In the annual Economic Report of the President released on February 10, Clinton's Council of Economic Advisers concludes that cutting environmentally destructive subsidies is good for the economy.

According to the Council of Economic Advisers, changing conditions in the West have reduced the importance of extractive industries, such as mining, grazing, agriculture, and timber for the region's economy. Extractive industries in the region now “provide far less income and employment in aggregate than do recreation, tourism, manufacturing, and finance,” the report stated. From 1982 to 1990, as the region's economy diversified, total employment in the West increased by nearly 50 percent, yet agriculture (including timber extraction) and mining's share of employment fell by 21 percent.

The report stated that the original motivations for many natural resource subsidies are no longer relevant, and that balancing the budget may necessitate eliminating this corporate welfare. “These new changing economic and social conditions – the maturation of the Western economies, the emphasis on deficit reduction, and the increasing value placed by the public on environmental quality – motivate a new set of objectives for federal natural resource policy,” said the report.

To reconcile changes in. the Western economy, environmental concerns and deficit reduction, a section on natural resources outlines several potential policy revisions including:

• Incorporate a larger share of timber road and overhead expenses in the minimum acceptable bid to minimize below cost timber sales.

• Auction off grazing rights – like the successful broadcast spectrum auction – to potentially raise more money for the government than the grazing fee increases proposed in 1994. Conservation groups may even be allowed to bid.

• Charge an 8% net income royalty on hardrock mining to raise $275 million over five years.