This allowed them to emerge faster and stronger in their fields and, in the 1990s, to more readily adapt new technology as an integral part of their businesses. An open, flexible and extremely entrepreneurial venture capital sector has channeled needed funds to new industries. It was also the result of an outpouring of traditional U.S. ingenuity. And it came about because an increasing number of workers have been willing to invest longer hours, acquire new skills and accept pay increases more in line with the success of their companies than ever before. However, our ability to exploit these new opportunities depended critically on President Clinton and Vice President Gore's determination to stop a generation of public borrowing and forge a new national consensus around sound budget policy.
Structural deficits give rise to vicious circles.
They tend to lead to rising interest rates, and so to falling investment and slower growth, which reduce revenues further, increase deficits and start the cycle again. This is what we saw in the late 1980s and the early 1990s. Surpluses generate a kind of virtuous circle of declining debt, increasing national savings, lower interest rates and rising growth and investment. As a share of GNP, real investment today is higher than it has been at any time in the postwar period. We need to continue to exercise fiscal discipline, and retire debt, to keep the longest economic expansion in our history going strong.