    [Public Papers of the Presidents of the United States: George W. Bush (2004, Book I)]
    [February 26, 2004]
    [Pages 270-277]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks in a Discussion on the National Economy in Louisville, Kentucky
    February 26, 2004

        The President. Listen, thanks for having me. I want to thank you all
    for coming. What we're going to do here is have a--talk about how our
    economy works and how good public policy out of Washington can affect
    people's lives in a positive way, can encourage job growth, so people
    have got a hopeful future. That's what we're here to talk about. And the
    best way to talk about it is to have people who are actually living
    lives that--which have been affected by policy.
        But first, I want to say some things, if you don't mind.
        James Kirchdorfer, Sr. Go right
    ahead. [Laughter]
        The President. Okay, good. [Laughter] I love the entrepreneurial
    spirit of America. It's one of the things that I think makes the country
    unique and strong. I love family-owned businesses. Nothing wrong with a
    son trying to follow in a father's footsteps. [Laughter]
        I appreciate the Kirchdorfer family and employees for welcoming us
    here. Jim was bragging backstage
    about the success of this company is really based upon the fact you've
    got great workers, highly productive, well-motivated workers, which
    speaks volumes about your management style and your ability to make good
    decisions, like marrying your wife, Carolyn. [Laughter]

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        I appreciate a member of my Cabinet being here today. Elaine
    Chao is with us. The Senator married really well. [Laughter] So did
    she. Elaine, I appreciate your hard work. I want to thank very much my
    friend Anne Northup, who flew down with me
    today. We had a fascinating discussion about Kentucky. She's doing a
    great job. She's straightforward. She cares about people.
        It's good to see the Governor and the
    Lieutenant Governor here. I want to thank
    you for coming, Governor and Governor. I appreciate you all coming.
    Ernie, thanks for being here. And Steve Pence--thanks, Steve.
        Mr. Mayor--where's the mayor? Oh, Mr. Mayor, thanks for coming. Jerry Abramson, honored you're here. I
    really appreciate you taking time to be here. I want to thank you all
    for taking time out of your day to come and listen to this dialog.
        There's a person I met at the airport I want to herald. Her name is
    Marina Partee. She is--thank you, Marina. She
    helps victims of domestic violence. See, she is a volunteer to make
    Louisville, Kentucky, a better place for all. She's one of those
    thousands of loving souls who are willing to provide comfort to those
    who hurt.
        The reason I bring up Marina is that we
    talk about the strength of America a lot. We say that we're strong
    because we've got a great military--and we'll keep it that way, by the
    way--we're strong because we're a wealthy nation. The true strength of
    this country lies in the hearts and souls of our citizens. That's where
    we find the real strength of America. We find strength in the fact that
    there are souls who are willing to take time out of their busy lives to
    love a neighbor just like they would like to be loved themselves.
        One of my jobs is to rally the armies of compassion, people who have
    heard the universal call to love. And Marina
    is a soldier in the army of compassion. I want to thank you for setting
    a fine example. I urge people in this fine city to help somebody who
    hurts. There are all kinds of ways that you can serve your community.
    You could mentor a child. You can help somebody who is homeless. You can
    help a shut-in. But be a part of the army of compassion. You represent
    the true strength of the country when you do so. So, Marina, thank you
    for coming. Thanks for the example. I'm proud you're here.
        I'm optimistic about the future of this country because I know what
    we've been through. Yes, I saw firsthand what the Nation has overcome.
    We have overcome a recession. We overcame an attack. On September the
    11th, the enemy attacked us, and it hurt our economy. It also affected
    our psychology, made us realize oceans were no longer--could no longer
    protect us from an enemy which hates what we stand for. And then, all of
    a sudden, we started to recover. Things got better because of the
    resiliency of our economy and the fact that Americans refused to give in
    to terror. Then we had some corporate scandals, scandals which affected
    our confidence. The capitalist system requires honesty and openness. But
    we dealt with it straightforward. We said, ``If you're going to lie or
    cheat or steal, if you don't tell the truth to your shareholders and
    your employees, there will be serious consequences.''
        And then, as the economy kind of started to recover from those
    three, I made a tough decision, and that is to deal with threats before
    they fully materialize, threats abroad before they become imminent. And
    that, obviously, was not only in Afghanistan but in Iraq. I looked at
    intelligence and saw a threat. Congress looked at intelligence and saw a
    threat. The United Nations Security Council looked at the intelligence,
    and it saw a threat. Saddam Hussein said,
    ``I'm not going to expose my weapons. I'm not going to get rid of my--
    I'm not going to allow inspectors in,'' he said. But this is the same
    man who had used them.

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        So I had to make a decision: Do I trust the word of madman, or do I
    remember the lessons of September the 11th? I vowed on September the
    11th to do my duty to protect America, to deal with threats before they
    fully materialize. So I called upon our country and many other nations
    to respond. Some did; some didn't. But the world is better off without
    Saddam Hussein. The people of Iraq are better
    off without Saddam Hussein.
        A march to war affects the confidence of the people. Laura reminded me, in July of 2002, on the television screens
    came the notation ``America Is Marching to War.'' It's hard to invest
    capital when you're marching to war. It's hard to be optimistic, isn't
    it? War is not an optimistic thought. Now we're marching to peace. We're
    marching to peace.
        But all those affected not only the psychology of the country but
    affected our economy. But we overcame the obstacles, and that's why I'm
    optimistic. I say we overcame them--the economy is growing. We added
    over 100,000 jobs since January, new jobs. Inflation is low; interest
    rates, low. Manufacturing activity is up. We're growing. The economy is
    getting better. There's more to do, but look at what we've overcome. And
    we overcame it because of good fiscal policy out of Washington, DC, in
    some part. We overcame it because the role of Government is not to
    manage the economy; the role of Government is to create an environment
    in which entrepreneurs are willing to take risk and create new jobs.
        And so we cut the taxes on the people. We let people keep more of
    their own money. We understand that when somebody has got more of their
    own money to spend, they're likely to demand a good or a service. And in
    this economy, when somebody demands a good or a service, somebody will
    supply that good or a service. And when somebody supplies that good or a
    service, it means somebody is working. That's what that means.
        We cut all taxes. I believe if you're going to cut taxes, you
    shouldn't try to pick and choose winners and losers in the Tax Code.
    Everybody ought to get tax relief. And so we reduced taxes on everybody
    who paid taxes. And it particularly helps small businesses when you cut
    income taxes, because, you see, most small businesses, like some up
    here, are what they call Subchapter S corporations, which means they pay
    tax at the individual income-tax level. A lot of small businesses are
    sole proprietorships, which means you pay tax at the individual income-
    tax level. So when you hear people talking about cutting income taxes on
    individuals, not only does it help families, those tax cuts help small
    businesses. And if you're worried about job creation, like I am, and you
    understand that most new jobs are created by small businesses, it made
    eminent sense to have policies that affected small businesses in a
    positive way.
        We also helped families. We increased the child credit to $1,000 per
    child. That helps moms and dads do their solemn duty to raise their
    children. It reduced the marriage penalty--the tax relief reduced the
    marriage penalty. I think it makes sense to encourage marriage in our
    society through the Tax Code, not discourage marriage. We helped our
    senior citizens by reducing the tax on capital gains and dividends. We
    encouraged small-business investment by raising the limits of
    deductibility, and we'll hear some talk about that in a minute. And we
    put the death tax on its way to extinction.
        Now, let me talk about the death tax right quick. See, I think it's
    really unfair to tax a person's assets twice, while they're living and
    after they die. I think people ought to be able to leave their business
    to whomever they choose without the Federal Government making it
    difficult to do so. I think a person ought to be able to live their
    farm--leave their farm to whomever they choose without the Federal
    Government making it difficult to do so. The death tax is bad for small
    businesses. It's

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    bad for farmers and ranchers. It makes--it's, in my judgment, bad
    policy, and it's on its way to being put to extinction. I say ``on its
    way''--you'll hear me talk in a minute that these--some of these taxes
    don't really go away. It's like they go away for a period of time, but
    they come back.
        Now, as I mentioned, we're doing well. But there are more things we
    need to do. We need an energy policy. It's hard to be a manufacturing
    company, for example, in America if you have uncertainty when it comes
    to energy supply and energy price.
        We need tort reform. It is really hard to be a small-business owner
    and try to create new jobs if you're constantly worried about frivolous
    and junk lawsuits. We need to worry about the cost of medical care. You
    see, it's the cost of medical care that makes it awfully hard for this
    country to remain competitive. As the costs go up, it's harder for small
    businesses to provide employment, and it's very difficult for American
    families as well. We need what's called association health care plans
    that allow small businesses to pool risk so as to better control the
    cost of health care. We need to expand and market health savings
    accounts, which will make it easier for small business to provide
    affordable health care to their employees. We need medical liability
    reform, national medical liability reform. The cost of frivolous and
    junk lawsuits is high on our society. It makes it harder for people to
    be able to employ people because it increases the cost of medicine.
        We need good trade policies. It's easy to trade into America; it
    makes sense for us to be able to trade in other countries easily as
    well. Listen, we're good. We're good at growing things. We're good at
    manufacturing things. We ought to be selling those into--not only here
    at home but into other markets as well.
        There needs to be less regulation out of Washington. And frankly,
    Governor, there needs to be less regulation
    out of the State level as well, so small businesses can spend time
    becoming more productive and employing people as opposed to spending
    time filling out paperwork that, in some cases, probably isn't even
    read.
        We need to do a series of things to make sure the economy grows. And
    one thing for certain we need to do is make sure there is stable,
    reliable tax policy. See, as I mentioned to you, the tax relief exists
    today, but it is going to change unless Congress acts. The child credit
    will go down unless Congress acts. The marriage penalty will go back up
    unless Congress acts. The 10 percent bracket will be affected unless
    Congress acts. In other words, all the tax relief that we passed is set
    to expire. And unless Congress acts, they will be raising taxes on the
    American people at a time when we shouldn't be raising taxes on the
    American people.
        In 2005, the child credit goes down, which is a tax on the families.
    In 2005, the marriage penalty goes up, which is a tax on people who are
    married. In 2005, the 10 percent bracket is altered, which is a tax on
    people. We don't need to be raising taxes right now as the economy is
    beginning to recover. We've got plenty of money in Washington, DC, by
    the way. We've got to be wise about how we spend it. And by the way, in
    2006, many of the small-business deductions go away, which would be a
    tax on small businesses.
        And so I'm calling on Congress to make the tax cuts that are set to
    expire permanent. I would like Congress to make all tax cuts permanent.
    But the very minimum--at the very minimum, they need to listen to the
    stories up here on the stage and make those set to expire in 2005
    permanent. For the sake of our economy, for the sake of American
    families, for the sake of small-business owners, and for the sake of job
    creation, the tax cuts need to be permanent.
        Finally, one other thing I do want to say, and that is that we are
    in a changing economy. And these are exciting times, but change creates
    the need for government

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    at all levels to act in a way that takes advantage of the changing
    times. We need to make sure our job training programs work. We need to
    make sure that the community college system is capable of training
    people for the new jobs of the 21st century, higher paying jobs, better
    jobs.
        I saw the mayor nodding his head. He
    understands that a good, viable community college system which is
    flexible, which matches up employer demands with curriculum to make sure
    there are employees available for those jobs, is really good at making
    sure Louisville, Kentucky, remains a viable place for people to live and
    to work. It's a good way to attract industry, if you've got a viable and
    real job training program system.
        I appreciate Elaine's hard work on this.
    This is a major initiative of our administration, is to provide the
    opportunity for people to retrain so that their skills--they've got the
    skills necessary for the new jobs being created in this economy and, I
    emphasize, better paying jobs being created in this new economy.
        So these are the things we're working on in Washington. But you'll
    be happy to hear I'm about to turn the program over to people who are
    actually on the frontlines of creating jobs and providing employment,
    and they're treating people with dignity in the workplace.
        Jim is an entrepreneur. He is a
    risktaker. He takes risks in order to make sure his company can compete.
    He takes risks in order to make sure the people behind us can work. And
    so I appreciate being invited into a successful family-owned business
    that does so much good for the people that you employ and, really, so
    much good for the economy, because there are thousands of companies all
    across America who base their hopes and aspirations on dreams and
    success and on being a responsible citizen by providing good work for
    people. So, Jim, thanks for having me. Tell us your story.

    [At this point, Mr. Kirchdorfer, chairman, ISCO Industries, made brief
    remarks.]

        The President. Let me just ask you a question. When you made
    investments, what did you do? What did you buy? Investment means
    somebody--you went out and purchased something. So when you hear--when
    people hear the word ``made an investment,'' it means you went out and
    purchased. What did you buy?
        Mr. Kirchdorfer. Well, to put our
    pipe together, it takes expensive equipment. And we do have McElroy
    Manufacturing here, which is where we purchased about $3 million last
    year of equipment. They're in Tulsa, Oklahoma, a USA company. And this
    equipment--when we open a new location, we need equipment to put the
    pipe together at those locations, so we buy more equipment. We need
    people to operate the equipment, so we employ more people. So the
    expansion has created growth in investment and jobs.
        The President. See, the tax bill we passed encouraged this company
    to invest. It made it easier to make the decision to spend $3 million,
    called bonus depreciation. That's fancy words for, we're trying to
    encourage Jim to make the decision to
    expand his business by buying new equipment. And when he buys new
    equipment, somebody has got to manufacture the equipment. And when
    somebody manufactures the equipment, it means they're working, right?
    And so the tax relief we passed had the effect of encouraging investment
    at the small-business level. And that's important because most new
    jobs--70 percent of new jobs, more or less, are created by small
    businesses like Jim's.
        The second thing I want to point out is he started his business
    behind his dad's store. Is that right?
        Mr. Kirchdorfer. Hardware store.
        The President. Hardware store. You know, it's like,``I started my
    business in my garage.'' You know how many times this happens in
    America? It is--think about a

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    country that has got an environment that encourages people to start
    their business behind their dad's store. It's a really exciting part of
    our country, isn't it? And Government must not thwart this
    entrepreneurial spirit by bad tax policy, by bad medical policy, by bad
    regulatory policy. We need to encourage the entrepreneurial spirit. It's
    so hopeful to have a country where people can start their own business
    with a good idea.
        Now, we can't guarantee success. But we can have an environment so
    if somebody decides to take the risk, that they can succeed and,
    therefore, end up employing people. I love the--are you going to employ
    anybody next year, you think?
        Mr. Kirchdorfer. Oh, sure. We're
    going to add probably 30 or 40 jobs again next year--or this year.
        The President. Which is good. Thirty jobs here, thirty jobs there;
    all around the country, small businesses are expanding because there's a
    sense of optimism about the future of this country. And that's how
    people are able to find work. And that's how we're able to provide
    stability in the workplace.
        Speaking about that, we've got Rich Gimmel
    with us. He's the president--there's nothing wrong with being Mr.
    President--[laughter]--of Atlas Machine and Supply. Rich, thanks for
    coming.

    [Rich Gimmel made brief remarks, concluding as follows.]

        Mr. Gimmel. When my father took over the
    company in the late '50s, we had about 35 employees. When my brother Rob
    and I began to run the company together--Rob is in the front row here.
    He's our CEO.
        The President. He's the pretty one.
        Mr. Gimmel. That's right. He's the little
    brother with the gray hair, but he's been there longer than I have.
        The President. I see. [Laughter]
        Mr. Gimmel. But we had about 75 employees at
    that time. Now we have almost 170 employees at Atlas Machine. We are a
    very capital-intensive company. We provide----
        The President. Explain what that means, ``capital-intensive.''
        Mr. Gimmel. Well, we have to reinvest. We
    have to reinvest a lot in our company every year to keep it productive.
    We have to buy machine tools. We have to expand plant. We have to expand
    our facilities. We have to expand our workforce. And all of this is
    extremely demanding of capital.
        We provide plant maintenance services in the Ohio Valley, and also,
    we're the compressed air and pump provider for industry in the Ohio
    Valley. Compressed air is vital to an industry. It's like another
    utility. It's as important as their electricity. If they lose their air,
    they're out of business, so we're the air people. We're kind of an
    industrial----
        The President. It kind of sounds like Washington.
        Mr. Gimmel. That's right. We're the air
    people. [Laughter]
        The President. Is it hot air? [Laughter]
        Mr. Gimmel. Yes, it can be.
        The President. You need to tap into the Nation's Capital. [Laughter]
        Mr. Gimmel. Maybe you guys could be
    supplying us. How about that?
        The President. That's what I--that was my point. [Laughter]

    [Mr. Gimmel made additional remarks.]

        The President. Good. If somebody's listening out there, here's a
    shot to find work--[laughter]--if you're willing to work hard. Thanks
    for coming.
        Jeannie Unruh is with us. One of the
    exciting things about our country is that there's a lot of companies run
    by very skilled women. Women-owned business is, I think, a very hopeful
    part of the future of this country. And I want to thank Jeannie for
    coming. By the way, she's a Subchapter S corporation. So when you hear
    the people rail on taxes and this, that, and the other--when you reduce
    all taxes, it affects her business. She pays taxes. Don't

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    tax the rich--well, the so-called rich happen to be, in many cases,
    small businesses that are out providing opportunities for people.
        Anyway, Jeannie is the head of MAC
    Construction & Excavating, Inc. Thanks for coming.

    [Jeannie Unruh, chief executive officer, MAC Construction & Excavating,
    Inc., made brief remarks.]

        The President. The country grows because people who run small
    businesses are confident about the future. And what I've come away with
    here is that these three businessowners are confident, and that's
    important. It bodes well for the people who are working for these
    companies and for those who they're going to hire.
        The other thing about the tax relief plan--obviously, it affected
    people's lives. And I want to talk to two people whose lives were
    affected. I do want to remind you, however, that this year, if the
    Congress doesn't act on making the tax cuts that expire in '05
    permanent, they're raising taxes on people. You'll hear, ``Let's get rid
    of Bush's tax plan.'' That's code word for, ``I'm going to raise your
    taxes.'' That's what that is.
        Just to give you a sense of what that means, a married couple with
    two children with an income of $40,000 would face a $915 tax increase in
    2005 if the Congress does not act. Remember the child credit--the
    benefits of the child credit go away, which is like a tax increase. The
    marriage penalty goes back up, which is like a tax increase. And the 10
    percent bracket is affected, which is a tax increase.
        With us is Libby McKinney. She's got
    a husband and two children. She works here as a collections specialist.
    Libby, thank you for coming. Tell us what's on your mind.

    [Elizabeth McKinney, credit and collections specialist, ISCO Industries,
    made brief remarks.]

        The President. Well, that's great. Congratulations. Doing
    her duty, by the way. Some people spend
    the money; some people save the money. But it all has a positive effect
    on the economy. And, by the way, you can't have investment unless
    there's savings. And so I appreciate your story. The family saved about
    $1,700 because of the tax relief. We throw a lot of numbers around in
    Washington. That may not sound like a lot in Washington-speak; it's a
    lot for the family, $1,700 tax relief this year.
        And by the way, I just, again, want to remind the people listening
    that if Congress does not act, this family will have a $725 tax
    increase, if Congress doesn't make the tax relief permanent. You see,
    they've got two children, and they're married, and the 10 percent
    bracket affects them. There will be a tax increase on Libby and her family. I don't think that makes sense to
    be raising taxes on hard-working people who are trying to get ahead and
    do their duty as a mom and a dad to raise their children. So, Libby,
    thanks for coming.
        Big Rob is with us, accounting specialist
    Rob Hansen. Thanks for coming, Rob.

    [Robert Hansen, accounting specialist, ISCO Industries, made brief
    remarks.]

        The President. Good. See, he made a
    decision with the extra money to go out and purchase a good, and that
    just helps the economy. There are millions of these decisions being made
    on a daily basis, which is how the economy works.
        I often have to argue that the tax relief was better spent than
    Government could have spent the money. It's a--it affected--[applause].
    I appreciate the checks finally arriving. I was a little nervous when we
    said we were going to put checks in the mail. [Laughter] You've heard it
    before. [Laughter] It actually made it. [Laughter]
        But if the Congress doesn't act, this family will pay $1,000 in
    taxes--increase. It's a tax increase. They don't make--if they don't
    make the child credit permanent or the marriage penalty permanent or the
    10

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    percent bracket permanent, they pay $1,000 next year. We're running up
    taxes on this family, and it affects their ability to make decisions. It
    affects their future. It's just--it doesn't make any sense for Congress
    not to make the tax relief permanent. And the best way that I can
    possibly tell the story--they're used to me--is all they've got to do is
    listen to what tax relief meant for people in their lives and what tax
    increases would do. And so I call upon Congress to listen to the voices
    of the people out here struggling to get ahead in America, people who
    are making good decisions, people who are doing their duty as
    responsible citizens to love their children with all their heart, people
    who are putting food on the table.
        I want to repeat to you what I said before. This country has
    overcome a lot, and we're moving forward with optimism and confidence.
    You know why? Because we've got great people. And I'm proud to be the
    leader of such a strong nation.
        Thank you all for coming. God bless.

    Note: The President spoke at 10:52 a.m. at ISCO Industries. In his
    remarks, he referred to Senator Mitch McConnell of Kentucky, husband of
    Secretary of Labor Elaine L. Chao; Gov. Ernie Fletcher and Lt. Gov.
    Steve Pence of Kentucky; and Mayor Jerry E. Abramson of Louisville, KY.