    [Public Papers of the Presidents of the United States: George W. Bush (2003, Book I)]
    [January 9, 2003]
    [Pages 41-45]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks at the National Capital Flag Company in Alexandria, Virginia
    January 9, 2003

        Thanks for having me, Al.  Jr. First, we
    just had a really good discussion about how to make sure America is as
    promising as possible, how do we grow our economy, what's the role of
    Government, who do we trust when it comes to the people's money. And I
    want to thank Al for assembling the group and providing this opportunity
    for me to come and speak to you all and to the country about America.
        First, the great thing about America, it's represented by guys like
    Al.  Jr. He owns his own business. It's his.
    He's realizing his dream. The true strength of America is the
    entrepreneurial spirit of America, is the fact that Al, who had gone
    from firefighter to CEO--it can happen--and not only CEO but CEO of a
    thriving business. And I know Al's wife and
    daughter are really proud of him for taking a
    risk.
        But by taking risk, he is not only realizing a dream, he's also
    helping other people find work. The backbone of the U.S. economy is the
    small business. And to be able to talk about economic vitality and
    growth in a small business is a joy for me.
        So thanks for having me. Thanks for what you do. Thanks for making
    all those flags that fly on the limousines. [Laughter] I'm proud to be
    traveling behind your flag. [Laughter]
        I want to thank Hector Barreto,  Jr.
    who is the Administrator of the Small Business Administration, for being
    with us.
        I'm proud that our Senator from the State of Virginia is with us,
    George Allen. I'm honored George is here. He's
    a good fellow. If you've got any complaints about things, just take them
    to George. [Laughter] But I'm proud to call him friend.
        I want to thank the vice mayor of Alexandria who's here. Where are you? Thank you, sir. Mr. Mayor,
    thanks for coming. I'm honored you're here. My little brother is a resident of Alexandria, so go light on his
    property taxes. [Laughter] I'm going to try to go light on his income
    taxes. [Laughter]
         I appreciate so very much the folks that joined us to talk about
    their own individual circumstances and the policies that I've
    articulated. I am oftentimes asked, ``How is the economy doing?'' And
    it's doing pretty darn well, given the fact that we've been through a
    recession, which is three quarters of negative growth. We've been
    through an attack on America, which many folks in this neighborhood,
    obviously, witnessed the consequences of firsthand. That caused our
    economy to slow down. It caused people not to get on airplanes and go to
    hotels. It was a shock to our economy. And then we had some of our
    citizens not tell the truth, that they thought that they could fudge the
    numbers to get ahead. And that created a lack of confidence. And we've
    dealt with all three of these things, and our economy is growing.

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        In spite of the fact that we had three major effects, the economy is
    showing positive growth. Matter of fact, we're the strongest, most
    resilient economy in the entire world, which should say something. So
    we're pretty darn good, but we're not good enough. And that's what I'm
    concerned about.
        I say we're not good enough because there are some in the corporate
    world that don't have the confidence to expand like they should be
    expanding, and too many of our citizens are looking for work. Too many
    people who want to work can't find a job, and that concerns me. And so
    one of my jobs is to deal with problems. If you see a problem, instead
    of hoping it goes away, just be forthright and lay out a plan to deal
    with it. And that's what I'm doing. That's what I did in Chicago, and
    that's what I'm going to do again today, to talk about why I've--why I
    said what I think is important.
        First, in order to deal with the recession, in June of 2001 I signed
    a law that allowed people to keep more of their own money. In other
    words, it was tax relief for all citizens. We've reduced the tax rates
    for everybody who pays taxes. And it was phased in over a period of
    years for the sake of economic vitality. I mean, it was good enough in
    January of '01, the theory that if you let people have more of their own
    money, it would help the economy. That same theory still holds.
        See, if Congress thought it was good enough in '01 to let people
    keep more money, they ought to think about it's good enough in '03 to
    let people keep more of their own money. And the phase-in is in '04 and
    '06. And all we're asking Congress to do is take the law they've already
    passed and accelerate the tax relief to today. As a matter of fact, when
    they pass that, I'll then get the Treasury to make it retroactive. And
    if we make it retroactive, the Treasury will then account for that
    retroactivity so that you get immediate money into the economy. You'll
    notice the effects of the tax relief quickly.
        All people who pay taxes should get tax relief. The tax relief is
    already in place. If tax relief is good enough 3 years from now for the
    American people, given the circumstances today, it's good enough today.
    And Congress needs to hear that. The plan is fair.
        And the other thing we're going to do is accelerate aspects. Not
    only the tax rate reductions but the marriage penalty ought to be
    accelerated. The benefits of the marriage--of reducing the marriage
    penalty ought to be accelerated. It's a little odd that we have a
    marriage penalty to begin with. [Laughter] It seems like we ought to not
    penalize marriage; we ought to encourage marriage.
        We ought to speed up the increase in the child credit. If you're a
    mom or a dad, you ought to get an increase in your child credit. And we
    ought to accelerate the reduction of the lowest tax rate from 15 percent
    to 10 percent. And these are all items that allow me to tell you that 92
    million Americans benefit from this.
        You hear a lot of talk in Washington, of course, about this benefits
    so-and-so, or this benefits this, the kind of the class warfare of
    politics. Let me just give you the facts that, under this plan, a family
    of four with an income of $40,000 will receive a 96-percent reduction in
    Federal income taxes.
        Now, that may not mean a lot of money to some of the big shots. It
    means a lot of money for the family of four making $40,000. The income
    taxes would drop from $1,178 a year to $45 a year. That's real
    significant money for this family. It's money that family would have to
    save, invest, to help with the credit-card squeeze. It's money that the
    family would have to make decisions on their behalf.
        Somebody asked me earlier, ``Why can't Congress see the wisdom of
    this?'' And one of the answers is, is that some in Congress would rather
    spend the money themselves

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    as opposed to trusting you to spend your own money, at least that's how
    I view the debate.
        This tax relief is real, and it's significant. I was with
    Wayne and  was
    with Wayne. They're going to save $2,500 a year. The folks at the so-
    called roundtable--it happened to be square, by the way. [Laughter]
    Wayne was with us. We were talking about his family. Joe and Kristen, two hard-
    working Americans that have got two children, they'll have a yearly
    savings of $900, an 18-percent reduction in what they pay to the Federal
    Government.
        This is a fair plan. It is an important plan. And it's a plan that
    will help people find work, because it will help keep this economy
    growing.
        Secondly, one of the things in the plan is how do we affect the
    small-business owner. If 70 percent of the new jobs in America are
    created by small business, then we ought to be figuring out how to
    create incentives for small business to grow. That makes sense.
        The first thing is that most small businesses pay--file their small-
    business income on their personal income-tax returns. Most are small
    businesses or limited partnerships--most small businesses are limited
    partnerships or sole proprietorships. Al  Jr.
    is not. He's a C corp, so he pays at the corporate level, but many small
    businesses are.
        So when you reduce the rates on everybody who pays taxes, you're
    reducing the taxes on small-business owners, which gives that small-
    business owner more money to invest in the growth of the business, which
    means it's more likely he or she will be able to hire somebody
    additionally. When you reduce the income-tax rates on Americans, you're
    affecting small business, and that's important for people to know. It's
    a fact, and it's a real fact.
        As well, I've asked the Congress to raise the deduction from $25,000
    to $75,000--in other words, the amount that a business can deduct from
    the investment of equipment. And this makes sense for a company like the
    National Flag Company. See, it is a capital-intensive business. It
    requires sophisticated machinery to run this business, as the folks who
    work here know. It's pretty darn sophisticated, isn't it? [Laughter]
        If this plan were to go through, the company, Al
    Jr. tells me, since he is the company, or part of the
    company, or the decisionmaker in the company, says that he would buy two
    more machines, which would create more job opportunities for people. In
    other words, this is a plan that says that if you are willing to take
    risk and invest more, that there's a benefit for doing so. It's an
    incentive for small business to increase.
        It's aimed at small business; it makes sense for small business. And
    if Al  Jr. makes the decision to buy more
    equipment and to hire more people, imagine all the different Als around
    the country that are making the same decision. It's the cumulative
    effect of his decision as well as millions of others that will enable me
    to predict that more jobs will be created, more opportunities for
    growth. The people making the machines will have more opportunity. And
    it will have a positive effect throughout our entire economy.
        The third aspect of this plan is on dividends. A dividend is money
    that a company gives back to investors out of their profits. Right now
    this country taxes dividends twice--or income twice, in the sense. In
    other words, you tax the profit at the corporate level, and that's good.
    Profits should be taxed. And when the profit is distributed to an
    investor, it gets taxed. I don't think it's fair to tax that dollar
    twice. And I think the Congress ought to abolish the double taxation on
    dividends. That's a fair principle.
        And it will have other effects as well. Fifty percent or half of all
    the dividend income--50 percent of all the dividend income in America
    goes to our seniors. There's a way that seniors have been--many seniors
    have invested and use the

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    dividend income as part of their retirement. If you get rid of the
    double taxation of dividends, you help seniors in their retirement, and
    that makes sense. That's good public policy, it seems like to me.
        The average tax savings for taxpayers 65 and older who receive
    dividends will be $936 per year, per tax return. That's--that will help.
    That will help people. Abolishing the double taxation will increase the
    return on responsible investing, which will draw more money into the
    markets, which will make it easier for people to have capital to build
    plant and equipment, which means more people will find work.
        I mean, this is a plan to encourage growth, focusing on jobs. And
    the Council of Economic Advisers has predicted that these proposals will
    create 2.1 million new jobs over the next 3 years. That's good for the
    American people. It's good for our economy.
        See, I want people who need to put bread--food on the table to be
    able to do so, more people working. They're looking for work and can't
    find work. That's--that's sad.
        I signed a bill yesterday, by the way, to extend unemployment
    benefits. I want to thank both Republicans and Democrats, Senator Allen
    and others, for getting that done. See, they showed yesterday that when
    they get their mind to something and forget politics and focus on the
    good of the American people, we can get some things done. And I signed
    the bill yesterday. They hadn't been in town but 2 days and got the bill
    to my desk, and that's good.
        They need to be thinking the same way about this jobs package. They
    need to understand that the proposal I made will put $59 billion out the
    door in 2003 alone, which is short-term stimulus. They need to
    understand that we've got to be thinking long-term for the United States
    of America, that the role of Government is not to create wealth but to
    create an environment in which the small business can grow to be a big
    business, in which people are comfortable about investing, in which
    people have the ultimate confidence in our system.
        We got a lot of big problems ahead of us here in America. We're
    fighting a war, and the war goes on. I knew that the farther we got away
    from September the 11th, the more likely it would be that I would
    continue to have to convince people that we live in a dangerous world,
    and we do.
        And this year, the year '03, we're going to do like we did last
    year; we're just going to keep hunting them down, one at a time. It
    doesn't matter where they try to hide. We'll find them and bring them to
    justice. We'll be dealing with weapons of mass destruction in order to
    make the world more peaceful.
        And here at home, we've got some obstacles to overcome as well. And
    one of those obstacles is to make sure people can find work, make sure
    this economy is strong and vibrant and hopeful, that the future is
    optimistic for every single citizen.
        But there's no doubt in my mind we'll overcome these obstacles.
    There's no doubt in my mind that the world is going to be a more
    peaceful place because of the United States of America. There's no doubt
    in my mind that we'll prevail in the war on terror, no matter how long
    it takes. And there's no doubt in my mind, when Congress does the right
    thing, that more of our Americans will have a more hopeful future,
    because they'll be able to find work.
        Thank you, Al,  Jr. for giving me a chance
    to come by. May God bless you and your families, and may God continue to
    bless the greatest nation on the face of the Earth, the United States of
    America.

    Note: The President spoke at 10:05 a.m. in the company's sewing room. In
    his remarks, he referred to Albert Ulmer, Jr., president, National
    Capital Flag Company, his wife, Joanne, and their daughter, Caitlin;
    Vice Mayor William Cleveland of Alexandria; and Wayne and Candi Page,
    and Joseph and Kristen Pappano, who participated in a roundtable

    [[Page 45]]

    discussion with the President prior to his remarks. The Office of the
    Press Secretary also released a Spanish language transcript of these
    remarks.