[Public Papers of the Presidents of the United States: GEORGE W. BUSH (2001, Book I)]
[February 28, 2001]
[Pages 148-154]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks in a Discussion on Small Business in Beaver
February 28, 2001

[Geoffrey Taylor, president, Control 
Concepts Corp., thanked the President for his visit and said his 4-year-
old daughter was curious about the names of the President's puppies.]

    The President. Let me see if I can get it right. [Laughter] We're 
the proud owner of Spot. She was born in the White House in 1989 to 
Millie.

[[Page 149]]

    On November 4th, I was campaigning in New Jersey. It happened to be 
my wife's birthday, and the then-Governor of New Jersey said, ``Well, 
Governor, what did you buy your wife for her birthday?'' I said, 
``Nothing''--which wasn't the right answer--[laughter]--certainly not 
politically correct, as they say. It then happened that Laura and Christie Todd 
started talking about the fact that Christie Todd raises Scottish 
terriers. It turns out I did buy my wife something for her birthday, a 
Scottish terrier named Barney, who is having a heck of a time on the 
carpet upstairs in the White House, by the way.
    The answer is, Spot and Barney--[laughter]--and one cat named India.

[Mr. Taylor described the operation of 
Control Concepts and stated that the President's tax plan would be of 
great benefit to Control Concepts and to small companies across the 
Nation.]

    The President. Well, thank you, sir.
    I want to thank you all for having me. First, the greatness--this 
country's greatness is because there are a lot of entrepreneurs in 
America, and you are an entrepreneur. And I'm honored to be sitting next 
to you and your son. I love the concept of a family-owned business, the 
idea of a mom and her son working together to not only produce a product 
but, more importantly, to employ capital so people can find work. After 
all, small businesses are the main creators of jobs in America. And all 
public policy and tax policy must work to create an environment in which 
entrepreneurship can flourish. So my speech last night was speaking not 
only about a budget but was also talking about the entrepreneurial 
spirit in our country. And one of the reasons we came here is because 
the entrepreneurial spirit is alive and well here, and I appreciate it 
very much.
    It is important to remember the role of Government is not to create 
wealth. The role of Government is to create an environment in which 
businesses, small and large, can flourish. That's the role of 
Government.
    I want to thank my friend the Governor of Pennsylvania for being here. We hosted the Governors at the White 
House last Sunday night. It happened to be the first lady of Pennsylvania's birthday, as well. And it was good 
to see you, Tom. Thanks for coming.
    Pennsylvania is well represented in the United States Senate by two 
very capable, smart, concerned Pennsylvania citizens--so concerned, we 
spent most of the flight from Washington to Pennsylvania talking about 
how to make the economy of Pennsylvania a better place. Senator 
Specter and Senator Santorum are not shrinking violets when it comes to making the 
case for the citizens of Pennsylvania and the country. I want to thank 
you all for traveling with me. Finally, a freshman just like me, Melissa 
Hart, and Melissa is an active soul.
    I appreciate you giving me the chance to explain the rationale 
behind my budget. It was very important for people to hear that what I 
think is--what I know is true, and that is we've got a lot of cashflow 
coming into the U.S. Treasury. And the fundamental question is what to 
do with it: How best can we spend the people's money?
    Last night I made the case that our Nation can achieve the following 
priorities: One, set aside all payroll taxes that are designed for 
Social Security to be spent only on Social Security. That is $2.6 
trillion over the next 10 years will be set aside to be spent only--
only--on Social Security. I believe there's wide consensus on both sides 
of the aisle that that is prudent fiscal policy.
    Secondly, I made the case that we can prioritize and fund Medicare 
for our senior citizens, that we're going to spend--we're going to 
double the Medicare budget over the next 10 years. And if we have the 
right kind of leadership in the Congress, someone willing to--people who 
are willing to work with the President to reform Medicare, we will not 
only have money to fund Medicare, we will have a Medicare system

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that will enable seniors to choose the health care plan that meets their 
needs, all of which will include prescription drugs.
    I made the case that we can meet our needs by funding what's called 
discretionary spending at a 4 percent increase. Some says 4 percent 
sounds like a small number, but I want to remind you, it's greater than 
the rate of inflation. It is less than what Congress spent during the 
last three sessions, I readily concede. But we've got to be careful 
about overspending in Washington, DC. We shouldn't have bidding contests 
in Washington. What we ought to have is rewards for people who are 
concerned about overspending, it seems like to me. And so I propose 
increasing the discretionary spending at 4 percent.
    It means, for example, that public schools will get a significant 
increase in spending out of the Federal Government. Now, having said 
that, I promise you I will stand tough to the principle that we ought to 
run our schools locally--that local control of the schools--that we've 
got to run our schools locally in order to achieve excellence for every 
single child.
    We need to pay our soldiers more money. We need to make sure that 
they are well paid. But before we spend a lot of money on the Defense 
Department, it seems wise--and I think business people will agree with 
this--that we ought to have a strategy about what our military ought to 
look like in the long term. We've got to make sure we have a proper 
strategy on how to prioritize our military spending before we do so.
    There is still money left in the budget, after growing discretionary 
spending by 4 percent, after funding the entitlement programs, after 
meeting priorities. Over the next 10 years, we set aside a trillion 
dollars for what I call contingencies, a trillion dollars in case we 
need money for additional Medicare spending or military spending or 
spending on the farmers in America. So there is money set aside for 
that, and there is still money left over.
    Now, the debate always seems to come out of Washington that if you 
have tax relief, somebody is not going to get their Medicare check, or 
if you have tax relief, somebody is not going to get a Social Security 
check. My point to you is that we set priorities and fund them; we 
protect Social Security and Medicare and fund them; we spend money on 
the military to keep the peace; we set aside contingencies--money for 
contingencies, and there's still money.
    And what I want to do is to remind Americans--this is why I've come 
to western Pennsylvania--remind Americans that the surplus is your 
money; it is not the Government's money. And once we fund priorities, we 
ought to give it to you.
    One reason Dave and Janet sit here is because I think it is very important for 
people to know that behind every statistic there are Americans who--in 
whom we ought to place our trust. These good folks pay $4,400 in Federal 
income taxes. Under the plan I proposed last night in the Congress--
which doubles the child credit from $500 to $1,000, reduces all rates 
for everybody who pays taxes, drops the top rate from 39 to 33, reduces 
the bottom rate from 15 to 10, reduces the effects of the marriage 
penalty, eliminates the death tax--these good folks will save $1,980.
    Now, for a lot of folks, they'll yawn and say, ``Gosh, that's 
$1,980. That's really nothing.'' We disagree. We disagree; $1,980 a year 
can make a big difference to people who are raising two lovely children, 
to people who want to set aside money for savings. It is so important 
for Members of the Congress to realize what the average citizen is going 
through today. When you couple high energy prices with consumer debt, 
there's a lot of good folks who struggle in America. And it seems like 
to me that the right thing for Washington to do is, once we fund our 
priorities, enhance the cashflows of the people who pay the bill in the 
first place in America. In so

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doing, not only do we help working Americans but we also will add a 
second wind to an economy that is slowing down.
    I come from the school of thought--I know many of you do, as well--
that sound fiscal policy coupled with sound monetary policy is going to 
make a difference in this economy, that by giving people their own money 
back will be a part of sound fiscal policy. The more money you have to 
spend, the more money circulating, the more likely it is the economy 
will recover. And all of us in Washington must do everything we can to 
make sure that the economy is strong enough for people to be able to 
keep jobs and find work, if they're looking for work. That's the whole 
purpose of economic growth, is for people to be able to find work.
    I'm so thankful that you gave me a chance to come to make my case. I 
can't think of a better place to make the case than in a business run by 
a family, a business run by entrepreneurs, a business who care more 
about their employees than they do about themselves because they 
recognize if the employee is happy, an employee can work, an employee is 
satisfied, that the business itself will run well.
    It's my honor also to be here with Dave and 
Janet and Erin and 
Jonathan, Americans who under our plan will 
receive real, tangible benefits--but that's not really the right way to 
say it, is it; it's your money to begin with--Americans who under our 
plan will keep more of their own money so they can spend it where they 
see fit.
    Thank you very much.

[Employee Dave Berger explained how he started 
working for Control Concepts.]

    The President. I'll give you a loaded question. Do you want some tax 
relief? [Laughter]
    Mr. Berger. All you can give. [Laughter]
    The President. You know, I'm constantly amazed that--first of all, 
one of the things that happens when you talk about tax relief, people 
immediately go to the class warfare argument that ``only the rich people 
will benefit,'' which obscures reality. And reality is, $1,980 is a lot 
of money. And I'm not going to ask you what you're going to do with it, 
because I trust you to do the right thing with it. Frankly, it's none of 
the Government's business about what you decide to do with your own 
money. But I bet it may have something to do with your children's future 
education, for example.

[Administrative medical technician Janet Berger 
briefly described her work and said she and her patients were pleased 
that the President was discussing their health care needs.]

    The President. Yes. Well, we're concerned, all of us are concerned 
about making sure that Medicare fulfills the promise to our seniors. It 
is a solemn obligation that the Federal Government has assumed, and it's 
a solemn obligation that the Federal Government will keep. And there 
will be a lot of discussion, a lot of argument about how to get where 
we're going to end up, but we're going to end up with reform that will 
make the system solvent and give seniors a variety of options in order 
to tailor a plan that meets their needs, all of which will include 
prescription drugs. And it's going to be a titanic struggle. But it's 
one that, with the right leadership and the right tone in Washington, 
DC, people I think are going to be able to come together on, and I think 
we'll get something done.
    Mrs. Berger. And on a personal note, I'm 
glad to hear that your tax reform will refund almost $2,000 for our 
family for education and our needs.
    The President. Well, thanks. I--let me talk about a couple of 
aspects of this tax relief plan that I want to explain to you.
    First of all, I believe that the Government should not decide, oh, 
you get tax relief, and you don't get tax relief. To me, the best tax 
policy is to treat everybody fairly and to say if you pay taxes, you get 
relief.

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    Secondly, it is very important to understand that the Tax Code is 
unfair for people at the bottom end of the economic ladder. If you're, 
say, a single mom struggling to get ahead in life and you're making 
about $22,000 a year, as she begins to earn additional money, she loses 
earned-income tax credit; she pays payroll taxes; and she pays income 
taxes, which means that every additional dollar above a level around 
$22,000 is taxed at nearly 50 percent. That's the way this Tax Code is 
structured. It means that folks who struggle to get to the middle class 
pay a higher marginal rate than someone who is successful, someone who 
has got quite a bit of cashflow, and that's not fair.
    Part of the tax relief package has got to be aimed at making the 
code easy to understand and fair. One thing our country is known for is 
being a fair country. Another thing we ought to be known for is that we 
want people to succeed, and the code ought to reward success.
    Secondly, a lot of small businesses, as I mentioned earlier, these 
small businesses provide, by far, the vast majority of new jobs in 
America. And dropping the top rate will serve as a catalyst to attract 
capital to small businesses. Many small businesses are unincorporated 
small businesses; many are what's called Subchapter S businesses, and 
they pay the high rate. And by dropping the rate, it will provide 
capital for small business expansion. And that's very important for this 
country.
    And I know the rhetoric will be, ``Oh, he's focused on the 
billionaires,'' and all that business. That's called class warfare. The 
truth of the matter is, this plan is aimed at helping small businesses 
flourish and grow and succeed. It is important for America that the 
small-business person remain vital and healthy.
    And so this is a plan that is well-thought-out. It is--I found it 
interesting during the course of the speech last night, I said, ``Some 
think it's too big''--and of course, those who thought it was too big 
cheered--``and some think it's too little''--and they cheered. Of 
course, I thought it was just right. [Laughter]
    Let me say that part of my job as President, as well--I might as 
well be just very upfront--is to travel the country ginning up support 
for this plan. And that's why I'm here. I would hope that you would not 
only contact your immediate Representatives--I don't think you need to 
in the case of the three here--[laughter]--but I would hope that if you 
find others that may be reluctant to listen to what we have to offer--
and I say ``we'' because this is a plan that really is aimed for 
people--that you would help, that you would write, that you would e-
mail, that you would call folks to encourage them to be openminded and 
to think about you when they cast votes.
    And this is a plan that will benefit hard-working Americans. I find 
it such an honor to be your President, and I love traveling the country, 
to go out and--I'm going from here to Nebraska and Iowa and Arkansas and 
Georgia. And it is exciting because this is a great country, made great 
by the fact that it's got such wonderful people. And it's so important 
for all of us who have the honor of representing you to have public 
policy in mind that makes lives easier. And this series of initiatives 
that we're going to be debating over the next months will be aimed, if 
it's done right, at easing the burden on the working people in the 
country. And America will be even stronger as a result.
    So it's an honor to be here.

[Mr. Taylor stated the President's tax plan 
would be good not only for the economy and for employees but would allow 
small-business owners to reinvest in their businesses, creating a cycle 
of economic expansion. He added that long-term debt reduction would 
further spur the economy.]

    The President. I appreciate you bringing that up. We have set aside 
$2 trillion over the next 10 years to pay down debt. Now,

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people say, ``Well, why don't you pay all the debt off?'' One reason why 
you don't pay all the debt off is because at the end of 10 years, a 
number of bonds will have not matured. It does not make economic sense 
to prepay American debt that will cost American taxpayers a premium to 
do so.
    And so we pay down all available debt; all the debt that matures 
will be paid off. And it's going to ease the interest burden on the 
country. It makes fiscal sanity, sense to do so. And there's ample 
cashflow to be able to meet the debt requirements and put aside a 
contingency fee and provide tax relief.
    I urge the Congress to be cautious about overspending. The rate of 
spending increased last year by 8 percent. That is a significant number, 
particularly when you're talking in terms of trillions. And there was 
something like over 5,000 one-time expenditures in the budget at the end 
of the year. And so we have to work with the appropriators to say, 
``Let's be reasonable about how we spend the people's money.''
    A sure way to make sure this economy gets drug down is to overspend. 
A bloated Federal Government will affect economic vitality. And so it's 
going to require a lot of us working together to say, ``Well, wait a 
minute. It's important to set priorities.'' One thing business owners 
learn how to do is how to prioritize and then have the discipline 
necessary to meet priorities.
    So I appreciate you bringing up the debt retirement, and it's an 
issue that I'm confident we can work together on. It's just important 
for people to know that it's only wise to pay down a certain portion of 
the debt before it costs taxpayers an additional premium. And that 
doesn't make any sense. It doesn't make any sense to do that.

[Mr. Berger said he was interested in education 
reform and impressed that the President would increase spending for 
reading.]

    The President. I am. You all know I used to be a Governor, and 
therefore, I'm a little suspect about Federal involvement in any way, 
shape, or form in education. I do, however, think that it is appropriate 
for the Federal Government to spend money, so long as it's spent wisely. 
I can't think of anything more important than to increase the amount of 
money available at the Federal level for reading programs, so long as 
the strategy makes sense.
    And there has been a lot of thought and a lot of research about what 
works. A lot of programs in States, you know, abandoned the concept of 
phonics, and as a result, many children weren't learning to read. The 
reason I bring that up is I want to reinvigorate the curriculum debate, 
all based upon--the conclusion of which we based upon a simple concept: 
If it works, use it. So part of the reading initiative is to encourage 
people to analyze the facts about reading.
    Secondly, I strongly believe in diagnosis. And I believe we've got 
to measure children. And I believe we've got to measure children to make 
sure that not any children get left behind. And that includes K-through-
two little children. We ought to develop a reading diagnostic tool that 
can be easy to administer but will point up where there are some reading 
deficiencies that need to be corrected early, before it's too late. That 
is a very feasible and logical approach to reading.
    Finally, I know we need to retrain teachers. Part of the failures in 
our society thus far have been that some teacher colleges--I'm certainly 
not accusing any here in the State of Pennsylvania, Governor--that have not taught teachers how to teach 
reading. And if that be the case, we need to retrain teachers in the 
science of reading, so they can teach reading. So I believe this makes 
sense, the initiative.
    I used to be a business person. As a matter of fact, I was in a 
business where the results were posted every day. It's called baseball. 
Generally, the results weren't all that good. [Laughter]

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    So I understand when the president of a company says, ``What is the 
bottom line?'' It is a philosophy to which I adhere. I ask the question, 
are the children learning? And if we spend Federal money, particularly 
on disadvantaged children, the debate ought to be not whether or not we 
ought to spend money on disadvantaged children; the debate ought to be, 
are we getting our money's worth?
    I believe every child can learn. I refuse to accept excuses that 
``there are certain children who can't learn; therefore, let's don't 
measure, or let's just move them through the system.''
    And so therefore, I'm asking Congress to say--to enact this reform. 
If you receive Federal money, you, the State of Pennsylvania--or the 
State of Texas or any other State--must devise and implement an 
accountability system that determines whether or not children are 
learning basic English skills and math skills. That's what we want to 
know. Accountability becomes the whole cornerstone for reform. Without 
measurement, we're just guessing. With measurement, it would enable 
policymakers and educators to devise programs that will meet needs. You 
don't know if you don't measure.
    And so the crux of the reform is that we do spend some more money, 
and that's fine. But money alone is simply not the answer. There must be 
reform. There must be a system in place that creates the incentive for 
people to change when there's failure and to address problems early, 
before it's too late. It's the whole cornerstone of what we're trying to 
do.
    The State of Pennsylvania can design the remedies. They can design 
what remedies will ultimately make a difference in terms of creating 
educational excellence. The Federal Government ought to be focused on 
some targeted spending but also understanding that systemic reform will 
yield positive results for children from all walks of life. It is an 
incredibly important debate that is taking place in Washington.
    You will hear much of the dialog that will be all focused on 
dollars, and that's an important part of the debate. But the truth of 
the matter is that Federal Government only funds about 7 percent of the 
education budgets in aggregate across the Nation. Most funding, as you 
well know, in Pennsylvania comes from either State Government or local 
property taxes. And that's where the power ought to be. It ought to be 
closest to the people who are paying the bills in order to make sure 
that schools chart the path to excellence necessary so every child 
learns.
    But at the Federal level, we can institute structural reform or 
insist upon changes that will eventually yield to structural reform, and 
that's what the whole educational debate is about. And it's an important 
debate in America, and I'm really glad we've engaged early on that 
subject in the Senate and the House. You got more than you wanted.
    Mr. Taylor. Education is also very 
important to me. As I had mentioned earlier, I have two small children. 
And as they grow up, we need to have some type of accountability so that 
they are learning the reading and writing skills necessary.
    The President. It starts with you, however, as you know.

[The discussion continued to its conclusion.]

Note: The discussion began at 9:35 a.m. at Control Concepts Corp., a 
manufacturer of industrial switch devices. In his remarks, the President 
referred to former New Jersey Gov. Christine Todd Whitman; Carolyn 
Taylor Renninger, chief executive officer, Control Concepts Corp., and 
mother of Geoffrey Taylor; and Gov. Tom Ridge of Pennsylvania and his 
wife, Michele.