    [Public Papers of the Presidents of the United States: George W. Bush (2003, Book I)]
    [May 5, 2003]
    [Pages 426-433]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks in Little Rock, Arkansas
    May 5, 2003

        Thank you so very much. So I'm on my way back from Crawford to
    Washington, and what the heck, I thought I'd stop into Arkansas.
    [Laughter] It's great to be back in Arkansas, a land full of really
    decent people. And it's--as you know, I was honored to be the Governor
    of the great State of Texas, and some of my best trips were into the
    State of Arkansas when I was down there. And I'm glad to be back. And
    thank you all for coming.
        Before we begin, I do want to say how--I express my sincerest
    condolences to the victims of the tornadoes that ripped through Arkansas
    and Kansas and Missouri, Tennessee, Nebraska, and South Dakota. Our
    prayers--and I hope your prayers--are with those who--loved ones who
    lost life or those who lost their home. The Federal Government--the
    local--State and local authorities need to know the Federal Government
    will be moving as quickly as we possibly can to provide help where help
    is needed and where help is justified. Nature is awfully tough at times.
    And the best thing we can do right now is to pray for those who have
    suffered.
        I had a good time on our ranch. One of the guests that we had down
    there was the Prime Minister of Australia, John Howard, and his wife. The reason why
    we welcomed them there is because Australia is an important ally of
    ours. Australia is a strong friend of the United States of America. The
    Australians fought beside our forces in Iraq. They were a part of our
    coalition, a coalition that believes in peace and security, a coalition
    which believes every person ought to be free. They rose to their
    responsibilities as a free nation. Because of their hard work and
    because of the bravery and skill of our military and because of the
    bravery and skill of our coalition, America is more secure; the world is
    more peaceful; and the Iraqi people are free.
        When I get back to Washington, Congress has got important business
    to finish. I want to talk about some of that business here today. Four
    months ago, I sent the United States Congress a jobs-and-growth package
    that would provide tax relief to American workers and families.
        Last Friday, we got some troubling economic news. The unemployment
    rate is now at 6 percent. This news ought to serve as a clear signal to
    the United States Congress that we need a bold economic recovery plan,
    so people in America who want to work can find a job. And part of a good
    economic plan must understand the importance of small business. And
    that's why I went to a roundtable discussion that Richard talked about, so I could hear from small-business
    owners and employees of small businesses, the entrepreneurs of America
    that make this economy go.
        By far, the vast majority of new jobs in America are created by
    small-business owners, so we spent time listening to small-business
    owners here in the State of Arkansas. And I want to thank you all very
    much for sharing your stories and talking about your hopes and your
    aspirations and your dreams for your companies.
        I also want to thank Hector Barreto,
    Jr. who is the Administrator of the Small Business
    Administration, for joining us here today. Hector, I'm glad you're here.
    You're doing a fine job of making sure the ownership

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    society spreads its roots throughout all of society in America, that the
    entrepreneurial spirit is strong not only in traditional parts of our
    society but for anybody who wants to start their own business, they get
    a opportunity to do so here in America. And the SBA helps provide those
    opportunities for people.
        I also want to thank your Lieutenant Governor, Win
    Rockefeller, for joining us. Win understands
    entrepreneurship--doing a fine job as Lieutenant Governor of the State
    of Arkansas, and I'm glad he's here.
        Congressman John Boozman is here from--he's
    from the northern part of the State. Glad you all let him into Little
    Rock for this event, since he's going to get on Air Force One and fly
    back with me. But I appreciate John. I appreciate his steady leadership.
    All he wants to do is talk about Arkansas football when I'm around him.
    [Laughter] I thought so. [Laughter]
        I appreciate very much the mayor of Little Rock, Arkansas, being
    here. Mr. Mayor, thank you for coming. I'm
    honored you're here, and I want to--I appreciate the local officials and
    the State officials who have joined us as well. It's my honor to be with
    you today.
        I also had the honor of meeting David Shapiro. There's David right there. David is a retired
    businessman who works for a program called SCORE, which is a volunteer
    program that's associated with the SBA to help match aspiring new
    businessowners with experienced volunteer counselors who can help the
    entrepreneur, the new entrepreneur, realize the opportunities and
    pitfalls of owning your own business.
        David's spirit reminds me of the true
    strength of the country. Oh, we're a great military might--will remain
    that way, but our real might is our people. The real might of America is
    the heart of the American people, and so when somebody like David says,
    ``Well, I'm going to help somebody help themselves,'' it reminds me of
    the true strength of our country. The best way for America to be a
    hopeful place, the best way for America to be the land of opportunity we
    want it to be, is for neighbor to love neighbor just like you'd like to
    be loved yourself. It is that spirit of community.
        I want to thank you, David. I want to
    thank you very much. I want to thank each and every one of you who are
    helping somebody in need in your community or in your neighborhood. It's
    the millions of acts of kindness and generosity which define the true
    spirit of the American experience.
        This has been a time of testing for this country. It really has
    been. But I'm absolutely confident we've got the strength to meet every
    test that's put in our way. For 20 months, we've been fighting a war
    against terror. For 20 months, this Nation has been at war against
    people who hate freedom, and they hate America because of what we stand
    for. And we are winning that war against terror.
        We routed the Taliban in Afghanistan. That was the Government that
    was so barbaric and backwards, they wouldn't let young girls go to
    school. And now, thanks to the United States of America and our
    coalition, young girls go to school in Afghanistan. Society is a better
    place because of the American troops.
        Al Qaida is on the run. That group of terrorists who attacked our
    country is slowly but surely being decimated. Right now, about half of
    all the top Al Qaida operatives are either jailed or dead. In either
    case, they're not a problem anymore. And we'll stay on the hunt. To make
    sure America is a secure country, the Al Qaida terrorists have got to
    understand it doesn't matter how long it's going to take, they will be
    brought to justice.
        We're doing a lot to secure our homeland. We've got a lot of good
    people working hard to make sure the new Department of Homeland Security
    works well. We're working with local officials in a much more--close
    manner. We're working with State officials more closely. But the best

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    way to secure America is to get the enemy before they get us, and that's
    exactly what's going to happen.
        America is more secure as a result of the liberation of Iraq. Saddam
    Hussein is no more. The terrorists can no
    longer find a source of funding in the Saddam Hussein regime. They won't
    be able to find weapons of mass destruction from Saddam Hussein regime
    because that regime is gone forever.
        I had the honor of being on the U.S.S. Abraham Lincoln. It was an
    unusual arrival--[laughter]--but it was such an honor to be with our
    sailors and pilots, people from all walks of life, all parts of our
    country, that had been on a very long deployment. Morale was high. Their
    spirits were strong. They couldn't wait to get home to see their loved
    ones. I told them all in my speech there on the deck, I said, ``You wait
    and see what's going to happen. America welcomes you home. We're proud
    of your service, and we're proud of your bravery.''
        And for those of you with a loved one in our service, for those of
    you with a loved one overseas, I want to thank you very much for your
    sacrifices. When you talk to them, tell them the Commander in Chief
    really appreciates the job they're doing. So do the Iraqi people, by the
    way.
        Not all our troops are coming home immediately. We've got a job to
    do in Iraq. We've got to make sure the quality of life improves, and
    we're working on that right now, the quality of life for all Iraqis. Got
    to make sure that the elements of the old Ba'athist Party that still
    wants to create havoc there is brought to justice. We'll do that. We're
    going to stay there to make sure that the environment is such that a
    democratic government emerges.
        See, we believe that the Iraqi people are plenty competent of
    running their own Government. We believe that the habits of democracy
    and freedom are how you fight hatred in the world, that a free society
    is one in which people have got positive aspirations for the future, a
    free society is one in which--will be a--more likely a peaceful partner
    in a troubled neighborhood. We'll stay to help the Iraqi form a
    government of, by, and for the Iraqi people, and then we're coming home.
        You see, here's what America and Americans believe, that freedom is
    not America's gift to the world, that freedom is the Almighty's gift to
    each and every individual who lives in the world.
        We have got challenges to make the world more peaceful and America
    more secure, and we'll meet the challenges. There's just no doubt in my
    mind. We've got challenges here at home, to make sure that our economy
    is strong enough so people can find work. The proposal I outlined 4
    months ago was designed to address specific weaknesses in our economy
    and to remove obstacles that keep companies from hiring workers. Those
    obstacles still exist. Congress needs to move.
        But let me take a step back, though, and tell you why I'm optimistic
    about our economic growth potential here in America. We've been through
    a lot. Just think what we've been through. We've been through a
    recession. The first three quarters of the year 2001 were recessionary;
    they were negative growth. We've been through an attack on America, an
    attack that affected us--it just did. In a lot of ways it affected us.
    It certainly focused our resolve. But it also affected our economy.
        And then, just as we were recovering from the attack, when we got on
    the offensive against the enemy, some of our citizens--it was revealed
    that some of our citizens forgot what it meant to be a responsible
    citizen, and they didn't tell the truth to their employees and
    shareholders. There were corporate scandals which affected this Nation.
    And by the way, they will be dealt with as well. We passed a new law,
    the most important reforms--CEOs in America must understand, with
    certainty, there will be consequences if they're not responsible
    citizens. If they're not responsible to their

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    employees and responsible to their shareholders, there will be
    consequences in America. Capitalism must have honesty in the boardrooms
    of American corporations.
        We've just been through the uncertainties of war. There were just a
    lot of things affecting economic growth. But think about this: Interest
    rates are low, which helps the home-buyer; inflation is low, which helps
    those who--those on fixed incomes, for example, that worry about high
    prices of the necessities in order to live. The housing market is
    strong. The energy prices are declining. There's a lot of positives in
    our economy.
        The greatest strength in our economy is the fact that we're a
    productive nation. Productivity of the American workforce just last
    year, for example, rose by 4.8 percent, the highest since 1950. When you
    hear somebody say that it's a productive nation, that means we've got
    the best workforce in the world. That's what that says to me.
        We have one of the strongest economies in the industrialized world.
    Things aren't going as good as they can, but nevertheless, we're making
    progress. We've got some positives on which we can build. But one of the
    problems with being a productive economy is that a worker can--one
    worker puts out--there's better output per worker, let me put it to you
    that way. And therefore, in order for the job market to increase, you
    need to increase demand for goods and services. If one worker can
    produce more goods or more services than before, you need more goods and
    services to be able to hire the additional worker. In other words, we've
    got to have policy which stimulates demand. And the best way to
    stimulate demand is to let people keep more of their own money.
        Notice I said ``keep more of their own money.'' The money we're
    talking about in Washington is not the Government's money. It's your
    money. The best way to get this economy growing is to let you have more
    of your own money so you can spend on a good or a service. And when you
    do, it's going to make it more likely somebody is going to find work.
        The good news is that the debate has shifted from ``no tax relief''
    to ``how much tax relief.'' And I've got an idea. We need robust tax
    relief. We don't need a small tax-relief package. We need a tax relief
    package that meets the needs of our workers. We need a tax relief
    package that stimulates the entrepreneurial spirit. We need robust tax
    relief in order to make sure those who are looking for work can find a
    job.
        Now, let me tell you the ingredients of the package that I've
    outlined. And I'd like to--at the end of this, I'm going to ask your
    help to maybe contact your elected Representatives to let them know how
    you feel, if you like this. First of all, one of the cornerstones of the
    tax policy is to speed up the tax relief which has already been passed.
    In the year 2001, we cut the tax rates on everybody who pays taxes.
    Congress phased it in over a 5--3-, 5-, or 7-year period of time, phased
    that tax relief in. Well, we need the tax relief now. I mean, the
    economy needs the stimulation today, not 3, 5, or 7 years from now.
    Congress needs to accelerate the tax relief.
        We need an immediate reduction of the marriage penalty. And we need
    the child credit--we need to increase the child credit from $600 per
    child to $1,000 per child, retroactive to January 1st of this year. This
    plan would cut the taxes on 705,000 individuals and households in the
    State of Arkansas. That's how you stimulate demand. You let people keep
    more of their own money.
        But the other thing that's interesting about this plan that's
    important for the people of Arkansas and America to understand, when you
    cut individual income-tax rates, you help small business grow. And here
    is why: Most small businesses pay tax at the individual income-tax rate.
    Most small businesses are taxed at the individual income-tax rates
    because they're either a sole proprietorship, a limited partnership, or
    an

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    S corp. Those entities pay individual income-tax rates. So when you're
    talking about cutting individual income tax, you're really talking about
    providing more capital for the small businesses of the State of
    Arkansas.
        I just had the honor of talking to Maura Lozano-Yancy. She is a small-business owner here in the State of
    Arkansas. She specializes in serving the Spanish-speaking community. She
    has owned her business for 4 years. First of all, welcome to this
    ownership society, Maura. One of the things that we want, we want more
    people owning their own business or their own home. There's nothing
    better than having a society of owners helping to affect the public
    policy in a positive way, by the way.
        Maura has been at it for 4 years. She
    knows that it is--it's tough to make it as a small-business owner. But
    she's making it. How do I know? She's got four full-time employees and
    nine part-time employees. She's making it because not only is her
    business thriving, but she's employing people.
        And so we talked about this proposal which would save her says--she says,
    ``Buying equipment is something we always wanted to do, but sometimes it
    gets put back.'' Two thousand dollars would make a difference in her
    calculations as to whether or not she makes an investment. And that's
    what we want to encourage. We want to encourage investment. That's why
    the plan I've submitted to the Congress will raise the small-business-
    expense deduction from $25,000 a year to $75,000 a year.
        We have the
    Pete with us today. They're owners of a packaging company.
    They are a C corp. In other words, when you cut individual tax rates,
    they don't get a tax cut. However, when they buy equipment under this
    plan, they will get a tax relief--they'll get tax relief. Pete says,
    ``We don't mind spending money to make money, but you got to have money
    in the first place.'' That's pretty sound economics. [Laughter]
        But this plan, when they make investment, would save them money over time. It
    provides an incentive for them to invest. Just like Richard
    Derickson, who is an S corp. He not only
    gets to save money as a result of the income-tax rate--he and his daddy
    started the business--his father started the business in '47. It's a
    manufacturing company which makes panels for household appliances.
    Richard says he wants to expand. He's thinking about expanding. He wants
    to buy a sheet washer that would improve the company productivity. This
    plan would help him buy that. See, the deal costs $250,000 to purchase
    one of these. But if you can expense up to $75,000, it makes it more
    likely somebody like Richard will make that investment.
        And I want you to know what happens when somebody buys a piece of
    equipment. First, somebody has got to make the equipment. When somebody
    provides--when there's an incentive to go out and buy an extra piece of
    equipment, somebody is more likely to find work on an assembly line
    which is making that equipment. And then he purchases the equipment;
    somebody has got to operate the equipment. So we got a new employee
    there. And then the company becomes more productive, which means it's
    more likely to have a better bottom line over time. And when you have a
    better bottom line over time, it means you're likely to stay in
    business, so that the people you've hired today are going to have work
    tomorrow.

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        This proposal will save Richard
    $13,500 in taxes. Not only will he save 7,000 from the increased
    expensing, but he'll have $6,500 in his company treasury from cutting
    the taxes.
        My point to you is, is that the Richards of the world, the Mauras of
    the world are all making decisions about whether to expand or not.
    They're making decisions all across America. Tax policy needs to
    encourage positive decisionmaking in the small-business sector because
    small businesses are the lifeblood for new employment. If we're
    interested in a healthy economy, any good plan has got to focus on small
    business, and the plan I submitted to Congress does just that.
        Gordon Whitbeck was telling me he wants
    to buy an HBLC machine. I had to get him to explain it to me. [Laughter]
    He's got his own laboratories. This piece of equipment will make his
    laboratories more competitive. He said he's more likely to make that
    purchase when you increase expensing up to $75,000.
        The Congress needs to hear from the people of Arkansas. Congress
    needs to hear from the small-business owners all across America and
    understand. And when they do, they must listen to the importance of the
    small-business owner as well as to why this plan is good for small-
    business growth and job creation.
        As well, I've talked about the need to treat our investors fairly.
    The Tax Code ought to be fair, and it's fair to tax corporate profits
    once. It is not fair to tax the owners of the corporate profits, the
    shareholders, again. That's not fair. The double taxation of dividends
    is not fair. And I ask Congress to get rid of the double taxation of
    dividends. And let me explain some reasons why it makes sense to do
    that.
        First of all, there are 62,000 seniors in the State of Arkansas who
    pay taxes on dividend income. A lot of seniors rely upon their dividend
    income in order to live the out-years, their remaining years. It's good
    public policy. It makes sense to let the seniors keep more of their own
    money by getting rid of the double taxation of dividends.
        A while ago in the stock markets, it used to be kind of the
    bestselling tool to say, ``Invest in my company. I've got a pretty good
    story to tell.'' I would call that the pie-in-the-sky period of American
    investment. ``We may not have any cashflow,'' the owner of the company
    would say, ``but I've got a great story. Go ahead and invest with me.''
    And a lot of people did, and the market corrected, because good old-
    fashioned economics eventually sets in. If your out-go is greater than
    your in-flow, no matter how good your story is, you're bust. [Laughter]
        A company which pays dividends says, ``Invest in me. I'm going to
    pay a dividend.'' In other words, there is no pie-in-the-sky; dividends
    come out of cash. ``In order to earn your confidence, I'll pay you a
    dividend on a regular basis.'' And when the dividend is met, it is
    pretty clear the company is achieving its objectives. If the company has
    to cut the dividend, it sends a warning signal up to the investors.
        The best--a good--let me just say, a good corporate reform will be
    conservative accounting practices. If you get rid of the double taxation
    of dividends, more companies are likely to pay dividends, as opposed to
    relying upon pie-in-the-sky statements.
        As well, we've got a lot of--I was talking about the ownership
    society--a lot of people own stocks in America. Now, some of them
    directly--own their stock directly, and some of them through their
    pension plans. But by getting rid of the double taxation of dividends, a
    lot of economists talk about what they call the ``wealth effect,'' that
    the markets will go up. This will help the American public at this point
    during our economic history. The more people feel they've got wealth in
    their portfolios, the more likely it is they're willing to spend.
        And so getting rid of the double taxation of dividends will create
    an environment in

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    which capital moves more freely. As a matter of fact, getting rid of the
    double taxation of dividends will reduce the cost of capital. It's good
    economic policy to get rid of the double taxation of dividends.
        Jim Davis is a fellow from right here in
    Arkansas. He owns his own insurance company in Little Rock. He started
    28 years ago. He's 65 years old, and he reminded me right off the bat
    that he's not retired. He said, ``An entrepreneur never retires. Once
    you've got the entrepreneurial spirit, you never shake it.''
        And he was reminding me that by getting rid
    of the double taxation of dividends, he would save $5,700, money which,
    by the way, that he would seriously consider putting back into his
    insurance company. He'd like to hire two additional employees. The
    double taxation--getting rid of the double taxation of dividends would
    make it more likely two people would find work in Jim's business.
        The package I outlined is fair. It addresses weaknesses in our
    economy. Congress needs to move. They need to move boldly. We don't
    need, as I mentioned the other day, a little bitty tax relief plan. We
    need one that is strong and robust for the American worker.
        You'll hear them talking about the deficit in Washington. I'm
    concerned about the deficit, but let me remind you about how we got into
    deficit. We got into deficit because the economy went into the
    recession, is how we got into deficit. When the economy slowed down, the
    revenues to the Treasury slowed down. When the market corrected, the
    revenues to the Treasury slowed down. That's how you get into a
    recession. You get less revenues coming in, unless you're willing to cut
    expenses.
        Secondly, we got a deficit because we committed--or I committed our
    troops into combat. And I told the Congress, ``I don't care how much we
    have to spend. When we put somebody in harm's way, they deserve the
    best.'' And so in order to deal with the deficit, you've got to deal
    with both sides of the equation, starting with the spending side. A
    Congress which overspends is one which is not that concerned about the
    deficit, evidently.
        I mean, we need to set our priorities, fund those priorities, always
    remember whose money we're spending in Washington, DC, and keep in mind
    the deficit. The surest way never to get out of deficit is to overspend
    in Washington, DC. The best way to deal with the deficit is to hold down
    discretionary spending to a reasonable level. The budget I submitted to
    the United States Congress says discretionary spending ought to be at 4
    percent. That's about as much as an average family's income is expected
    to grow this year. If it's good enough for the average family, if 4
    percent is good enough for the average family, it's darn sure good
    enough for the United States Congress.
        On the one hand, you control the spending. On the other hand, you
    stimulate revenue growth. In order to offset any deficit, you've got to
    have more revenues. The best way to have more revenues is to encourage
    economic growth. The more economic growth there is, the more people who
    are working, the more likely it is you're going to get more revenues
    into the Treasury of the United States. I'm concerned about the deficit,
    but I'm first and foremost concerned about that person looking for a
    job, and so should the United States Congress be worried about people
    looking for work.
        It's time for them to move. The debate has started in Washington,
    DC. The message I hope you send is, the more tax relief, the more work
    is going to be available for your fellow citizens. I would hope you'd
    call the members of your congressional delegation to let them know what
    you think, to let them know your opinion.
        Democracy can work, particularly when a lot of people get on the
    phone or by e-mail and just let them know what's on your mind. You need
    to let them know you're concerned, just like the President's

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    concerned about your fellow Arkansas citizen who's anxious to put food
    on the table but can't find a job. And remind them the best way to find
    a job--the best way to help somebody find a job is to stimulate the
    private sector, is to stimulate small-business growth, to let people
    keep more of their own money. And you might just remind them that we
    know whose money it is we're talking about in Washington, DC. It's the
    people's money in the State of Arkansas.
        And I want to thank you all for giving me the chance to come by and
    say hello. It's been an unbelievable experience to be your President.
    It's an unimaginable honor to be the President of such a fabulous
    country. I say ``fabulous country'' because there is no doubt in my mind
    we can achieve anything we put our mind to. There's no doubt in my mind
    that we can have a strong economy. And there's no doubt in my mind that
    the world is going to be more peaceful and more free because of the
    United States of America.
        You see, we hold values dear to our heart. We believe in human
    dignity. We believe every individual has worth. We believe in respect.
    We believe in tolerance. But the thing we hold most dear to our heart is
    we believe in the power of freedom.
        Thank you all for coming. May God bless you all, and may God bless
    America.

    Note: The President spoke at 12:06 p.m. in the Music Hall at the
    Robinson Center. In his remarks, he referred to Lt. Gov. Win Rockefeller
    of Arkansas; Mayor Jim Dailey of Little Rock; former President Saddam
    Hussein of Iraq; Maura Lozano-Yancy, owner, Cross Cultural Development
    Group; Mary and Pete Peterson, owners, Arkansas Packaging Products,
    Inc.; Richard Derickson, owner, Hiwasse Manufacturing Co.; Gordon
    Whitbeck, chief executive officer, Whitbeck Laboratories; and James
    Davis, owner, Davis Agency. The Office of the Press Secretary also
    released a Spanish language transcript of these remarks.