[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.