[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.