    [Public Papers of the Presidents of the United States: George W. Bush (2003, Book I)]
    [February 12, 2003]
    [Pages 156-161]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to Small Investors in Alexandria, Virginia
    February 12, 2003

        Thank you all for coming. Thanks for your interest in this country
    and its future. We've got some big challenges ahead of us. We've got an
    opportunity to make the world a more peaceful place and a freer place.
    And I believe, as a result of the resolve of the United States of
    America, the world will be more peaceful, and the world will be more
    free. And here at home, we've got a challenge with our economy. I mean,
    frankly, it's not strong enough. It is not robust enough. Anytime
    somebody is looking for a job and can't find one means we've got to work
    together to create jobs.
        Now, the role of Government is not to create wealth. The role of
    Government is to create an environment in which the entrepreneurial
    spirit can flourish, in which people are encouraged to invest and save,
    in which there's confidence in the future of the country. And that's
    what we're here to discuss today.
        I want to thank John Snow for agreeing to
    serve in our administration. He came at a pretty tough time. [Laughter]
    Some people would have said, ``Well, I don't think I want to take on the
    job unless everything is precooked and the markets will be surging.''
    But he realized that this country needed all of us pulling together. So
    I asked him; I said, ``Would you be willing to leave the private sector
    to serve America?'' And he said yes, and I'm thankful for that. I'm glad
    to have him on my team. His job is to talk about our program all around
    the country and particularly in the Halls of Congress and convince them
    about the wisdom of what we're proposing.
        Speaking about Halls of Congress, John
    mentioned George Allen, the Senator from
    Virginia. I'm glad that George is here. And Don Manzullo from Illinois is here, too. I'm honored both you guys
    came. I appreciate your interest. I look forward to working with you and
    your colleagues, both Republicans and Democrats, to do what's right for
    the American people.
        I want to thank Chuck Schwab, as well,
    for coming. He's a--he is a leading entrepreneur in the country, built
    his own business. Tomorrow, when I go down to Florida, I'm going to talk
    about the dreams for small businesses that grow to be big businesses.
    This is a guy that took a small business and grew it into a big
    business. It's really what America is all about, is to have unlimited
    horizons for people to take risk so they can achieve dreams, no matter
    what their status in life may be. And the Schwab Company certainly is--
    represents the great entrepreneurial spirit of our country.
        I also want to thank Susan Meisinger and
    David Hutchins, who run the Society for Human
    Resource Management. Thank

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    you for opening up your hall. It's awfully thoughtful of you to let us
    come in here. I fully recognize it's not easy to host a Presidential
    entourage--[laughter]--but you did it. And thanks for giving us a chance
    to come and talk about how we're going to address some of the big
    challenges here at home.
        My attitude about the economy is that, first, we've done a pretty
    remarkable job here in America of overcoming some difficulties. The
    first three quarters of the year 2000 were recessionary. They were
    negative growth. Fortunately, we passed tax relief, which--based upon
    the principle, if people have more of their own money, they're likely to
    spend it. And when they spend it, somebody's likely to provide a good or
    a service. And when somebody provides a good or a service, somebody's
    more likely to find work. And I think most economists would tell you
    that the recession--most objective economists--would tell you that the
    recession was shallower as a result of the initial tax relief package
    that both Republicans and Democrats voted for.
        Then the terrorists hit us. And people of Virginia know full well
    the impact of the terrorist attack on the Pentagon and this part of the
    world. Of course, the people in the great city of New York understood
    the effect that it had, the terrorist attack had, on the New York
    economy. But it affected our whole economy. The airline industry
    became--had difficult times. We couldn't get projects started--real
    estate, big building projects going because of the lack of terrorism
    insurance. We actually dealt with that issue in the Halls of Congress,
    and hopefully big construction projects which will put our hardhats back
    to work will get going.
        The country was resilient, though, and strong, determined to defeat
    terror and determined to go about our life, no matter what the threat
    may be. And we began to recover. And then it--then we found out some of
    our fellow citizens, a few of the many executives which run our
    companies, thought they could lie and cheat. And that created a lot of
    small investors--and large investors, for that matter--began to wonder
    whether or not the numbers they were reading were accurate. There was a
    loss of confidence in the markets because of the corporate scandals.
        And we dealt with that, and we're dealing with that. Pretty soon, a
    good man named Bill Donaldson will become
    the Chairman of the SEC. He knows what his charge is. His charge is to
    make sure that when an investor, a member of an investor club opens up
    his or her portfolio or the balance sheet of a company they've invested
    in, they know they're reading true numbers, so we can regain confidence.
        Our economy is growing, in spite of all of what I've just described,
    but it's not growing strong enough. And so I went back to the Congress
    and proposed a plan that is an aggressive plan, no question about it.
    But the principle of the plan says, we trust people in this
    administration. We trust the people to make wise investments. We trust
    the people with their own money. We trust the moms and dads to be able
    to save for their children. It's really the crux of the economic plan.
    It says it's the people of America; it's the ingenuity and hard work and
    wise investment capabilities of the American people that make this
    economy strong and different. And therefore, the plan is a plan that
    puts trust in people. It's a well-thought-out plan. As a matter of fact,
    over 200 economists today enthusiastically embraced it, said it's a good
    idea.
        The first part of the plan has to do with your income-tax levels. It
    says everybody who pays taxes ought to get relief. The role of the
    Government is not to try to pick and choose who the good taxpayers are
    and who the bad taxpayers are. If you pay taxes, you ought to get
    relief.
        Of course, that was already passed in the year 2001. We also are
    phasing--we're increasing the child credit to $1,000 over a period of
    time, reducing the marriage

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    penalty over a period of time, reducing the bottom rate from 15 percent
    to 10 percent.
        So what we've said to the Congress is, ``You've already passed all
    this. You've already accepted the major principle involved in tax
    relief, which is, trust American people with their money. You've already
    seen the effects of what a tax relief plan can do. Just accelerate what
    you've already got on the books. Take that which you have passed, and
    instead of phasing it in over 3 or 5 years, let's move it this year. If
    the economy needs a little extra oomph, if more money needs to go into
    the pockets of our people, so as to encourage economic vitality, why
    wait? You've been through the debate. You've already talked about the
    principles involved. Move it up.''
        This will affect 92 million Americans who will receive, on average,
    a tax relief of $1,083. Now, some in Washington may say, ``Well, that's
    paltry. That's not enough.'' Uh-uh, $1,083 is a lot of money for people,
    particularly when you think about the effect it will have on our economy
    when millions of Americans take that and invest it or buy things with
    it. It will have an effect that will increase the economic vitality of
    America.
        You hear a lot of talk about stimulative--what's stimulative, what's
    not stimulative. We anticipate that this plan--this aspect of the plan
    is over $50 billion in the economy this year. You see, I plan to not
    only get them to accelerate the tax relief; I'm going to ask Congress to
    make it retroactive to January 1st, so it will have an immediate effect
    on the economy. That's what's needed. The timing of tax relief is
    important, just as important as tax relief is.
        And so I'm optimistic that Congress was wise once, and they'll be
    wise again on the same plan. This also will have an effect on small
    businesses. Tomorrow I'm going to Florida to talk to small-business
    owners and entrepreneurs, and what Americans and Congress must
    understand--I know George Allen understands
    this; Don understands this--is that most small
    businesses pay tax at the individual tax rate.
        When you hear somebody say, ``I'm a sole proprietorship,'' that
    means you're paying individual income taxes. If you're a Subchapter S or
    a limited partnership, that means you're paying individual income taxes.
    And so when you reduce income taxes, you're really putting capital in
    the hands of small-business owners, and capital, extra money, gives that
    person a more likely--a chance to expand. And expansion means jobs. And
    by far, the vast majority of new jobs in America are created by small-
    business owners. And so this tax plan not only helps our fellow
    Americans save, it also helps small-business owners with additional
    capital. It's like a huge capital infusion into the small-business
    sector of America.
        On top of that, I'm asking Congress to allow small firms to write up
    up to $75,000 worth of equipment in the year in which they spend it, as
    opposed to limiting the deductions to $25,000. And that means a lot for
    small businesses. When a person can deduct an additional $50,000 of
    capital investment, it means you may have the small-business person
    invest in one extra machine. But when that's multiplied all across the
    country, all throughout America, it means the machine manufacturer is
    more likely to be able to provide jobs. It means the business that buys
    the machine becomes more efficient. It means somebody is probably needed
    to operate the machine so that there's extra employment there. It will
    have a ripple effect throughout our economy, which is very important for
    our fellow Americans to understand.
        The other thing I want to talk to you about is the dividend
    proposal. In America today we tax corporate-income profits, which is
    fine. We should. It makes sense. But then we take that profit and
    distribute it to a shareholder in the form of a dividend, one of the
    owners of the company. And then he gets taxed again, and that doesn't
    make sense. You don't want to keep

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    taxing capital. If capital equals jobs, you really don't want to tax it
    but one time, seems like to me. It makes sense.
        So when people in America hear us talk about the elimination of the
    double taxation of dividends, they've got to understand we're doing so
    with two things in mind: How do we improve the lot of our fellow
    Americans, and what do we do to increase jobs? If somebody is looking
    for work out there, and capital equal jobs, therefore, the more capital
    available for investment, the more likely it is he's going to find work
    or she's going to find work. And that's what we're here to talk about
    today.
        The idea of allowing people to keep more of their own money is
    particularly important for many of our retired citizens. You've got a
    person who's worked all their life, and they've got medical bills,
    maybe, piling up, particularly since Medicare isn't all that effective
    these days for some. Or you're worried about your grandkids' education.
    But really what you're worried about is you want to make sure that you
    have got a comfortable existence.
        Ten million senior Americans receive some sort of dividend income.
    It certainly makes sense to me that if part of good policy is to
    encourage job creation with more capital, it's a nice dividend, so to
    speak, to allow our seniors to have more money as well. So this relief
    plan will immediately give seniors $800 on average a year more money,
    which is vital for their retirement. It's a plan which affects people's
    lives in a positive way.
        Secondly, this is a nation of investors. It used to be when you talk
    about stocks and bonds--it probably wasn't all that long ago--you'd say,
    ``Well, gosh, how's your portfolio?'' And that would probably pertain to
    a handful of people that lived--knew something about Wall Street. There
    probably weren't a lot of them in Crawford, Texas, all that long ago,
    saying, ``Hey, my portfolio's good. How's yours?'' But now, America's
    becoming a nation of owners and investors. We're a much more
    sophisticated country when it comes to stocks and bonds. Eighty-four
    million Americans own a stock directly and/or through a pension plan.
    And so, therefore, policy, public policy which affects stock ownership,
    public policy which affects those who own equities and those--public
    policy which encourages ownership, makes sense.
        I mean, after all, we want 100 percent of our people to be a part of
    the ownership society. The more somebody owns, the more somebody is
    going to have a stake in the future of the country. We want everybody to
    have their own home. We want everybody to have their own balance sheet,
    their own savings, their own plans. And excluding the double taxation of
    dividends rewards small investors. It encourages stock ownership.
        It also will have a positive effect when it comes to our corporate
    America. And a lot of corporate America said, ``Invest in me. The sky's
    the limit, a fantastic growth potential.'' They say, you know, ``We may
    not be making any money, but, hey, give me a shot.'' And that works in
    some cases. But it also makes sense to have people say, ``Invest in me
    because you're going to get a steady source of the cashflow of my
    company. I'm going to share it with you. We're proud that you took risk
    in us, and in return we're going to give you a steady flow of the cash
    coming into the company through the form of a dividend.''
        Eliminating the double taxation of dividends will encourage more of
    corporate America to distribute profits and cashflow to their investors
    through dividends. And that's good; that's a good corporate reform. It's
    also good for encouraging the ownership society, and it's good for
    enhancing the lifestyle of millions of Americans all across the country.
        The getting rid of the double taxation of dividends is good economic
    policy for the short term for America; it is good economic policy for
    the long term of America. And I urge the Congress to eliminate the
    double taxation of dividends.

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        One of the things we did before coming over here is we had a
    roundtable discussion, sitting around a square table. [Laughter] I
    like--I appreciate Chuck providing the square
    table--[laughter]--but I'm more appreciative of the members of the
    roundtable who came to talk.
        Now, we talked to Joan Hanover. She and her
    husband, George, were visiting with us. They
    are near retirement--retiring--in the process of retiring, meaning
    they're very smart, active, capable people who are retirement age and
    are retiring. They receive $1,700 additional dollars a year when we get
    rid of the double taxation of dividends. That is a significant amount of
    money for the Hanovers. It's additional money that they can choose to do
    with what they--they can do with their own money.
        Part of the dialog, by the way--the money we're talking about today
    is not the Government's money. See, that's the other important thing to
    remember. It's an important principle when it comes to tax relief. It's
    your money we're talking about. And the Hanovers are having more money
    to invest.
        Joe Kemper will have an additional $1,600, he
    shared with us. The whole tax relief will actually give him $3,500
    additional money in his own pocket, of which 1,600 will be from getting
    rid of the double taxation of dividends. I hope you didn't mind me
    saying that, Joe. But the point is, is that--I think Joe will tell you,
    he's not one of these superrich in America. He's a guy who served his
    country. He worked hard all his life; $3,500 means something to him.
        When you hear the debate about this kind of class warfare, rhetoric
    about, ``Oh, this is for the rich, only for the rich,'' I want you to
    think about the Joe Kempers of the world. I certainly will--a fellow who
    worked for our Government and now a fellow who we trust with that
    $3,500, because it's his money. And when he invests it, it's going to
    have a positive effect. All the Joe Kempers of the world taking that
    extra money and investing it will mean somebody else is likely to find a
    job, and that's important for our fellow Americans to understand.
        We met with Tim Roberts and the Lanes,
    Brian and Wendy Lane. They
    were--they are younger parents. The tax relief plan will mean they will
    have more money to invest for their children. When they set aside the--
    some of the money that they get in a child's education trust, for
    example, and that compounds over time, it means it's more likely that
    that child is going to have a pretty good nest egg. The more money they
    have, the more likely it is they'll be able to save for their children's
    future.
        If we get rid of the double taxation of dividends, it means that one
    of the good investment vehicles for a child who is young today will be a
    dividend-paying stock, because not only will the person be able to get
    the yield, the person will get the appreciation of the company in which
    they invest.
        These good couples work hard for their children. They make
    sacrifices for their children. And it makes sense for our tax policy to
    reward them for their sacrifices.
        The plan we've laid out is good for job creation. The plan we've
    laid out also speaks to the aspirations of many of our citizens. And
    that's very important for Congress to understand when they debate this
    plan. It speaks for the aspirations of the senior citizen to have a
    comfortable lifestyle when they retire. It speaks to the aspirations of
    the moms and dads to be able to invest for their children. It speaks to
    the aspirations of a person looking for work today. It really speaks to
    the hopes of our country that we want our economy to be as strong as it
    possibly can be, as we take on some of the great challenges which this
    country has ever faced.
        This country will accomplish anything we set our mind to. We will
    achieve peace in the world. We will work for freedom,

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    not only here in America, a free and just society. We believe in freedom
    around the world because everybody has got worth. See, one of the great
    principles of America is everybody has dignity. Everybody counts.
    Everybody matters. As I said in my State of the Union, liberty is not
    America's gift to the world. It is God's gift to human--mankind, and
    that's what I believe.
        And as we think about how to have a better society and a more
    peaceful world, we've got to trust in the wisdom and strength of the
    American people. After all, the American people is this country's
    greatest asset.
        I boldly predict that with good policy this economy will be strong.
    I boldly predict that with wise diplomatic policy the world will be more
    peaceful. And I can predict that, because we happen to live in the
    greatest nation on the face of the Earth. Thank you all for coming. And
    may God bless America.

    Note: The President spoke at 2:13 p.m. in the Founders Room at the
    Society for Human Resource Management. In his remarks, he referred to
    Charles Schwab, chairman, Charles Schwab Corp.; Susan Meisinger,
    president and chief executive officer, and David B. Hutchins, chair,
    Society for Human Resource Management. The Office of the Press Secretary
    also released a Spanish language transcript of these remarks.