviation. 
Short-haul aircraft includes commuter aircraft, rotorcraft, and general 
aviation airplanes. There are roughly 220,000 short-haul aircraft in the 
United States, making up 98 percent of the total civil aviation fleet. To 
help bolster the competitive position of the U.S. short-haul industry, 
NASA would develop technologies for both rotary and fixed wing aircraft to 
enable a new mode of high utility, safe, fast, and direct transportation 
linking thousands of smaller communities. The program would take advantage 
of ongoing and new Federal Aviation Administration (FAA) and industry 
cooperation to accelerate application of these advanced technologies to 
U.S. aircraft and engine manufacturers. Estimated outlay increase: in 
1997, $20 million; over four years, $50 million.

Greatly increase non-defense Cooperative Research and Development 
Agreements (CRADAs) at the national labs. Cooperative Research And 
Development Agreements (CRADAs) are one of the mechanisms by which the 
national laboratories can work with industry to transfer lab-developed 
technology and know-how to the private sector. The funds go to the labs to 
pay for their share of the jointly agreed-upon R&D in the CRADA. The 
laboratory work under each CRADA is proprietary to the private-sector 
partner, who also hold the patent rights to inventions made under the 
CRADA. The current funding for CRADAs to transfer technology developed by 
DOE non-defense programs is $9 million, but there is more demand from 
industry for assistance through CRADAs than can be funded with that amount 
of money. This investment initiative provides an additional $30 million in 
1994 and $50 million per year over the baseline in 1995-97.

Modernizing Social Security Administration computer systems. The Social 
Security Administration (SSA) relies heavily on its information systems to 
provide services and pay benefits. To meet current and future demands, SSA 
and State Disability Determination Services (DDSs) must abandon their 
labor-intensive, paper-driven tradition and automate. The proposal would 
invest in the pilot tested Intelligent Workstations and Local Area 
Networks and (IWS/LAN), creating a standard, state-of-the-art, computing 
network for all of SSA and DDSs. The investment funding includes modular 
workstations, and design/site preparation/installation. Estimated cost: 
over four years $880 million; 1997 $245 million.

Modernize Internal Revenue Service. IRS currently processes tax returns 
using technology from the 1960s. These out-of-date systems result in long 
delays for taxpayers and extra costs for the Federal government. Tax 
Systems Modernization (TSM) represents IRS's effort to move to an 
up-to-date, automated approach to processing taxes. With TSM, tax returns 
will be processed and stored using modern technology. Tax returns will be 
available in electronic files instead of remote warehouses. As a result, 
IRS employees will be able to provide immediate responses to most taxpayer 
questions over the phone. TSM will enable IRS to reduce the risks and 
costs associated with operating their current systems while also improving 
their ability to serve the public in the administration of the nation's 
tax system into the 21st century. Estimated cost: over four years $1.8 
billion; 1997 $0.7 billion.


Housing

These initiatives will help make housing more affordable, and streets and 
neighborhoods safer. In conjunction with other measures, they will also 
provide the help that the homeless need. By empowering our people, these 
measures will go far toward creating real choices for Americans at every 
income level and help them achieve the American dream.

HUD/Assist more households with housing subsidies. The Department of 
Housing and Urban Development currently provides housing subsidies to 4.7 
million low-income and very-low-income households to overcome their 
housing problem. Nevertheless, an estimated 3.6 million families and 
elderly very-low-income renters still face severe housing problems because 
they either have a "worst case need" for housing with (1) rent that 
exceeds 50 percent of their income or (2) live in a severely substandard 
housing unit. Additional Federal investments are needed to eliminate these 
remaining very-low-income rental housing problems. This investment would 
substantially increase assistance through HOME grants and housing 
vouchers. HOME funds would double to the full amount authorized of $2.2 
billion; housing vouchers would increase from nearly 40,000 annually in 
1993 to 100,000 by 1998. Estimated investment: over four years $716 
million; 1997 $422 million.

HUD/Supportive housing program. This investment is targeted towards the 
problem of homelessness. It increases funds for rehabilitation of housing 
that serves the homeless as well as other services which seek to address 
the root causes of homelessness. The $138 million increase in 1997 and 
$241 million over four years represents a doubling of the program.

HUD/Public housing operating subsidies. The rent paid by residents of 
public and Indian housing often does not cover the operating costs 
incurred by housing authorities. The Department of Housing and Urban 
Development's Payment for the Operation of Low-Income Housing program pays 
the housing authorities for those operating costs not covered by rental 
payments, thus permitting housing authorities to provide and maintain 
safe, sanitary and decent housing. This investment of an additional $121 
million in 1997 and $206 million over four years, by meeting the estimated 
cost of providing quality public housing, will strengthen our nation's 
stock of public housing and enable the people who reside there to have 
decent shelter.

HUD/Preserving and renovating low-income rental housing. The 
Administration proposes to increase funding to repair and restore the 
nation's stock of assisted rental housing, most of which is 20 to 30 years 
old. Many units are in deteriorated buildings. Many operators of buildings 
are also financially troubled. In the worst cases, hundreds of project 
operators have defaulted on federally insured mortgages, turning HUD into 
the lender and, ultimately, the landlord-of-last-resort. Another 360,000 
units of HUD-assisted low-income housing face a problem of a different 
sort. These properties are nearing the end of the long-term HUD subsidies 
that helped them to remain as low-income rental housing. Without 
additional Federal subsidies, some owners could convert these affordable 
rental units into luxury apartments or even condominiums, leaving their 
low-income tenants out in the cold. Congress created the Low-income 
housing preservation program in 1990 to provide landlords the necessary 
incentives and subsidies to preserve this federally subsidized low-income 
housing as affordable low-income housing. The Administration proposes 
increasing funding for this program to ensure that no existing tenant 
loses his or her housing benefits as a result of adverse landlord actions. 
The cost of this additional investment in preserving and renovating 
low-income rental housing will be $858 million over the next four years. 
For 1997, spending will total $384 million.

HUD/Community Development Block Grants (CDBG). Since 1974, the CDBG 
program has been an important source of flexible Federal aid to State and 
local governments. CDBG funds directly help fund local economic and 
community development projects that benefit low- and moderate-income 
residents in large cities and urban counties and smaller communities. The 
Administration's proposed investment would directly create more than 7,300 
jobs over the next five years, with even more jobs being created 
indirectly in the local economy. Because communities can select eligible 
activities most appropriate to their local circumstances, this additional 
funding will help communities where they need it most. Total spending 
would increase $137 million in 1997 and $430 million between 1994 and 1998.

HUD/Crime in public housing. The Administration proposes an Urban 
Partnership Against Crime initiative to address the increase in gang- and 
drug-related crime activity in many public housing developments across the 
country. Crime has exacted a profound and intolerable toll on public 
housing residents. Living in a constant state of fear of physical harm, 
residents have been robbed of their sense of community and personal 
well-being. Meanwhile, they have witnessed an ever-increasing expenditure 
of scarce public resources on repairing the damage done by crime to the 
physical environments of these developments. This initiative, costing $138 
million in 1997 and $312 million over four years, would allow the 
Department of Housing and Urban Development to work with public housing 
and other local officials in an intensive effort to reduce crime in public 
housing. It focuses resources on those developments with greatest need, 
and gives flexibility to local officials to develop solutions (like 
community policing, neighborhood watches, youth activities) to the 
problems of crime in their communities.

HUD/Restore dilapidated public housing. This investment would provide an 
additional $138 million in 1997 and $241 million over the next four years 
to rehabilitate and restore severely dilapidated public housing projects 
that today are not only uninhabitable, but also contribute to the economic 
and social problems of the surrounding neighborhoods. These economically 
viable public housing units would then provide, once again, decent, safe, 
and affordable housing for low-income renters.


Lifelong Learning

Becoming a productive member of the community requires certain basics: 
like a healthy, supportive childhood; safe, sound schools; a chance to 
serve your country; and the opportunity to be retrained for the challenges 
of today's global economy. The Administration's commitment to major 
investments in these kinds of "human capital" promises payoffs for the 
nation far beyond their original price.

HHS/Full funding of Head Start. Children who participate in Head Start do 
better in school and become more productive as adults. By giving them the 
caring, stimulating environment they need, Head Start programs enable 
at-risk children to become problem-solvers instead of problems. Thousands 
of parents and selected studies have testified to the program's success, 
but for years our government despite promises has failed to make Head 
Start available to all the children who need it. With this initiative, one 
of our country's most cost-effective programs will become far more widely 
available and help change countless lives. The Administration will 
increase funding for Head Start by $3.2 billion in 1997, $8 billion over 
four years, achieving full funding for an estimated 1.4 million eligible 
disadvantaged children by 1999.

USDA/Head Start-related child care feeding. Pay for meals at Head Start 
centers and serve them to the participants added by the Administration's 
Head Start initiative; $237 million in 1997; $590 million over four years.

HHS/Head Start related Medicaid. Fund new entrants in the Medicaid program 
resulting from Head Start expansion; $116 million in 1997, $275 million 
over four years.

USDA/Full funding of WIC program. If our nation is going to prosper, our 
children will have to grow up healthy, not hungry. This special 
supplemental food program for women, infants, and children (WIC), helps 
make sure they do. By the end of 1996, all eligible children ages 1 to 4, 
including some 2 million who were not served last year, can be assisted 
with the proposed investment of $1 billion in 1997, $2.6 billion over four 
years.

HHS/Parenting and family support. These initiatives stem from a simple 
reality: governments don't raise children; parents do. These proposals 
will empower parents with the skills and the tools they need to help raise 
their children. They will support disadvantaged parents, including 
activities to help them work with their children at home and parenting 
classes, with an investment of $500 million in 1997, $900 million over 
four years.

Department of Education/Reforms and initiatives. All American children 
need greater access to better education not just to make the American 
Dream more available, but to make the American economy more productive. 
These initiatives will provide $2.7 billion in 1997, $6.2 billion over 
four years, to support reforms and reauthorizations in elementary, 
secondary, and postsecondary education, including state and local systemic 
reforms, a new SAFE Schools program, student assistance program 
improvements, and support of Historically Black Colleges and Universities.

National Service. The national service initiative will help young people 
pay for college and other postsecondary education by serving their 
country. In conjunction with income-contingent loan repayment, which will 
help Americans take low-paying community service jobs and still pay off 
their student loans, the program will provide dramatic new opportunities 
to serve our country. Young people will meet pressing national needs in 
areas including education, public health, environmental protection, and 
public safety. In return for one or two years of service, they will be 
able to receive a significant educational benefit. As it enables Americans 
of all backgrounds to help themselves and their country at once, the 
initiative will reinvigorate American citizenship lifting our country up 
and bringing our people together. The Administration's commitment to a 
fully realized program of national service is behind its plan to invest 
$7.4 billion in the next four years, building from $389 million in budget 
authority in 1994 to $3.4 billion in 1997.

Labor/Dislocated workers program. Legislation will be proposed for a new 
program to replace and improve upon two existing programs to help workers 
who lose their jobs because of restructuring of their industries, 
international competition, or defense downsizing to secure rapid 
reemployment or train for new careers. The program will cost an additional 
$2 billion in 1997, $4.6 billion over four years.

Labor/Job Corps expansion. Provide resources to increase the size of the 
Job Corps program by 50 percent by 2001. This will increase the number of 
Job Corps participants to 104,000, from the current 70,000. Job Corps 
provides remedial education, occupational skills training, supportive and 
job placement services to severely disadvantaged youth in its network of 
110 residential centers. The plan would finance 50 new residential 
centers. The 1997 cost is $202 million; the 1994-97 cost is $341 million.

Labor/Job Corps maintenance. Spend $50 million in 1997 and $105 million 
over four years to repair and renovate Job Corps' aging residential 
centers.

Labor/Summer youth employment and training program (SYETP). The SYETP 
offers economically disadvantaged youth age, 14 through 21, work 
experience in minimum wage jobs in public and nonprofit agencies during 
the summer months. This investment of $625 million in 1997 and $2.0 
billion over four years would finance about 2 million additional summer 
youth jobs. The plan includes an enriched program of work experience, 
basic skills training, testing and counseling, and closer coordination 
with schools.

Labor/One-stop career shopping. This program would make it easier for 
adults seeking to change jobs or careers or upgrade their skills to obtain 
access to the confusing array of Federal programs and services by 
developing "one-stop shop" career centers. Over four years, the proposed 
investment is $900 million, $250 million of which is to be spent in 1997.

Labor and Education/Youth apprenticeship. This program would finance a 
nationwide system of school- and work-based learning programs for high 
school youth who do not plan to attend college, in order to reduce 
drop-out rates and help them make a successful transition to meaningful 
careers in technical occupations. The proposal provides $500 million in 
1997, a total of $1.2 billion over four years.


Rewarding Work

Earned Income Tax Credit (EITC). In America, no one who works should have 
to raise a family in poverty. The EITC currently provides refundable tax 
credits to low-income working families with children. By expanding the 
EITC, we will assure that a family of four will not be forced to live in 
poverty, if one of the parents works full-time at a minimum wage job. The 
cost of the entire proposal is $6.7 billion in 1997 and $19.9 billion over 
four years.

Welfare Reform. Later this year, the Administration will present a 
comprehensive reform plan to end welfare as we know it. The President's 
plan will carry out his pledge that no one with a family who works 
full-time has to live in poverty, that parents who bring children into the 
world should be held accountable for raising them, and that welfare ought 
to be a second chance, not a way of life. The plan, coupled with the 
Earned Income Tax Credit, tougher child support enforcement to crack down 
on deadbeat parents, increased training, parenting, and family support for 
moving people from welfare to work, will move toward a time-limited system 
of welfare. This will give people on welfare the education and training 
they need for up to two years, but after that, require all those who can 
work to go to work.


Justice

Justice/Crime initiative. A comprehensive program to support and improve 
all aspects of the criminal justice system. The initiative includes: (1) a 
new Community Policing/"Cops on the Beat" grant program to localities to 
create safer streets and to community policing, thereby building a bond of 
trust between citizens and police so that they can work together to fight 
crime; (2) a new Police Corps program, to provide scholarships to would-be 
police officers in exchange for a commitment to service as a State or 
local police officer; (3) a Criminal Records Upgrade program to assist 
States in improving their criminal records infrastructure and link with 
the FBI's criminal information databases; (4) increased funds to meet 
costs associated with detaining and incarcerating the growing Federal 
prison population, which has resulted from increased arrests and the 
imposition of minimum mandatory sentences; and (5) increased funds for 
existing Federal law enforcement activities. The budget authority 
investment is $900 million in 1997, $2.8 billion over four years.

Equal Employment Opportunity Commission (EEOC)/Enforcement. Increase EEOC 
enforcement staff in field offices to provide full enforcement of the 
Americans With Disabilities Act and the Civil Rights Act of 1991. The 
proposed outlays are $18 million in 1997, $63 million over four years.


Health Care

HHS/AIDS, immunizations, NIH research, and other public health 
initiatives. This investment provides substantial new funding $3.4 billion 
in 1997 and $8.2 billion over four years for a number of public health 
initiatives including: (1) HIV/AIDS research; (2) research on women's 
health issues; (3) the President's plan for increasing childhood 
immunizations; (4) teen pregnancy programs, and (4) other efforts to 
promote public health.

HHS/Substance abuse prevention and treatment. Challenge grants to the 
States to create substance abuse treatment capacity where is it needed 
most and for hard-to-treat populations. It will serve 30,000 people in 
1994 and more in years after. The outlays are $800 million in 1997, $1.5 
billion over four years.

USDA/Food Safety and Inspection Service. Improve the existing meat and 
poultry inspection system by increasing the number of Food Safety and 
Inspection Service inspectors available in order to ensure that visibly 
diseased animals are not processed, slaughterhouses and processing plants 
are clean and follow safe food handling procedures, and plant employees 
follow proper hygiene. Food safety research would also be enhanced. This 
responds to a clear need for improvements, highlighted by the recent food 
poisoning outbreak in Washington State. The initiative adds 200 
inspectors. The investment is $34 million in 1997, $111 million over four 
years, and it would create some 275 jobs in 1994.

Rural Health Initiative. This proposal provides grants and other 
assistance to small rural hospitals to upgrade needed services. Grants may 
be used to launch integrated health systems and telecommunications links 
for remote consultation and diagnosis in low manpower areas. Estimated $50 
million in 1994.

VA/Medical care. This four-year investment provides a $2.5 billion 
increase over the baseline to ensure high quality health care for veterans 
by such measures as providing adequate staff levels to meet requirements 
on residency education programs and automating drug dispensing in VA 
hospitals.

HHS/Social Security Administration/Disability insurance processing. 
Increase resources for the processing of dramatically increased disability 
benefit claims by $200 million in 1995-98. This will cut down on the 
significant delays that have occurred in recent years and reverse the 
general decline in service.

HHS/Ryan White Act. HIV/AIDS is now the ninth leading cause of death 
overall. Currently, approximately 1 million people are infected with HIV 
in the U.S., and about 60,000 new AIDS cases are reported each year. The 
President has pledged to respond to this need by fully funding the Ryan 
White Act and increasing Federal support for HIV/AIDS prevention efforts. 
To begin fulfilling these pledges this year, this proposal would increase 
funding for grants authorized under the Ryan White Act by $120 million in 
1994. The proposal includes additional funding of approximately $1 billion 
over the next four years.

State and Local Relief. Within the Health Care, Rewarding Work and 
Lifelong Learning investment packages, the Administration will design a 
program to offset the impact of refugees and undocumented residents on the 
budgets of State and local governments, including those in California, 
Texas and Florida.


Investment Package: Tax Incentives

We recognize that the only way to lay the foundation for renewed American 
prosperity is to spur investment. New investment will create jobs, putting 
people back to work today, and will provide the productive equipment that 
we need to compete in the global economy.

Our overall program consists of outlays for physical and human capital and 
investment tax incentives for the private sector. Outlays for physical 
capital will help rebuild the crumbling foundations of the United States, 
create millions of high-wage jobs, and smooth the transition from a 
defense to a commercial-based economy. Our program will concentrate on the 
transportation, environment, and communications infrastructure. The 
program of tax incentives will increase private investment over the long 
run. Like the outlay programs, these incentives are designed to increase 
investment in human and physical capital. These incentives will be 
particularly helpful to small business which generates the lion's share of 
jobs.

Permanent small business tax credit. As discussed in the stimulus package, 
the plan provides that small businesses will now be eligible for a 
permanent investment tax credit on their equipment. The credit will 
generally be 7 percent in 1993 and 1994, and 5 percent thereafter. Small 
businesses operate at the margin and need a permanent incentive to invest, 
grow and provide new employment opportunities.

Incentive for investment in small business. The program provides relief 
from the capital gains tax for investors in small businesses. This 
proposal will allow investors generally to exclude 50 percent of the gains 
earned from investment in the stock of a qualified small business (less 
than $25 million capitalization) when held at least 5 years. Furthermore, 
50 percent of the excluded gain is not subject to taxation under the 
alternative minimum tax. The tax incentives will both stimulate job 
creation over the short-run and increase investment over the long-term.

Research and experimentation tax credit. The economic plan will 
permanently extend the research and experimentation credit. This will 
encourage firms to undertake the research necessary to develop the 
technological innovations required to increase the supply of good jobs.

Real estate. The plan also permanently extends both the low-income housing 
credit and mortgage revenue bond provisions. Doing so will provide a 
stimulus to increase the supply of housing for low-income families. In 
addition, the program modifies the passive loss rules for persons in 
certain real estate trades or businesses, relaxes restrictions on pension 
investments in real estate and extends the depreciable life of 
nonresidential real estate.

Enterprise zones. This part of the program authorizes the establishment of 
a number of enterprise zones. Businesses located in enterprise zones will 
be eligible for a wage credit for the hiring of enterprise zone residents 
and accelerated depreciation or expensing of investments in enterprise 
zone property. In addition, small businesses in qualifying economically 
distressed areas will be eligible to obtain low interest rate loans 
through tax-exempt financing even if the area is not selected as one of 
the zones. Combined with the other tax incentives and other non-tax 
initiatives targeted to urban areas, these benefits should help promote 
investment and job creation in these areas.

Simplifying and enhancing depreciation provisions for companies subject to 
the alternative minimum tax (AMT).  As noted in the discussion of the 
stimulus package, the plan substantially enhances the investment 
incentives for taxpayers subject to the AMT and simplifies the AMT by 
using the shorter regular tax depreciable lives for minimum tax as well as 
regular tax purposes. Because they reduce the net cost of acquiring 
depreciable assets, this proposal will provide a lasting stimulus to 
investment for affected companies.

Targeted jobs tax credit; employer-provided educational assistance. The 
plan permanently extends these two provisions, thus providing an incentive 
for American businesses to continue to invest in human capital. The plan 
also expands the targeted jobs tax credit to include workers in an 
apprenticeship program. An educated workforce will be more productive and 
better able to adapt to the challenges of a modern information-based 
economy.

Health insurance deduction for the self-employed. The plan calls for an 
extension of the 25 percent deduction for health insurance premiums of the 
self-employed through the end of 1993. This will retain the current law 
tax treatment of these premiums for affected individuals until the 
Administration's comprehensive health care proposals are enacted.

Small issue bonds and high speed rail facilities. The ability to issue 
tax-exempt bonds for qualifying small businesses and certain farmers would 
be extended permanently under the plan. In addition, in order to promote 
the development of high speed rail facilities, tax-exempt bonds issued for 
that purpose will not be subject to the State private activity bond volume 
limitations.
