    [Public Papers of the Presidents of the United States: George W. Bush (2005, Book II)]
    [October 26, 2005]
    [Pages 1602-1609]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the Economic Club of Washington, DC
    October 26, 2005

        Thank you, all. It's about time you invited a President. [Laughter]
    Thanks for having me. As you know, there was an important Presidential
    election last year. There was a lot of debate, and the stakes were high.
    Fortunately for all of us here, it came out the right way. Vernon
    Jordan was elected president.
    [Laughter] My only regret is Vernon didn't tell me this was lunch.
    [Laughter] I was looking for some warm food.
        But it's good to be here; thanks for inviting. I appreciate all of
    you taking a lead in the economic vitality of this in--city. It's--as a
    part-time resident, I'm pulling for a good economy and job creation.
    Most of all, I appreciate the fact that you provide scholarships for
    graduate students. I think

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    it's a noble cause to do that. It's impressive that you understand that
    we have a duty to pay back to society. And the idea of providing
    scholarships for graduate students who want to study economics and
    business is a good idea, and I hope you keep doing it.
        You know, one of the important things about America is that in a
    capitalist system people who benefit from the system understand there's
    an obligation to put something back into the system, an obligation to
    help people in need. And I want to thank you for leading the way.
        I appreciate the board of directors having me here. I appreciate the
    DC government officials who are here.
        I'm going to talk a little bit about the economy. My most important
    duty as regards the economy is to foster an economic environment that
    encourages entrepreneurship. Government does not create wealth. The role
    of Government is to create an environment in which people can feel
    comfortable risking capital and realizing dreams. That's how I view my
    role.
        I took a step toward that--I took an important step last Monday when
    I nominated a distinguished economist named Ben Bernanke. Perhaps some of you know him. He's a decent man. He brings
    impeccable credentials and sound policy judgment and sound character to
    this vital post. And he will continue the superb leadership that Alan
    Greenspan has provided at the Fed.
        We have got a resilient and strong economy. If you think about what
    this economy has been through, I think you'll agree with me it's been
    resilient and strong. In the past 5 years--that happens to be the amount
    of time I've been here--this economy has been through a stock market
    bubble. We've been through a recession. We had the attacks of September
    the 11th. We had corporate scandals. We've had the rising price of
    energy, and we've had natural disasters. And these were shocks to our
    system. It required action to make sure America was a good place to risk
    capital. They forced us to make choices here in Washington. We could
    have tried to solve problems by raising taxes and dictating solutions
    from the Nation's Capital. That's not the route I decided to go.
        We gave Americans an opportunity to keep more of what they earn and
    let them decide the best way to save and spend and invest their money.
    To get our economy moving again, this administration has followed a
    clear principle: We put our trust in the hard work and good sense of the
    American people.
        And so that's why we cut the taxes. We cut taxes on families by
    lowering the rates. We cut taxes on the child credit. We reduced the
    marriage penalty. We cut taxes on dividends and capital gains to
    encourage investment. We cut taxes on small-business owners who often
    pay their business taxes at the individual income-tax rate. We created
    incentives for small businesses to invest in new equipment, expand, and
    create jobs. And to help our families and our farmers and entrepreneurs
    pass on the results of a lifetime of hard work to their loved ones, we
    put the death tax on the road to extinction.
        These progrowth policies have worked. Real disposable personal
    income has grown by nearly $1,900 per capita. Homeownership has reached
    an alltime high. More minorities own a home today in America than ever
    before in our Nation's history. Productivity is growing at the fastest
    rate in nearly 40 years.
        Over the past 28 months, America's entrepreneurs and--have created
    more than 4.2 million new jobs. The unemployment rate is 5.1 percent.
    That's lower than the average rate of the 1970s, 1980s, and 1990s. These
    policies have helped us achieve a growth rate of 3.6 percent over the
    past year, more than 3 times that of Europe and nearly twice that of
    Japan. The unemployment rate is roughly half of the unemployment rates
    in Germany and France--I might remind you, countries where workers and
    businesses face higher taxes, a lot

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    of regulation, and big Government. When people in these countries look
    for a place to invest their savings, by the way, they look right here to
    the United States of America.
        Our economic policies have helped create jobs, growth, and
    opportunity, yet every day brings new and stiff competition for our
    Nation's workers and businesses. In the coming decades, there's going to
    be a time of great opportunity if we make the right decisions, if
    Government doesn't foul it up. So we're moving forward with an agenda to
    ensure that America is entrepreneurial heaven, the place where people
    can realize their dreams.
        The agenda starts with keeping taxes low and restraining the
    spending appetite of the Federal Government. Tax relief left more money
    in the pockets of the people, and that's been a vital part of the growth
    of our economy. Yet, tax relief is set to expire in the years ahead. We
    need certainty in the Tax Code. We need to say to our risktakers,
    ``Here's the way the Tax Code is going to look in the years ahead.''
    Therefore, I think it's important that we make the tax relief permanent.
        As we provide more incentives for people to work and invest, tax
    relief has led to faster economic growth, which is translated into
    faster revenue for the Federal Treasury. This year, thanks to rising
    revenues and wise fiscal policy, the deficit was $108 billion less than
    expected. To continue reducing the deficit, we need to keep the taxes
    low, and we've got to redouble our efforts to be wise about how we spend
    your money.
        Earlier this year, I submitted the most disciplined proposal for
    nonsecurity discretionary spending since Ronald Reagan was in the White
    House. My budget proposed an actual cut in spending on nonsecurity
    discretionary spending. Congress needs to make that cut real. And I'm
    open to a further across-the-board spending cut as well. My budget has
    proposed vital reforms in mandatory spending that will save the
    taxpayers $187 billion over the next decade, part of our plan to cut our
    deficit in half by 2009.
        Some have said that the unprecedented destruction caused by the
    recent hurricanes means that we've put--got to put our plans to cut the
    deficit on hold. I disagree. We don't have to do that. We can help the
    people of the gulf coast region recover and rebuild, and we can be good
    stewards of the taxpayers' dollars at the same time, which means we're
    going to have to reduce unnecessary spending elsewhere in the budget. My
    administration is working with Congress to identify offsets and spending
    rescissions so we can provide for emergency relief in a fiscally
    responsible way.
        I met with the leader of the House and the Senate today, and we're
    working on a plan for pushing significant reductions in mandatory and
    discretionary spending. Both Houses are on progress--making progress
    toward cuts that'll show the American people we're capable of being wise
    about the money and at the same time, meet our priorities. I encourage
    Congress to push the envelope when it comes to cutting spending.
        See, believe it or not, up here in Washington, there's a lot of
    programs that simply don't deliver results. [Laughter] And if it doesn't
    deliver results, we ought to get rid of them. That will help us meet our
    priorities, winning the war on terror and helping the people down there
    in Katrina, making sure our kids get educated.
        If we keep taxes low and restrain spending, we also have got some
    other long-term challenges to the economy. This economy of ours, as I
    mentioned, has shown resilience because it's flexible and responsive.
    But there are three broad challenges we've got to confront. First is, we
    all must be concerned about our growing dependence on foreign sources of
    energy. Our families and businesses are hurting because of higher
    gasoline prices. It's like a hidden tax on the American people. Gasoline
    prices

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    drain the budgets of our families. They run up the cost on the small-
    business owners.
        And the damage inflicted by Hurricanes Katrina and Rita pushed the
    prices even higher, disrupting oil and natural gas and gasoline
    production along the gulf coast. These natural disasters have
    highlighted a problem that Congress needs to pay attention to. It's a
    problem I've been talking about since I first came to Washington: Our
    energy supplies are not keeping up with consumption, and that's why
    people's prices are going up.
        Now, I appreciate the work of Congress. I signed a good energy bill
    this summer. The bill makes an unprecedented commitment to energy
    conservation and efficiency by promoting new technologies and giving
    consumers incentives to use energy-saving products. And that was an
    important title, the energy bill, the conservation title. The bill helps
    America make cleaner and more productive use of our existing energy
    resources, like coal and oil and natural gas. And for the sake of energy
    independence, I know that we can build safe and efficient nuclear
    powerplants, and this country needs to get after it.
        This bill helps diversify our supply by promoting alternative and
    renewable energy sources such as ethanol and biodiesel. And we're making
    progress in developing the technologies that'll be able to use corn or
    soybeans to be the feedstock for energy. I mean, it makes sense, doesn't
    it? We grow a lot of corn, and we grow a lot of soybeans. I hope one
    day, the President is sitting in the Oval Office and somebody walks in
    and says, ``Hey, the crops are strong this year. It means we're less
    dependent on foreign sources of energy.''
        The bill also helps promote needed investment in our energy
    infrastructure. It's a good piece of legislation; but it's only a first
    step. Congress needs to take more steps. We've got to allow
    environmentally responsible oil exploration in the Arctic National
    Wildlife Refuge, if we want to become less dependent on foreign sources
    of energy. We need to build and expand our refineries. Do you realize we
    have not built a new refinery since the early 1970s in America? People
    wonder why the gasoline price goes up. It's because we don't have enough
    supply. People are conserving more, and that's good. But we need more
    supply of gasoline, for the sake of our consumers and for the sake of
    our economy. And so I'm going to work with Congress to pass a bill that
    makes it easier for current refineries to expand, that encourages the
    construction of new refineries so that we've got more affordable fuel
    for the American people.
        In the long term, reducing our dependence on foreign oil requires
    looking beyond fossil fuels. So we're making investments necessary to
    move from a hydrocarbon economy to a hydrogen economy. In other words,
    what I'm telling you is, is that investments in technologies are going
    to allow us to diversify away from the era of oil and gas. In 2003, we
    launched an aggressive program called the Hydrogen Fuel Initiative. When
    hydrogen is used in a fuel cell, it can power consumer products from
    computers to cell phones to cars that emit pure water instead of exhaust
    fumes. And I appreciate the Congress in dedicating $1.2 billion into
    hydrogen fuel research. Here's the dream--and I think it's going to
    happen--that your children--your grandchildren, for some of you--
    [laughter]--children, for the younger--will be able to take their
    driver's test in an automobile powered by hydrogen.
        Secondly, we've got to ensure that we have an education system that
    prepares a new generation of American workers to fill the jobs of the
    21st century. And that starts with making sure we get it right at the
    elementary schools. I want to thank Members of Congress for working with
    me on the No Child Left Behind Act. Let me tell you the philosophy
    behind that. I don't believe you can solve problems unless you measure.
    If you're running a business, it's

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    hard to solve problems if you don't measure. And so, inherent in the No
    Child Left Behind Act is the following philosophy: One, every child can
    learn, and we want to know if they are learning. You see, a system that
    doesn't hold people to account basically assumes certain children can't
    learn, and it's okay just to shuffle them through the school. That's
    unacceptable in America, as far as I'm concerned.
        The No Child Left Behind Act challenges what I've called the soft
    bigotry of low expectations by raising standards and raising
    accountability and says to the school districts, ``We'll get you money
    for--particularly your Title I students--but you measure; you measure in
    the early grades to show us whether or not a child can read and write
    and add and subtract. And if not, do something about it; change.'' And
    we're beginning to see results.
        On this year's NAEP test, fourth grade reading scores were six
    points higher than in the year 2000. That's progress. Fourth grade math
    scores were the highest in the history of the test. Minority students
    made progress toward achieving--closing an achievement gap in America, a
    gap which, by the way, is unacceptable in this country. And there's more
    work to be done.
        I think we ought to extend the same high standards and
    accountability to our high schools so that when somebody graduates from
    high school, the diploma means something. Most of the jobs in the 21st
    century will demand advanced training and technical expertise, as well
    as retraining over the course of a lifetime. That's why I'm such a
    strong believer in the community college system.
        We've got programs out of the Labor Department that simplifies the
    job training programs, that diversifies them and that streamlines them
    from their inadequate bureaucracies. It's unbelievable what--the strings
    attached to job training money here in Washington, DC, so we're trying
    to eliminate those strings so the money goes to places that are actually
    providing a result. I've traveled this country, and I've been to
    community colleges all over that are doing a fantastic job by giving the
    people the skills for the jobs which actually exist. And so we're going
    to continue pursuing a strong job training program in institutions that
    work and that are capable, that have got curriculum that are flexible
    and schools that are affordable, and people that are trained--being
    trained for jobs which are actually existing.
        And finally, we've got to make sure more Americans can go to 4-year
    colleges, and so we've provided more assistance in the form of Pell
    grants. To make sure that the economic environment in this country is
    conducive to growth, we've got to make sure our workforce is educated.
        Thirdly, we must have a health care system that puts patients in
    charge of decisions, that offers greater choice, and allows workers to
    own their own health care. Listen, I understand the rising cost of
    health care has imposed large costs on your businesses and on our
    families. But we've begun to make changes here in Washington. I was
    pleased to sign a bill that confronts costs and creates choice by giving
    Americans the option of health savings accounts. It's a really
    innovative product that gives you affordable coverage for major
    illnesses and allows the worker to save money tax-free for routine
    medical expenses. It puts the consumer in charge of making health care
    decisions.
        Once you have your HSA, by the way, you can roll over money on a
    tax-free basis year to year, and you can take it with you from job to
    job. I strongly urge you to look into HSAs if you're running a business
    here. Many Americans are already benefiting from the security and--of
    HSAs. I proposed tax relief for individuals and employers and low-income
    families to use HSAs, and I hope the Congress responds.
        As we make health care more accessible and affordable, we're
    strengthening the safety net. When I came to office, I

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    pledged to open or expand 1,200 community health centers to serve an
    additional 6.1 million people in need of health care. So far, we've
    opened or expanded more than 800 community health centers. These are
    cost-effective, smart facilities. It helps the poor and the indigent get
    much needed primary care. The budget for 2006 provides funding to open
    or expand more than 500 more community health centers.
        We also renewed the promise of Medicare. Medicare is a really
    important program, obviously. It needed to be reformed. If you're going
    to have a health care system for the elderly, it seemed like to me the
    health care system ought to be modern. Do you realize, prior to the
    reforms that the Congress passed and I proudly signed, Medicare would
    pay $100,000 for a heart surgery but not a dime for the prescription
    drugs that would prevent the heart surgery from being needed in the
    first place? The system was outdated, and it didn't make sense.
        And so I worked with Congress for the most significant reform since
    Medicare was established. Inherent in that bill is not only modernizing
    the medicine that people get, but it also gives seniors choices. I
    believe if consumers have more choices, it helps to control cost and
    enhances the quality of a product someone is able to get.
        I also believe that we ought to have what's called association
    health plans, which will allow small businesses to pool across
    jurisdictional boundaries, to be able to afford insurance at the same
    discounts that big businesses get. It's a commonsense way to help small
    businesses insure people. The bill got out of the House; it's stuck in
    the Senate. The Senate, if they are concerned about the cost of health
    care for our small businesses, needs to pass association health plans.
        And finally, we're working to expand information technology in the
    field of medicine. If you've ever looked at the IT part of medicine,
    you'll be amazed at how backwards it is. I mean, it's easier to get
    information on buying a car than it is on health care items. And that
    doesn't make any sense. So we've got a goal to computerize medical
    records that will help make America's health care more transparent and
    more efficient, which will help patients make rational choices and help
    doctors save lives.
        To reduce the cost of health care, we've got to do something about
    medical liability. We've got a problem in America. I've been to States
    where they have trouble finding an ob-gyn because they're getting--these
    good docs are getting sued out of business. It just doesn't make any
    sense to have a medical liability system that's out of control.
        When I first came up here--these former Governors will be pleased to
    hear--I thought that medical liability was mainly a State issue, until I
    realized that there's tremendous cost to the--to Federal medicine. And
    after all, we're paying for Medicaid and Medicare and veterans benefits.
    And when the docs who are getting reimbursed by the Federal Government
    practice defensive medicine, it runs up the cost to the taxpayers. And
    when the premiums on their policies go up as a result of these junk
    lawsuits, it runs up the cost to the taxpayers. I've come to the
    conclusion that medical liability is a national issue that requires a
    national response. I got a good bill out of the House. The Senate needs
    to pass medical liability reform so medicine is available and affordable
    for the American citizens.
        And speaking about tort reform, a part of making sure America is
    competitive in the world and this is a good place to risk capital, we
    need more tort reform out of the Congress. We took an important step
    when we passed class-action reform and bankruptcy reform. I signed a
    bill today that said if you manufacture a legal product, you shouldn't
    get sued for it. Now the House and the Senate need meaningful asbestos
    reform, and they need to get it to my desk as soon as possible.
        We also need to confront the long-term problems confronting our
    entitlements. If

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    this country wants to stay competitive throughout the 21st century, we
    have got to do something about Social Security and Medicare. And, as you
    know, I have brought up the--they told me not to talk about it when I
    first got up here. [Laughter] But I've been talking about it ever since
    I've been running and--for President and since I've been the President,
    because I believe the job of a President is to confront problems and not
    pass them on to future Presidents and future Congresses.
        And we've got a problem. It starts with the fact that baby boomers
    like me are getting ready to retire. It just so happens I turn 62 in the
    year 2008, which is quite convenient. [Laughter] And there's a lot of
    me. I'm getting--[laughter]--a lot of people like me. [Laughter] I mean,
    there are millions and millions of baby boomers relative to the folks
    that are going to be paying for my retirement and your retirement. The
    system is going broke. You know, I give a lot of speeches and look out
    in the audience and see people working hard to pay their payroll taxes,
    and they're paying payroll taxes into a system that's just not going to
    be around unless we do something about it.
        And so I've made some proposals to the Congress, proposals that work
    with how fast benefits will go up, proposals that said, ``If you're in
    the--a poor American, nothing is going to change for you. If you're a
    wealthy American, your benefits will grow, but at a slower rate.''
        We also have a fantastic opportunity as we strengthen and modernize
    Social Security to allow younger workers, if they so choose, to put a
    part--some of their own money in a personal savings account so they can
    take advantage of the compound rate of interest, a personal savings
    account they get to call their own, asset base the Government can't take
    away, an asset base that somebody can pass on to whomever he or she
    chooses.
        Part of our mission has got to be to encourage ownership in America.
    And one way to spread ownership throughout our society into
    neighborhoods where some may not own anything, is to allow them to save
    some of their own money--their choice--in a personal savings account as
    part of Social Security reform. I'm going to continue to talk to the
    American people on this issue and insist that Congress do the right
    thing and work together to save Social Security.
        And finally, we've all got to remember we live in a global economy.
    This country is home to about 5 percent of the world's population, which
    means 95 percent of potential customers live abroad. Millions of
    Americans--at least their jobs--depend on exports. And so to keep this
    economy growing and creating jobs, we've got to continue to open up
    markets for American products.
        When I came to Congress--when I came to office, I asked Congress to
    grant trade promotion authority. My administration has put that
    authority to good use. We've completed free trade agreements with 12
    nations on 5 continents. We've opened a combined market of 124 million
    consumers for American products. Earlier this year, we completed a free
    trade agreement with Central American nations that gives our goods and
    services the same access in Central America that their goods already get
    here. In other words, we leveled the playing field. My attitude is, is
    that our producers and farmers and workers can compete with anybody,
    anytime, anywhere, so long as the playing field is level.
        To continue to open up new markets for goods and services and farm
    products, we have got to work for a free and fair global trading system.
    The United States has taken a leadership role in working toward a
    successful conclusion to the Doha trade negotiations at the World Trade
    Organization. A successful Doha round will reduce and then eliminate
    tariffs and other barriers on farm and industrial goods, will phase out
    unfair agricultural subsidies and open up global markets for services
    and products and leave all nations better off.

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    The Doha negotiations are now at a critical point.
        Recently, the United States has come forward with a bold proposal in
    the critical area of agriculture to reenergize the talks. Now other
    nations must come forward with similarly ambitious proposals. Together
    we have an historic opportunity to knock down trade barriers and create
    economic growth and reduce poverty throughout the world. As Presidents
    from John Kennedy to Ronald Reagan to Bill Clinton have recognized, trade is the most certain path to lasting
    prosperity for people not only here but around the world. So I'm going
    to continue to pursue trade agreements on a bilateral, regional, and
    global level, to open up markets and to maintain our position as a
    strong economy in the world.
        It's important that people in Washington not use trade as a
    political issue. The objective is to have strong support from
    Republicans and independents and discerning Democrats, like Vernon
    Jordan. [Laughter] I've been
    disappointed with how the trade debates have gone in Washington. In the
    1990s, many Democrats supported important trade agreements such as
    NAFTA. Fewer and fewer Democrats today are willing to stand by that
    position and support trade bills that are good for American workers.
    It's time to get politics out of trade policy and focus on what's best
    for the United States of America.
        I appreciate you giving me a chance to come by and visit with you
    about the economy. We'll keep making the decisions necessary to ensure
    that the entrepreneurial spirit is strong, that the small-business
    sector can grow, and that people have got a chance to realize their
    dreams.
        We've got a remarkable country, when you think about it. I mean,
    think about a land where a person can come here from anywhere or grow up
    in a neighborhood, maybe, where there's no hope, and they have a dream
    of starting their own business and creating wealth and raising a family
    and owning a home. It's possible in this country. It's not only
    possible; it's likely, if you work hard. That's the greatest thing about
    our country. You know, it's such an honor to travel the world, and it
    always strikes me about how bright the American future is for people.
        And our job in Washington is to keep it bright and to keep it
    hopeful and keep making decisions that end up encouraging people to work
    hard and realize their dreams. This economy is strong. It's going to
    stay strong. And I appreciate you're working to keep it that way.
        Thanks for having me. Mr. President, I appreciate the invitation.
    May God bless you all.

    Note: The President spoke at 1:02 p.m. at the J.W. Marriott Hotel. In
    his remarks, he referred to Vernon E. Jordan Jr., president, Economic
    Club of Washington, DC.