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 QUEENSTOWN, Md., Jan. 25 /PRNewswire/ -- The Aspen Institute issued the following:
 The Aspen Institute's "U.S. and the World Economy Program" today issued a report advocating tough domestic and international economic measures to the Clinton administration and the new Congress. The report, "Present at a New Creation: America's Role in the World Economy," presents the most important insights that emerged from two years of discussions on pressing policy issues among American and foreign high-level government officials, legislators, business executives, journalists and scholars.
 The report's title echoes Dean Acheson's memoirs of his postwar years at the State Department when the foundation for nearly 45 years of Cold War foreign economic policies was put into place. Americans today are present at a new creation, asserts the report, the creation of a post-Cold War world that offers an unprecedented opportunity for a secure and prosperous future. To seize this opportunity, the United States must lay a solid new foundation of domestic and foreign economic policies to guide us through the coming decades.
 Four themes run through the report. First, U.S. interests require that the United States remain fully engaged in finding solutions to a broad range of global problems. Second, we must lead. The United States must continue to bear a unique responsibility for global leadership in problem-solving because only the United States possesses the global reach and influence necessary to rally the world to action. Third, Japan and Europe must take on greater roles in tackling global problems; in exchange, the United States must be prepared to engage in collective decision-making. Fourth, the United States will not be able to muster the will or the resources, nor will it be able to claim the

moral authority, to lead the world unless it puts its own domestic economic house in order.
 Action At Home
 The report calls for action to eliminate the federal budget deficit within a decade while at the same time increasing federal spending to build a sturdier foundation for long-term economic growth, to meet too-long neglected social needs and to tackle global problems. Achieving these conflicting objectives will require making very hard choices. Entitlement spending, especially for health care, must be brought under control. Existing domestic discretionary programs that must now be accorded lower priority must be scaled back or eliminated. Taxes must be raised.
 The report states that the nation can have no more important long-term economic objective than eliminating the federal deficit. By elevating real interest rates, the deficit stifles investment necessary for more vigorous growth and stronger competitiveness. The ever-rising annual interest bill -- soon to be the second largest item in the government's budget -- on our burgeoning debt consumes funds that should be devoted to meeting pressing social needs. And it is nothing short of disgraceful that we are mortgaging our children's future to enjoy a higher living standard than our own efforts entitle us.
 Because of the importance of eliminating the deficit, a credible program to accomplish this goal "should be put into place as soon as possible to be phased in as the economy strengthens." With accumulating evidence of a strengthening economic expansion, the report recommends that short term stimulus should be held in abeyance and utilized only if the recovery falters because of the dangers of increasing the deficit. "Over time, as our economy grows, the weight of the burden of our accumulated debt will slowly lighten but only if we stop adding to that debt with annual deficits." In the meantime, concludes the report, any increased expenditures, even those that can justifiably considere "investments," must be financed on a current basis, not by more borrowing. "Deficits that were once benign, even constructive, are now malignant."
 The report recommends:
 -- Making an immediate start toward sound financing of government health care programs while a comprehensive program to restrain exploding health care costs is developed: raise Medicare taxes on high income taxpayers (those earning more than $130,200); charge upper income beneficiaries higher Medicare premiums; tax excessively generous employer-provided medical insurance benefits.
 -- Transforming Social Security into a strictly "needs based" system: raise the Social Security retirement age from 65 to 67 in the year 2000 and higher in future years as longevity and health advances justify; raise the share of benefits subject to tax from 50 percent today to 85 percent; and possibly eliminate the income floors (now $32,000/couple) below which benefits are not taxed once people receive benefits equal to their contributions plus a reasonable rate of return.
 -- Scaling back or eliminating entirely a wide range of what now must be considered lower priority programs: subsidies for farmers and rural electrification, the NASA space station and other NASA programs, the superconducting super collider, rural and economic development programs and others.
 -- Reforming our tax system to eliminate perverse incentives and to introduce greater equity: replace the personal income tax with a progressive consumption-based tax that exempts savings and investment; replace the regressive payroll tax with a Business Transfer Tax or national sales tax combined with a refundable tax credit for low and lower-middle income taxpayers; impose a broad-based energy tax or, as an alternative, increase the gas tax by 10 cents a year for a decade; raise taxes on alcohol and tobacco products; phase out mortgage interest tax subsidies; limit itemized deductions; raise the top personal income tax rate; and tax capital gains at death.
 Action Abroad
 The United States must also face up to hard choices to meet the challenges of a new international order evolving out of the collapse of the Soviet Union, the economic ascendance of Europe and Japan, and the growing risks of environmental and other crises in the developing world.
 In its relations with its industrial country partners, the United States should:
 -- Rejuvenate the G-7 macroeconomic coordination process to promote faster rates of growth worldwide and make the IMF a more effective instrument of coordination by making public the IMF's annual reviews of countries' economic performance.
 -- Bring the Uruguay Round of multilateral trade negotiations to a successful conclusion at the earliest possible date and begin immediately preparations for a new round to address issues that have emerged during the six years the Uruguay Round has dragged on: international investment, competition policy, technology and industrial policy; and trade and the environment.
 -- Move quickly to initiate negotiations with Mexico and Canada to reach whatever additional agreements concerning the environment, worker rights and import surges are needed to complement the NAFTA to be able to implement the NAFTA as planned on Jan. 1, 1994.
 -- Encourage Japan to define a global role for itself in both economic and political terms appropriate to the economic clout Japan now wields. Press forward with important bilateral initiatives vis- a-vis the European Community, China and India as well as Japan.
 The United States and its industrial country partners have a huge stake in the successful transformation of the republics of the former Soviet Union and the countries of East Central Europe to democracy and market economics. We are perilously close to losing the opportunity to turn these former enemies into prosperous economic partners and compatible political allies for want of an adequate response to their urgent need for help. After spending trillions of dollars and losing tens of thousands of lives to win the Cold War, the cost of securing the peace will be a pittance. It is time we moved more aggressively -- from committing the necessary financial resources to organizing the technical assistance to finalizing debt rescheduling to a long list of other priorities -- to seize the opportunity before us.
 The end of the Cold War requires new thinking about our relations with developing countries as well. In the future, two ideas should serve as the foundation for a policy of active U.S. engagement vis-a- vis these countries: first, we share an interest in promoting faster rates of world economic growth; second, we hold a mutual interest in shaping a world in which we can live in peace and security and that provides a healthy, sustainable environment. Interdependence is no longer a slogan; it has become a reality.
 -- The U.S. foreign aid program urgently needs an overhaul. We need to rethink our objectives, refocus our priorities and allocate additional resources to achieving our goals. Military assistance should be greatly scaled back. Assistance should be focused on assisting the emerging democracies of the former Soviet Union and East Central Europe, family planning and environmental protection and providing for "basic human needs."
 -- Reducing the rate of population growth is an urgent priority. No government, no academic expert has the faintest idea of how to provide adequate food, housing, health care, education and gainful employment to the exploding numbers of people the U.N.'s medium population projections anticipate. The United States should lead the world to increase dramatically the resources being made available to family planning with a goal of making modern methods of family planning available to all couples in the developing world -- compared to only 30-40 percent today -- by the year 2000.
 -- The United States should also take the lead in advocating "earth increments" -- special additional financing to assist the developing countries in meeting the environmental objectives spelled out in "Agenda 21" of the Rio Earth Summit -- in future replenishments of the regional development banks and the World Bank's Global Environmental Facility.
 Bringing about these policy changes both in the United States and in other countries will be hard. "But we believe that leadership can make a difference and that a start must be made in the directions we have indicated. Political leaders have a clear obligation to ask present sacrifices in order to avert future perils."
 The report was written by former U.S. Trade Representative William D. Eberle, former Ambassador Richard N. Gardner, and John V. Moller, the director of the program.
 To obtain the report at no charge, write to: Publications Department, The Aspen Institute, P.O. Box 150, Queenstown, Md. 21658.
 The Aspen Institute is an independent non-profit organization supported by foundation grants, tuition, and individual and corporate contributions.
 -0- 1/25/93
 /NOTE: Copies of the report can be obtained by the media by calling: Liz Hasbrouck at 410-820-5462./
 /CONTACT: John V. Moller of The Aspen Institute, 202-872-9333/

CO: The Aspen Institute ST: District of Columbia IN: SU: ECO

DC -- DC002 -- 8289 01/25/93 09:07 EST
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