    [Public Papers of the Presidents of the United States: George W. Bush (2003, Book I)]
    [January 7, 2003]
    [Pages 28-34]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the Economic Club of Chicago in Chicago, Illinois
    January 7, 2003

        Thank you all very much. It's a windy day out there, which is--
    [laughter]--a good day for a windy speaker. [Laughter] I'm honored to be
    your guest here at the Economic Club of Chicago. I want to thank
    Michael for the invitation. I like a short
    introduction. He didn't let me down. [Laughter]
        For 75 years, the business leaders and the entrepreneurs in the club
    have helped make Chicago a prosperous and energetic city. You understand
    the concerns facing American workers and employers, and you believe, as
    I do, that we must address those concerns honestly and aggressively.
        Today in Washington, a new Congress convenes, and I will ask members
    of both parties to work with me to secure our economic future. We cannot
    be satisfied until every part of our economy is healthy and vigorous. We
    will not rest until every business has a chance to grow and every person

    [[Page 29]]

    who wants to find work can find a job. So today I'm announcing a growth-
    and-jobs plan to strengthen America's economy, specific proposals to
    increase the momentum of our economic recovery.
        And this is a good city to give it in. This is one of America's
    great cities. And one of the reasons why is because you have a great
    mayor in Richard Daley. We're from
    different political parties, but we have some things in common: We both
    married above ourselves. [Laughter] It is good to see the first
    lady of Chicago here. Thank you for coming. We
    both have famous and influential brothers. [Laughter] Our dads spent a little time in politics. [Laughter] And we
    love our country more than we love our political parties. The thing I
    like most about the mayor is he gets the job done for the people of
    Chicago. And Mr. Mayor, I'm proud to call
    you friend.
        And I want to thank another proud son of Chicago, Rod
    Blagojevich, for being with us today as
    well. He's soon to have the second-best job in America, being a
    Governor. I congratulate him on his election. I look forward to working
    with him for the good of Illinois and for the good of our country. Thank
    you for coming, Governor-elect. I appreciate you being here.
        I flew in today with the Senator from Illinois, Peter
    Fitzgerald. I appreciate his leadership.
    I appreciate his friendship. And as we speak, the Senate is debating the
    Fitzgerald bill which will extend unemployment benefits to those who are
    looking for work in America. And Peter, I want to thank you for your
    leadership on this important issue.
        And on that very same airplane was traveling with me Steve
    Friedman, who is the new Director of the
    National Economic Council. I'm honored that such a respected economic
    leader has agreed to join my administration. I appreciate the fact that
    he's willing to take time away from a comfortable private life to serve
    our country. He is a strong addition to a great economic team, and I
    want to thank him for his willingness to serve America. Thank you for
    coming, Steve.
        I've also named two other good people to join this team. John
    Snow is my nominee to serve as the Secretary of
    Treasury. Bill Donaldson is my nominee
    to be the Chairman of the Securities and Exchange Commission. They will
    fill essential positions in my administration, and I urge the Congress
    to confirm them quickly.
        As the new Congress meets today, our duties to this Nation are
    clear. We have a responsibility to meet great dangers to our country,
    wherever they gather. We will continue to hunt down the terrorists all
    across the world. Cell by cell, we are disrupting their plans. One by
    one, we're showing these merciless killers the meaning of justice.
        We're also confronting the outlaw regime in Iraq that lives by
    violence and deception and is arming to threaten the civilized world.
    The world's demands are clear: For the sake of peace, Saddam
    Hussein must disarm himself of all weapons of
    mass destruction and prove that he has done so. Should he choose the
    other course, in the name of peace, the United States will lead a
    coalition of the willing to disarm the Iraqi regime of weapons of mass
    destruction and free the Iraqi people.
        And we're dealing with North Korea as well. It's a regime that has
    expelled international inspectors and is attempting to defy the world
    through its nuclear weapons program. The United States and other nations
    will confront this threat as well. In this case, I believe that by
    working with countries in the region, diplomacy will work. We have no
    aggressive intent, no argument with the North Korean people. We're
    interested in peace on the Korean Peninsula.
        As we deal with the dangers of our time, different circumstances
    require different strategies. Yet our resolve in each case will be
    clear: We will not permit any regime to threaten the freedom and
    security of

    [[Page 30]]

    the American people or our allies and friends around the world.
        Even as we confront these dangers, you need to know I know we have
    needs here at home, especially the need for a vigorous and growing
    economy. Too many Americans today are wondering about our economy.
    They're asking, ``How is the economy really doing?'' Well, the American
    economy is the strongest and most resilient economy in the world. In
    spite of the terrible shocks that our Nation has received, our economy
    is growing, and the entrepreneurial spirit in America is strong.
        We've made great progress these past 2 years. Remember, in the
    summer of 2000, during the Presidential campaign, the market had started
    on a steady decline. Job growth started to dwindle. The economy had
    begun to slow. When I took office, the signs of recession were real.
        So I worked with the United States Congress to reduce income taxes
    for everyone who pays them. More than 100 million individuals, families,
    and sole proprietorships received tax relief. This tax relief was the
    largest in a generation, and it gave the economy a boost just at the
    right time, ensuring that the recession was one of the shortest and
    shallowest in modern American history.
        Americans should be able to count on those tax cuts as they plan
    their financial futures. So I will continue to press the Congress to
    make these tax cuts, including the end of the death tax, permanent. We
    know that the tax cuts worked, and Americans deserve to know their tax
    cuts will not be taken away.
        We faced a second test with the attacks of September the 11th, 2001.
    These attacks caused terrible suffering and a massive disruption of the
    economy. Flights were canceled. Many hotels and stores were empty. Stock
    trading was halted for nearly a week. So we acted: We reopened the
    markets; we helped the people of New York City recover; we assisted the
    airlines; we provided tax incentives for business investment; and we
    passed terrorism insurance so building and real estate projects could go
    forward.
        And then our economy was tested a third time, when Americans
    discovered serious abuses of trust by some corporate leaders. So we
    passed historic reforms to assure corporate integrity, to punish
    wrongdoers, and defend the interests of workers and investors. Corporate
    greed and malfeasance cause innocent people to lose their jobs, their
    savings, and often their confidence in the American system. For the sake
    of justice, and for the sake of every honest business in America, I have
    made this commitment: Corporate misdeeds will be investigated; they will
    be prosecuted; and they will be punished.
        We have met the tests before us because the American people have
    worked hard through difficult times. And now our country has entered its
    second year of economic growth. Our trade with other nations is
    expanding, bringing lower prices that come from imports and better jobs
    that come from exports. More Americans are buying and building houses, a
    central part of the American Dream. The homeownership rate is now 68
    percent, close to the highest ever. Low interest rates have allowed
    Americans to tap the rising value of their homes. In 2002, refinancings
    added more than $100 billion to American pocketbooks, money that helped
    renovate homes or pay off debt or cover tuition or purchase other goods.
        The most important indicator of our economic strength is the growing
    skill and efficiency of the American worker. The productivity of
    American workers went up by 5.6 percent over the last four quarters for
    which we have data, the best increase since 1973. As productivity rises,
    so do wages and our standard of living. Nationwide, incomes are rising
    faster than inflation.
        We have the most productive, creative, and promising economic system
    the world has ever seen. America sets the standard for scientific
    research, engineering skill, and

    [[Page 31]]

    medical innovation. Our companies and universities attract talent from
    every single continent. Investors from around the world know America is
    the safest place to put their money. People around the world who search
    for a better life still dream of working and living in the United States
    of America.
        All these conditions create a platform for long-term growth and
    prosperity. Yet, in spite of successes, we have more work to do, because
    too many of our citizens who want to work cannot find a job and many
    employers lack the confidence to invest and create new jobs.
        We can help assure greater success tomorrow with the policies we
    choose today. Now, these policies must recognize that our $10 trillion
    economy is sustained by the labor and enterprise of the American people.
    Government spends a lot of money, but it doesn't build factories. It
    doesn't invest in companies or do the work that makes the economy go.
    The role of Government is not to manage or control the economy from
    Washington, DC, but to remove obstacles standing in the way for faster
    economic growth. That's our role.
        And those obstacles are clear. Many jobs are lost in America because
    Government imposes unreasonable regulations, and many jobs are lost
    because the lawsuit culture of this country imposes unreasonable costs.
    I will continue to press for legal and regulatory reform.
        But today--today I want to talk about these concerns: Americans
    carry a heavy burden of taxes and debt that could slow consumer
    spending. I'm troubled by that. I'm also troubled by the fact that our
    tax system unfairly penalizes some productive investments. And I worry
    about people who are out of work. They need our help, both in short-term
    benefits and long-term opportunity. By directly confronting each of
    these challenges, we can preserve the hard-won gains our economy has
    made and advance toward greater prosperity.
        Our first challenge is to allow Americans to keep more of their
    money so they can spend and save and invest--the millions of individual
    decisions that support the market, that support business, and help
    create jobs.
        Consumer spending accounts for about 70 percent of our economy. It
    has been the driving force of our recovery. Yet there are warning signs
    I won't ignore, and I hope the Congress doesn't ignore either. Many
    Americans live in constant and increasing personal debt, with credit
    card bills so heavy they often cannot pay much more than the monthly
    minimum. Millions of citizens spend their entire adult lives living
    paycheck to paycheck, never getting a chance to save for their
    children's education or their own retirement. Americans today are paying
    about a third of their income in taxes. All of this puts pressure on
    family budget and therefore clouds our economic future.
        Americans facing these struggles are due to receive additional tax
    relief in 2004 and again in 2006. Republicans and Democrats in Congress
    already approved these tax rate reductions. And the time to deliver the
    tax rate reductions is now, when they can do the most good for the
    American businesses.
        For the sake of economic vitality, I'm asking Congress to make all
    the tax rate reductions effective this year. The tax cuts should be
    retroactive to January 1st. Upon passage, I'll order the Treasury
    Department to immediately adjust the amount of money withheld for income
    taxes, so that Americans will keep more of their paychecks right away.
    By speeding up the income-tax cuts, we will speed economic recovery and
    the pace of job creation. If tax relief is good enough for Americans 3
    years from now, it is good enough for Americans today.
        An additional beneficiary of this tax cut will be small businesses.
    About 30 million Americans include small-business income when they file
    their individual tax returns with the IRS. Faster tax relief will help

    [[Page 32]]

    these businesses to expand sooner, to hire new people faster, and to
    build a stronger foundation for the recovery.
        We also know that middle-income families need additional relief. So
    today I'm asking Congress to speed up three other tax reductions
    promised in 2001, tax reductions that will help our middle-income
    families. Instead of slowly reducing the marriage penalty until 2009, we
    should do it now, to help 35 million married couples. Instead of waiting
    until 2008 to move more taxpayers from the 15-percent bracket to the
    lowest bracket of 10 percent, we should make that change now and help 2
    million working Americans. And instead of gradually raising the child
    tax credit from $600 to $1,000 per child by the year of 2010, for the
    benefit of 26 million families, we should raise it now.
        These tax reductions will bring real and immediate benefits to
    middle-income Americans. Ninety-two million Americans will keep an
    average of $1,083 more of their own money. A family of four with two
    earners and $39,000 in income will receive more than $1,100 in tax
    relief, real money to help pay the bills and push the economy forward.
    And the sooner Congress acts, the sooner the help will come.
        Taken together, these income-tax cuts will put an additional $70
    billion to work in the private economy over the next 18 months. And
    there's no better way to help our economy grow than to leave more money
    in the hands of the men and women who earned it.
        Our second challenge is to encourage greater investment by
    individuals and small businesses, the kind of investing that builds
    personal wealth and helps company expand and creates new jobs.
        We are increasingly a nation of owners, who invest for retirement
    and the other financial challenges of life. One-half of American
    households own stock, either directly or through pension funds. And we
    have an obligation to make sure, now more than ever, that American
    investors are treated fairly.
        We can begin by treating investors fairly and equally in our tax
    laws. As it is now, many investments are taxed not once but twice.
    First, the IRS taxes a company on its profit. Then it taxes the
    investors who receive the profits as dividends. The result of this
    double taxation is that for all the profit a company earns, shareholders
    who receive dividends keep as little as 40 cents on the dollar.
        Double taxation is bad for our economy. Double taxation is wrong.
    Double taxation falls especially hard on retired people. About half of
    all dividend income goes to America's seniors, and they often rely on
    those checks for a steady source of income in their retirement.
        It's fair to tax a company's profits. It's not fair to double-tax by
    taxing the shareholder on the same profits. So today, for the good of
    our senior citizens and to support capital formation across the land,
    I'm asking the United States Congress to abolish the double taxation of
    dividends.
        The benefits of this tax relief will be felt throughout the economy.
    Abolishing double taxation of dividends will leave nearly 35 million
    Americans with more of their own money to spend and invest, which will
    promote savings and return as much as $20 billion this year to the
    private economy.
        By ending this investment penalty, we will strengthen investor
    confidence. See, by ending double taxation of dividends, we will
    increase the return on investing, which will draw more money into the
    markets to provide capital to build factories, to buy equipment, hire
    more people.
        We must also encourage the investments that help turn small
    businesses into larger ones. Small businesses create the majority of new
    jobs in America, and they account for half the output of the economy.
    Currently, tax law permits small firms to write off as expenses up to
    $25,000 worth of equipment, like computers or machinery that they need.
    I'm asking the Congress

    [[Page 33]]

    to raise that limit to $75,000 and index that number for inflation. This
    change, together with the faster rate reductions, will benefit more than
    23 million small-business owners. My view is this economy can thrive
    only if our small businesses thrive. And we will provide them every
    incentive to grow and create more jobs.
        A third challenge facing our country is the need to help unemployed
    workers and prepare them for the new jobs of a growing economy. The
    unemployment rate today is 6 percent. That's low for an economy coming
    out of recession. It's higher than it should be, and the unemployment
    rate is projected to rise even further in the short run.
        This hardship is concentrated in certain regions and in certain
    industries. Manufacturing jobs have declined for 28 months in a row. You
    know what I'm talking about here in the Midwest. You're showing signs of
    recovery here; yet many people here and across this country are still
    looking for work.
        A woman in Arkansas tells a typical story. She talked about the fact
    that her husband was laid off from his job at a local steel mill. And
    both she and the husband have been looking for a job for quite a while.
    Here's what she said: ``There's just nothing for me to find. We're
    trying to save up what little money we have and move to another
    community and look for jobs there.'' Got to be worried about those kind
    of stories here in America. As we encourage long-term growth, we will
    not forget the men and women who are struggling today.
        Close to 70,000 workers each week exhaust their unemployment
    benefits, and we have an obligation to help our fellow citizens. So I'm
    asking this new Congress to extend unemployment benefits that expired on
    December the 28th. And the benefits Congress approves should be
    retroactive, like the Fitzgerald bill, so that people who lost their
    benefits last month can receive their benefits in full. Helping
    America's unemployed workers should be a first order of business in the
    new Congress, and it looks like it's going to be.
        We must be more creative when we help those who have the hardest
    time finding work. To encourage innovation and more choices and to help
    those who are out of work find the dignity of a new job, today I'm
    unveiling a new approach to helping unemployed Americans through
    Personal Reemployment Accounts. Under this new program, Americans who
    face the greatest difficulties in finding work will receive up to $3,000
    to use in their job search. They will have great flexibility in how they
    use that money. A person with a Reemployment Account will be able to
    decide whether to use the funds for job training or child care or
    transportation or even to cover the costs of relocating to another city
    for a new job. If the job is obtained quickly--within 13 weeks--the
    worker will be able to keep the cash balance as a ``reemployment
    bonus.''
        As we see new economic growth, we will need well-trained workers to
    fill new jobs. So I'm going to ask the Congress to provide $3.6 billion
    to the States to pay for the Reemployment Accounts, enough money to help
    more than a million unemployed men and women across America. In order to
    strengthen this economy in the future, we must help these Americans
    today.
        The jobs-and-growth proposals I've outlined today are a focused plan
    to encourage consumer spending, to promote small-business growth, to
    boost confidence in our markets, and to give critical help to unemployed
    citizens. Overall, this growth package will reduce the tax burden of
    Americans by $98 billion this year and $670 billion over the next
    decade. I proposed a bold plan because the need for this plan is urgent,
    and I urge the Congress to act swiftly and pass this bill.
        Our Nation has seen 2 years of serious and steady challenges. The
    recession and the decline in the stock market slowed

    [[Page 34]]

    earnings and cut into tax revenues and created a budget deficit. And in
    this time of war, I can assure you this Government is spending what is
    necessary to win the war. But the Congress must also understand this:
    The American people deserve and expect spending discipline in
    Washington, DC. With spending discipline and with progrowth policies, we
    will expand the economy and help bring down this deficit.
        This growth-and-jobs package is essential in the short run; it's an
    immediate boost to the economy. And these proposals will help stimulate
    investment and put more people back to work, is what we want to have
    happen. They are essential for the long run as well, to lay the
    groundwork for future growth and future prosperity. That growth will
    bring the added benefit of higher revenues for the Government, revenues
    that will keep tax rates low while fulfilling key obligations and
    protecting programs such as Medicare and Social Security.
        We're meeting the challenges to America. We're strengthening our
    economy, and we're taking a battle to our enemies. And we're not going
    to leave our work half-finished. In the months ahead, we'll confront
    every threat to the safety and security of the American people. We'll
    press on to turn our recovery into lasting growth and opportunity that
    reaches every corner of America. By the courage and by the enterprise of
    the American people, this great Nation will prosper, and there's no
    doubt in my mind this great Nation will prevail.
        May God bless you all, and may God bless America.

    Note: The President spoke at 12:07 p.m. in the Sheraton Chicago Ballroom
    at the Sheraton Chicago. In his remarks, he referred to Michael H.
    Moskow, president and chief executive officer, Federal Reserve Bank of
    Chicago; Mayor Richard M. Daley of Chicago, and his wife, Maggie;
    Governor-elect Rod R. Blagojevich of Illinois; and President Saddam
    Hussein of Iraq. The Office of the Press Secretary also released a
    Spanish language transcript of these remarks.