    [Public Papers of the Presidents of the United States: George W. Bush (2006, Book I)]
    [February 8, 2006]
    [Pages 200-211]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the Business and Industry Association of New Hampshire in
    Manchester, New Hampshire
    February 8, 2006

        The President. Thank you. Please be seated. Thank you for the
    welcome. It's good to be back here in New Hampshire. We had a little
    problem scheduling a room here in this State. It turns out, a lot of
    Judd's colleagues are prebooking for the '08
    elections. [Laughter]
        I really appreciate you giving me a chance to come by. I want to
    spend a little time on our economy. I want to talk about your money; I
    want to talk about the budget I submitted. I hope at the end of this
    discussion you'll have a better feel for why I make the decisions I've
    made. You know, one of the interesting things about my job is you get to
    make a lot of decisions. My buddies from Texas come up, and they say--
    after they get over the initial shock of me being in the White House in
    the first place--[laughter]--they say, ``What's the job like? What's it
    like to be President of the United States?''
        The best thing I can tell them is it's a job that requires
    decisionmaking. Decisionmaking is based upon--good decisionmaking is
    based upon standing for something, making decisions based upon certain
    principles that won't change even though the political circumstances may
    appear to be changing. Decisionmaking means listening to people,
    surrounding yourself with excellence. Decisionmaking means doing what
    you think is right, not what may be politically expedient.
        And so today I hope I give you a sense of why I made some of the
    decisions that I made on the budget I've submitted to the Congress and
    why I believe it'll help the American people.
        Before I begin, I do want to thank Judd.
    The guy is a great friend--he's a great friend of mine; he's a great
    friend of the people of New Hampshire. I've gotten to know him really
    well. He's a good man--and he married well too, by the way. [Laughter]
    So did I. Laura sends her best. She's winging her
    way, by the way, to Italy to represent the United States at the Winter
    Games, which is pretty unusual for a woman who was raised in west Texas,
    where it rarely snows. [Laughter]
        I'm also proud to be traveling today with Senator John
    Sununu. He, too, is a fine man and a great
    Senator for the people of New Hampshire. I'm proud to be here with the
    two Congressmen, Jeb Bradley and Charlie
    Bass. I'm looking forward to flying them
    back to Washington. It's amazing what people will do to get a free
    flight. [Laughter]
        I want to thank the speaker who is here; Doug, thank you for being here. I remember going to your farm a
    while back. You know, I don't follow New Hampshire politics that closely
    these days, at least statehouse politics, but I do know this is a guy
    who loves his family. And he's got a lot of family to love; I've met
    them all. Appreciated his hospitality.
        I want to thank the president of the senate, Ted Gatsas, who is with us as well. Mr. Mayor, thank you for joining us today. The mayor said he just got
    elected; he's all excited and fired up. Just fill the potholes, Mayor,
    and everything will be fine. [Laughter]
        I want to thank all the other State and local officials. I want to
    thank George Gantz. Thanks for the
    introduction. I asked him what his middle name was; I was hoping it was
    W. [Laughter] But it wasn't. But, anyway, George, thanks for introducing
    me, and thanks for having me here. I want to thank Mike Donahue and all the other members of the board of the Business
    and Industry Association of New Hampshire.
        I also want to thank the bankers who are here. Thank you for
    allowing me to

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    horn in on your meeting. I hope it's worth your while to have me. Most
    of all, thank you all for giving me a chance to come.
        Let me first start off with our economy. It's strong, and it's
    getting stronger. That's how I see it. I say that because we're now in
    our fifth year of uninterrupted economic growth. Last year, this economy
    of ours grew at 3.5 percent, which is good; that's good, strong economic
    growth. We did so in the face of higher energy prices and natural
    disasters, which makes the growth even more extraordinary.
        More Americans now own their home than ever before in our Nation's
    history. I love the fact that America is an ownership society. I think
    it's important for policy to promote ownership. Low interest rates, by
    the way, helps promote ownership. You'll be happy to hear that this
    administration doesn't intend to set the interest rates, but I did name
    somebody good, named Ben Bernanke, to head
    up the Fed, to replace Alan Greenspan, and
    I'm confident he will do a good job of being the Chairman of the Fed.
        More minority families now own a home than ever before in our
    Nation's history as well. See, a hopeful society is one in which all
    people see a positive future. There's nothing better than saying, ``I
    own my own home; welcome to my home.''
        Real after-tax income is up by 8 percent--nearly 8 percent per
    person since 2001. New orders for durable goods like machinery are
    rising, which is a good sign. Shipments of manufactured goods are up as
    well. The productivity of the United States was strong last year, and
    that's important. A productive society is one in which the standard of
    living rises. It's important for us to have policies in place that keep
    us the most productive society in the world.
        Small businesses are thriving. We've added 4.7 million new jobs over
    the last 2\1/2\ years. The national unemployment rate is at 4.7 percent,
    the lowest level since July 2001. I was interested to see that your
    unemployment rate is still unbelievably low; it's at 3.5 percent. A
    recent survey of your businesses says that nearly two-thirds of the CEOs
    expect revenues to increase this coming year. In other words, there's a
    positive feel here in New Hampshire and around a lot of parts of our
    country as well.
        I like to say it's an exciting time for the economy. We're
    productive; we're innovative; we're entrepreneurial. And the role of
    government is to keep it that way. That's the role of the government.
    The global economy--we're the leader. We're growing faster than other
    major industrialized nations, and in the past 2\1/2\ years, we've
    created more jobs than the EU and Japan combined.
        Now, one of the interesting things we face here in America is in
    spite of the numbers and the economic growth, there is uncertainty. Some
    of the uncertainty comes as a result of competition from places like
    India and China. The temptation with uncertainty and competition is to
    say, ``We can't compete; let us kind of wall ourselves off.'' If you
    look at the history of the United States, the economic history, there
    have been periods of protectionism and isolationism, in the hopes that
    that will lead to a better lifestyle for our citizens. I strongly reject
    the notion of becoming a protectionist nation. I don't think this
    country ought to fear the future. I don't think we ought to fear
    competition. I know we ought to shape the future with good policies out
    of Washington, DC, and make sure that we're the preeminent economy in
    the world.
        There's also, you know, kind of a debate in Washington about how to
    handle your money. There are some that--frankly, whose policies would
    make us look more like Europe than we should, and that is kind of a
    centralization of power. The surest way to centralize power is to take
    more of your own money to Washington. And so I want to talk a little bit
    about why our economic policies, in my judgment,

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    should reject the centralization of power, particularly through the
    budget process, and let the folks at home make the decisions about their
    own money.
        You see, government doesn't create wealth. A lot of my
    decisionmaking is based upon this principle: The role of government is
    not to try to create wealth but an environment in which the entrepreneur
    can flourish; is to create an environment in which people are willing to
    risk capital; an environment in which a person feels comfortable with
    making a decision to start their own business. That's the role of
    government. It's a role of government that says, ``We trust people to
    spend their own money wisely.''
        And so in the State of the Union Address, which I gave last week, I
    outlined a series of steps that encompass that philosophy and steps that
    I believe that will keep America the preeminent economy in the world,
    the leader in the world, which is what we should be. If we want our
    people to prosper, if we want lifestyles to improve, if we want our
    standard of living to go up, America must remain the leader.
        I've talked about health care and the importance for us to have a
    health care system that takes care of the elderly and the poor, but a
    health care system that strengthens the relationship between doctor and
    patient, a health care system that provides transparency into pricing, a
    health care system that uses information technology to bring the medical
    profession into the 21st century.
        You know, some are going to say, ``What do you mean by that?'' Well,
    I mean, when you're writing your files by hand, it means you're not in
    the 21st century. And since most doctors can't write too well, there's a
    lot of information that didn't pass through--[laughter].
        I've talked, as well, about the need to get legal reform in the
    medical industry. Look, we've got too many lawsuits, pure and simple.
    We've got a real problem in the country because docs and hospitals are
    getting sued. A lot of good docs are being driven out of business. I
    said an appalling--a statistic that I think is appalling in my State of
    the Union. Do you realize there are 1,500 counties in America without an
    ob-gyn? And that's wrong. And one of the reasons that's happening is
    because there's too many lawsuits driving good docs out of practice. We
    need a medical liability system that is fair to medical providers in the
    United States of America.
        When I first went to Washington, I thought it might be a State
    issue. And then I realized that all these lawsuits are causing doctors
    to practice defensive medicine as well as running up premiums, which
    costs the Federal Government a lot of money. And so I've decided this is
    a national issue that requires a national response. And the United
    States Senate needs to be pass medical liability reform this year.
        Part of our plan for a patient-doctor system, one that gives you
    choices to make and counts on you for making rational choices, is to
    expand health savings accounts and make sure that individuals and small-
    business employees can buy insurance with the same tax advantages that
    people working for big businesses now get. And we're going to make sure
    those health savings accounts are portable. One of the things about our
    economy, which is interesting, is that there's a lot of turnover when it
    comes to jobs. People are changing jobs a lot, which creates
    uncertainty. And one way to deal with that uncertainty, to bring
    certainty to people in the workforce, is to make sure they can carry
    their health savings account with them from job to job, so they don't
    fear losing their health insurance.
        So I've got a lot of ideas on health care that I'm going to be
    talking to the Nation about in the coming weeks. Also, as we continue to
    make sure this country is whole, we're going to make sure that we repair
    parts of our country that have been hurt by natural disaster. Thus far,
    the Federal Government has committed $85 billion

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    to the folks who got hurt by Katrina. I went down there in Jackson
    Square, and I said, ``The Federal Government is going to help you,'' and
    we are helping--$85 billion is a lot. It may not be all it takes, but I
    want to compliment the Congress for making a strong commitment to
    helping the people down there get on their feet and get this important
    part of our country up and running again.
        I talked about a very important issue that I think surprised old
    Judd a little bit--you know, he knows I'm from
    Texas, a little concerned about my views on energy, I think, at times--
    prejudged me the wrong way. I meant what I said; we've got to get off
    our dependence on oil. To stay competitive, this country cannot be
    reliant upon oil from unstable parts of the world. And therefore--as I
    said in the State of the Union, we're spending $10 billion so far to
    come up with ways to wean ourselves off of oil.
        I talked about clean coal technologies. We have got to promote safe
    nuclear power. We have got to continue our investment in solar energy.
    But I want to spend a little time--I mean, a little time--on making sure
    that you understand that I am serious when it comes to spending money so
    that--to be able to develop the technologies necessary to be able to
    convert saw grass and wood chips and refuse into energy. It's coming. We
    believe this technology is close to breakthrough status.
        I also want to tell you something interesting that I didn't say in
    the speech, is that there's 4\1/2\ million automobiles on the road today
    that are flex-fuel automobiles that can switch from gasoline to ethanol
    already. In other words, the technology is available for the
    automobiles. When we have the breakthrough, when it comes in ethanol,
    I'm convinced that this country is going to become what we want it to
    be--not reliant upon Middle Eastern oil.
        It's exciting times. It's important. This is not only an economic
    security issue, it is a national security issue. And we're intent at the
    Federal Government to promote research dollars to see to it that we
    achieve this important objective.
        I also talked about education. One of the things we've got to
    understand here in America is that if our children don't have the skills
    necessary to fill the jobs of the 21st century, those jobs are going to
    go somewhere else. We live in a competitive world, and as I told you, I
    recognize that competition creates uncertainty, but we've got to be
    certain about the goal to make sure our children are educated.
        And so, laid out a math and science initiative, which embodies a lot
    of the principles in the No Child Left Behind Act, which basically says,
    ``Look, we're going to measure, and if we determine that you're falling
    behind in middle school in math, we'll provide extra money so you can
    catch up.'' We need more AP teachers trained in the classrooms for our
    high schools. We're going to have 30,000 adjunct professors from private
    industry and/or retired scientists to go and excite our children about
    math and science.
        And, as well, we've got to lead the world in basic research. I
    committed our Government to doubling the basic research for sciences
    over a 10-year period of time, as well as we've got to understand that
    most of the money invested in research is done at the private sector.
    And that's why we've got to make sure the research and development tax
    credit is permanent. You see, the research and development tax credit
    expires annually. Now, how can you possibly plan for an aggressive
    research budget if you're uncertain as to what the Tax Code is going to
    allow you to do? Congress has got to understand that CEOs of companies
    that are investing to make our life better can't make sound decisions
    with uncertainty in the Tax Code. And so they've got to make the
    research and development tax credit permanent.
        And so there are some ways to make sure that we remain competitive.
    And I'm going to work with Members of Congress

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    to make sure we get these initiatives passed.
        Today I'm going to focus on the budget strategy. We're on our way to
    cutting our deficit in half by 2009. And I'm going to give you some
    ideas as to how we can do that. The budget strategy has three parts. The
    first part is to promote economic growth by keeping taxes low. The
    second part is to restrain spending. And the third part is to insist
    that Federal programs produce results. That may sound odd to you.
    [Laughter] But I'm going tell you how we--we've got interesting ideas
    how to promote results-oriented programs in Washington, DC.
        First, we're going to keep the taxes low to make sure the economy
    growing--grows. My philosophy is this: When Americans are allowed to
    keep more of their own money to spend and save and invest, that helps
    the economy grow, and when the economy grows, people can find work. If
    entrepreneurs have more money in their pocket, they're going to use it
    to expand their businesses, which means somebody is more likely to find
    work. If consumers have more money in their pocket, they're likely to
    demand additional good or services. And in a marketplace economy when
    somebody demands a good or a service, somebody meets that demand with
    product or the service. And when that demand is met, it means somebody
    is more likely to find work. Cutting taxes means jobs for the American
    people.
        We're a confident nation, and one reason we are is because we've
    overcome a lot. I want you to think about what this economy has been
    through in a relatively quick period of time. We've been through a
    recession, a stock market collapse, terrorist attacks, a war, and
    corporate scandals. And I told you how strong the economy was going. I
    think one of the reasons why this economy is as strong as it is, is
    because Congress wisely cut the taxes for the American taxpayers.
        We lowered taxes, and in doing so, the message was and the
    philosophy is, you can spend your money better than the Government can
    spend its money. We want you making decisions for your families. We want
    you making investments. And so we cut taxes on families by lowering
    income tax rates and doubling the child credit. We reduced the marriage
    penalty. I've never understood a Tax Code that penalizes marriage. Seems
    like to me, we ought to be encouraging marriage in the Tax Code. We put
    the death tax on its way to extinction. My view is, is that if you're
    running a small business, you ought not to have to pay taxes twice, once
    while you're living and once after you die. If you're a farmer or a
    rancher, you ought to be allowed--the Tax Code ought to encourage you to
    be able to pass your property on to whomever you choose.
        We cut taxes on small businesses. An interesting part of the debate
    that a lot of people in America haven't focused--didn't focus on is that
    when you're cutting individual income tax rates, you're also cutting a
    lot of taxes on small businesses. See, most small businesses are sole
    proprietorships or subchapter S corporations, and therefore, they pay
    tax at the individual income tax level. And so when you reduce all
    rates, you're really interjecting capital into the small-business sector
    of the country. And that's important because two-thirds of new jobs in
    America are created by small businesses. It makes sense, doesn't it, if
    you're worried about people finding work, if you're trying to overcome
    economic hardship, to fuel the engine of growth that will provide work--
    and that's the small-business sector of the United States.
        One of the interesting things we did is we understand it's important
    to encourage investment, particularly for small businesses. And so we
    raised the amount of investment a small business can deduct immediately
    from $25,000 to $100,000. And why do you do that? Well, one, you want

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    your small-business sector to remain productive. Investment yields
    enhanced productivity, which means it's easier to compete and stay in
    business. We want more productivity. Productivity will yield a higher
    lifestyle for the American citizens.
        Secondly, we want people to invest because it means somebody is
    going to have to produce the product that they buy. And so this--raising
    the deduction had a positive effect not only in the small-business
    sector but throughout the economy. By the way, this deduction is set to
    expire, and so part of my budget proposal is to double the deduction to
    $200,000 to help small businesses and to make this a permanent part of
    the Tax Code so small-business entrepreneurs have security in planning.
        We also lowered the taxes on dividends and capital gains. One of the
    interesting statistics, and why this is such an important initiative, is
    that half of America, now 50 million households, have some investment in
    the stock market. Think about that. Half the households in America have
    got a stake in the stock market. They either own shares in individual
    companies or through mutual funds. By cutting the taxes on dividends and
    capital gains, we helped add nearly $4 trillion in new wealth to the
    stock market. In other words, it invigorated the markets. That's
    positive, particularly if you're one of the one-half of the American
    family that owns stock. When those stocks go up, you see the value
    increase in your IRAs or your 401(k)s or your mutual funds.
        These gains help American families. See, there's a correlation
    between cutting taxes on dividends and capital gains and increase in the
    market and increase in individual net worth. When that happens, that
    helps American families be able to afford a down payment for a home, or
    helps a family be able to afford a college tuition, or it helps a family
    in retirement enjoy a better life. In other words, there is a direct
    correlation between cutting taxes on the capital gains and dividends and
    quality of life all across America.
        The tax relief on dividends and capital gains has also helped
    families that don't own stocks. And the reason why is, people out here
    understand--capital flows will tell you that cutting taxes on dividends
    and capital gains has reduced the cost of capital. That's economic talk
    for meaning the money that you borrowed doesn't cost you as much, and
    that helps investment. An economy in which there is ample investment is
    an economy in which people are able to find work. So this has been a
    positive part of our tax plan.
        One of the interesting things that I hope you realize when it comes
    to cutting taxes is this tax relief not only has helped our economy, but
    it's helped the Federal budget. In 2004, tax revenues to the Treasury
    grew about 5.5 percent. That's kind of counterintuitive, isn't it? At
    least it is for some in Washington. You cut taxes and the tax revenues
    increase. See, some people are going to say, ``Well, you cut taxes;
    you're going to have less revenue.'' No, that's not what happened. What
    happened was, we cut taxes, and in 2004, revenues increased 5.5 percent.
    And last year, those revenues increased 14.5 percent, or $274 billion.
    And the reason why is, cutting taxes caused the economy to grow, and as
    the economy grows, there is more revenue generated in the private
    sector, which yields more tax revenues.
        Revenues from dividends and capital gains are up by an estimated 50
    percent. Think about that. We cut the taxes, so if you got a dividend or
    you sell your stock after a period of time and pay capital gains--and
    the revenues from those two areas have gone up--the economy kicked into
    high gear, and we're getting more money in the Treasury.
        Now, this tax relief I mentioned to you is set to expire. In other
    words, when Congress passed it, it wasn't permanent. Kind of like the
    R&D tax credit, it's kind of--it may be permanent, it may not be
    permanent, depending upon whether or not Congress acts.

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        If you're a small-business owner, that's not good for you, to be
    wondering what your taxes are going to look like. You cannot plan your
    future if you're a small-business owner if you wonder whether or not
    your tax rates are going to go up in the short term. I don't think
    families are looking forward to any tax increases. I think they agree
    with me. We've got plenty of money to spend in Washington, and we just
    need to make sure we set our priorities.
        If Congress doesn't act, your taxes are going to go up--and you're
    not going to like it, and it's going to hurt the economy. And so
    Congress needs to make the tax relief we passed permanent.
        You will hear the argument during the budget debates, you know, all
    the noise coming out of Washington, that you need to raise taxes in
    order to balance the budget. I've been there long enough to tell you,
    that's not the way Washington works. They're going to raise your taxes,
    and they're going to find new ways to spend your money. The best way to
    reduce the deficit is to make sure we have progrowth economic policies
    in place and be smart and wise about how we spend your money.
        So the second thing I want to talk to you today about--the strategy
    behind the budget and the decisions I made for the budget--is how we can
    be wise with your money. In the State of the Union, I outlined
    priorities. One way you're wise with your money is you set priorities.
    You know what it's like to manage your own family budget. Of course,
    you'd like to take a vacation every week, you know, some exotic place;
    but you've got to set your priorities; you can't do that. You want to do
    this or do that, go to a fancy restaurant every night, but that's not
    setting priorities. Families set priorities. Individual Americans set
    priorities. Business people set priorities all the time when it comes to
    setting the budget, and that's what the Federal Government needs to do.
        And the first priority of our Government is to make sure our troops
    in harm's way have all they need to complete their mission for the sake
    of peace.
        The budget I've submitted has got other priorities; I mentioned some
    of them. A priority is to make sure that we help the folks down South
    get on their feet, those suffering from Hurricane Katrina. I talked
    about the need to have education as a priority, particularly in math and
    science. I talk about the priority to spend research money so we become
    less dependent on Middle Eastern oil. Those are priorities.
        Now, when it comes to budget talk, there are two types of spending
    in Washington. There's called discretionary spending and mandatory
    spending. Discretionary spending is the kind of spending Congress votes
    on every year. Mandatory spending is the kind of spending that happens
    based upon fixed formula. We made good progress in discretionary
    spending. In the last year of the previous administration, nonsecurity
    discretionary spending rose by 15 percent. Every year of my Presidency,
    we've reduced the growth of that spending. And last year, Congress
    responded to my request and passed bills that actually cut nonsecurity
    discretionary spending.
        There's no question, the war and the hurricanes have stressed our
    budget--all the more reason to set priorities and to be wise with your
    money. And so we submitted a budget. The budget I submitted this year
    proposes to cut discretionary spending that's not related to defense and
    homeland security. We will keep the growth in overall discretionary
    spending below the rate of inflation so we can cut the deficit in half
    by 2009.
        One reason we're able to do so and meet priorities is because we've
    identified $14 billion in savings from programs that aren't performing
    very well at all. I'm going to talk a little bit later about that.
        Now, the biggest challenge we've got, however--and this is very
    important for our citizens to understand--when it comes to

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    deficits--the deficits, the unfunded liabilities inherent in our
    mandatory programs, such as Medicare and Social Security and Medicaid.
    And the reason why there's a lot of unfunded liabilities in those
    programs is because a baby boom generation is fixing to retire, and I'm
    one. As a matter of fact, I turn 62 in 2008, which is a convenient year
    for me to be retiring. [Laughter] Old Judd is
    a baby boomer. I think he's 7 months younger than I am.
        And I'm looking around, and I see a couple of baby boomers out
    there. And we're getting ready to get into the system. And there is a
    lot of us. A huge number of retirees are getting ready to get on Social
    Security and Medicare. And there is not a lot of--relative to those of
    us who retire, the number of payers in the system is shrinking. And
    there's a burden. The math doesn't work. It's a problem, particularly
    for people who are going to be having to pay for baby boomers like me.
        Medicare recently was modernized. I'm not talking about the recent
    modernization program--which is the right thing to do, by the way. If
    you make a commitment to America's seniors, which Lyndon Johnson did and
    this country has honored, then it makes sense to make sure the health
    care system you provide the seniors is modern and up to date. A
    commitment means a commitment of modern medicine, and that's precisely
    what we did when we provided prescription drug coverage for seniors.
        Imagine a system that said, ``We will pay for an invasive surgery
    but not for the drugs that will prevent the surgery from being needed in
    the first place.'' It didn't make sense. Medicare was old and
    antiquated, and I'm proud to have signed the reform. Twenty-four million
    seniors are now enrolled in this new program. Tens of thousands of more
    are signing up each day. The prescription drug benefit is saving the
    typical senior more than $1,100 on medicine a year. And the average
    expected premium that seniors pay has gone down by a third, from $37 per
    month to $25 a month. It's amazing what happens when you interject
    competition into the health care system.
        But the real problem for Medicare is the long-term problem of baby
    boomers coming into the system. There is going to be 78 million of us.
    And interestingly enough, we've been promised greater benefits than the
    previous generation. People ran for office who said, ``Vote for me; I'm
    going to make sure that you get a better Social Security deal or a
    Medicare deal.'' And sure enough, Congress passed that. Do you realize
    that if we don't do anything on fixing this problem--and by the way, if
    you're a senior, you don't have anything to worry about; you'll get your
    check. I'm talking about knowing the system is going broke and walking
    around this country and talking to people who are paying payroll taxes
    into a broke system. And that's not right. It just doesn't make any
    sense to me for us not to take care of this problem.
        In 2030, spending on Social Security, Medicare, and Medicaid alone
    will be almost 60 percent of the entire Federal budget. I mean, there is
    a problem. One of the tricks in Washington is just to pass them on to
    future Congresses and future Presidents. That's not my style. I want to
    get something done. I believe the job of a President is to confront
    problems and not say, somebody else can take care of it. That's why I
    ran. That's why Judd ran and Sununu ran as well, by the way. And they're strong advocates
    of doing something about this before it's too late.
        Listen, I understand that Congress didn't act last year on the
    Social Security proposal I laid out, but that's not stopping me from
    doing what I think is right. I see a problem. And so do the American
    people, by the way. They see a problem, and they expect us to put aside
    all that needless political rhetoric, that partisanship and get
    something done. And I'm serious about it.
        So I'm looking forward to putting together a group of both
    Republicans and

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    Democrats in the Congress--from the Senate and the House--people who can
    get something done--and sitting down at the table and doing what the
    American people expect us to do and solve this problem for a generation
    of Americans that are coming up in our society.
        In the meantime, we've got to do what we can do to make sure that we
    keep spending under control. Later today we're flying back to
    Washington, and I'm going to sign a bill that will rein in spending on
    entitlements, on mandatory spending, by nearly $40 billion over 5 years.
    And I applaud Judd and Members of the House
    and the Senate for putting fiscal sanity back into the budget. By the
    way, it's hard work up there to get everybody in the same direction.
    Everybody thinks their own program is special. And the noise can get a
    little loud up there when you're making some decisions that are
    apparently tough decisions for some.
        Let me talk about the Medicaid decisions that was made. Medicaid is
    an important program. It's a program that's a part of our commitment to
    the poor and the elderly. People talked about how the decision to reform
    Medicaid was immoral. Well, it's not immoral to make sure that
    prescription drug pharmacists don't overcharge the system. You're a
    taxpayer, you expect the Medicaid person we're helping to be able to buy
    drugs at a reasonable cost. But it turns out that there was inflated
    markups for people who had Government help to buy drugs. That doesn't
    make any sense, so we reformed that. The people are still going to get
    their drugs, but the taxpayers aren't going to have to pay inflated
    prices. That seems to make sense, seems to be fair.
        They talk about us slashing resources for the elderly. No, there are
    resources for the elderly in Medicaid, but what we did was, we said,
    ``We're going to try to stop you from transferring assets from the
    parent to the child,'' so that the parent's apparent poverty enabled
    them to get on Medicaid. That's not fair. You work hard for your money.
    We want to take care of the poor, but we don't want to reward people who
    game the Medicaid system. And so we saved money for the taxpayers by
    making rational reforms in Medicaid. We're able to keep the commitment
    to the poor, and that's important for you all to understand. And at the
    same time, by putting commonsense reforms in place, we saved the
    taxpayers $4.7 billion of entitlement reform.
        Let me talk about the student loan program. I remember going to
    Kansas State recently, and a young lady stood up and asked me a
    question. She said, ``Well, here you are on a college campus; why are
    you cutting our loans?'' I said, well, I didn't think we were--as a
    matter of fact, I thought we were helping you get student loans. She was
    talking about the reforms within the budget I'm going to sign today.
        Let me tell you what those reforms were. There were too many
    subsidies to folks who were providing loans to the students. And so we
    decided to reform those subsidies to make it more rational for the
    taxpayers and, at the same time, to help the students. By reducing the
    cost of lending, we saved the taxpayers $22 billion, of which $10
    billion will be used to increase student loans. So here is an example of
    staying focused on the mission, providing money for loans and, at the
    same time, providing relief for the taxpayer.
        The new budget I submitted builds on our progress in controlling
    mandatory spending by proposing another $65 billion in entitlement
    savings. I'm looking forward to working with Judd to get this passed out of the Senate and the House. It's
    an important part of maintaining fiscal discipline. Thirty-six-billion
    dollars of that comes from Medicare, and let me tell you how we achieve
    that.
        The annual growth of Medicare spending is about 8.1 percent. Now, if
    you think about inflation, the growth in that program far exceeds
    inflation. And the budget I submitted suggests that we slow that growth

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    down to 7.7 percent. That doesn't seem too unreasonable to me, if you're
    trying to bring fiscal sanity into Washington--to slow the growth of the
    program down from 8.1 percent to 7.7 percent. This isn't a cut. People
    call it a cut in Medicare. That's not a cut. It's slowing down the rate
    of growth. It's the difference between slowing your car down to go the
    speed limit or putting your car in reverse.
        In Medicare, we believe that payments ought to be made to the
    individual we're helping, in a reasonable way. If there are productivity
    gains and savings to be had at the hospitals, for example, those savings
    ought to be given to the taxpayers, not to the hospitals. Reform means
    making health care providers bid and compete for services. That seems to
    make sense. Competition and bidding creates transparency in the process,
    but it also helps the taxpayers.
        So we brought these reforms into place recognizing that the choices
    will be tough for Members of Congress--but necessary choices. That's
    what you expect, it seems like to me. You ought to expect us to ask the
    tough questions, to make sure the programs focus on the people we're
    trying to help and, at the same time, achieve savings, if possible to
    do.
        Congress is working on earmark reform, and I appreciate that a lot.
    It's a necessary part of making sure the budget process is rational. I
    look forward to helping them. I've got some ideas of my own, in terms of
    budget reform.
        One, I believe any time Washington makes a spending commitment that
    our children and grandchildren will not be able to afford, I propose
    that Congress offset those expenditures in entitlement spending. In
    other words, if they make a commitment to increase entitlement spending
    somewhere, they've got to decrease it elsewhere, in order to make sure
    we have rational budgeting.
        Secondly, I believe we ought to sunset Federal programs. That means
    that they ought to be reviewed at a certain period of time to determine
    whether or not they're meeting the objectives that Congress set them out
    to be. And if not, get rid of them.
        And finally, I'd like to have the line-item veto.
        I mentioned to you getting good results. Let me talk about the last
    part of our budget strategy. We have worked hard to insist upon results.
    Perhaps the most vivid example of that is in the relationship between
    the Federal Government and the State government when it comes to public
    school education. I was always worried about a system that never asked
    the question, ``Are we getting results for our money?'' It's a
    legitimate question, particularly when it comes to schools.
        When I was the Governor of Texas, I remembered what it was like to
    be the Governor of a State where people just got shuffled through, and
    we didn't know whether they could read or write, add and subtract, until
    it was too late. And it was a real problem, and it's been a problem
    throughout our society. And so we came to Washington with a spirit of
    innovation and reform--worked with Judd on
    that bill as well. I don't mean to be mentioning your name too often,
    Judd, but if it helps you, fine. [Laughter]
        But we had a new spirit when it came to funding schools, and that
    is, in return for Federal money--I mean, we spend a fair amount of
    money, not nearly as much as State and local governments, of course.
    About 10 percent of all the money spent nationwide is spent at the
    Federal level--but in return for that money, I thought it made sense to
    say, ``Why don't you show us whether or not a child can read.'' That
    seemed to make sense. It wasn't that difficult a request.
        It turns out, it's a pretty difficult request politically. You know,
    ``How dare you measure. All they're doing is teaching the test. It's
    racist to measure.'' No, it's racist not to measure. It's racist not to
    know whether a curriculum is working. It makes sense

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    for the Federal Government to demand results for money spent.
        We didn't tell the people of New Hampshire how to teach. We didn't
    design the test, nor should we have, from the Federal level. I believe
    in local control of schools. I believe in aligning--[applause]--but I
    darn sure want to know. And the interesting thing about these tests--we
    test three through eight, or we demand that the schools test three
    through eight. One of the parts of the test that I find most important,
    and I hope you do as well, is that when we find a child deficient in
    reading, that family gets supplemental services, extra help, where they
    can go get tutoring at a private or public institution. In other words,
    there's a focus on every child, making sure that we solve problems
    early, before it's too late. And you can't solve a problem unless you
    measure. We're going to apply that same thing to the math and sciences
    agenda, as I mentioned to you earlier.
        And so that's the spirit of asking for reform. And so I've got a
    group of folks that are constantly analyzing whether or not the Federal
    Government is doing what you're doing--doing what you expect us to do.
    You realize we spend $2.7 trillion a year, and there are more than 1,000
    Federal programs. That's a lot; that's a lot of programs. And it makes
    sense to make sure that they're working. See, good intentions aren't
    enough, as far as this administration is concerned. We're insisting that
    people show us, program managers show us, whether or not they're
    achieving--these programs achieve results.
        Last 4 years, we've had what we call the President's Management
    Agenda. Employees have been working to help ensure that the programs are
    doing what we expect them to do. That's what they do. They spend a lot
    of time on this. We ask Federal managers to achieve good results at
    reasonable costs, and we measure them. The point is, is that if they
    can't prove they're achieving good results, then the programs, in my
    judgment, ought to be eliminated and/or trimmed back. That's why I told
    you earlier, we found 141 such programs. And we did the same thing in
    last year's budget as well.
        One of the interesting innovations that we have put forth is a new
    web site called expectmore.gov. It's a program where--it's a web site
    where we start to put the measurement results up for everybody to see.
    Nothing like transparency into the Federal bureaucracy to determine
    whether or not a program is working. And so I think you'll find it
    innovative--I do--that the White House has put this web site up. And
    you'll be able to see whether or not results are being achieved for the
    money spent.
        I'll give you one example of what we're talking about. I'll give you
    two examples--one example of money poorly spent, and one example of
    money well-spent, as a part of this management initiative--the
    analyzation as to whether or not the programs are actually delivering
    results we want.
        One of them is, the Department of Energy runs the natural gas
    technology program that is designed or was designed to help businesses
    increase natural gas supplies. That sounds reasonable, doesn't it? Let's
    have a program at the Federal Government that says to producers, produce
    more natural gas. The problem is when we found out--when we analyzed the
    program, we found that it's impact on production is minimal. It's not
    working. It sounds good. Somebody thought of it, had a good title to the
    bill, but it's not delivering results. The private sector has got better
    incentives to provide natural gas for you; it's called price, not the
    Federal Government's program.
        And so I'm asking the erstwhile chairman
    to eliminate the program.
        Senator Judd Gregg. It's done. [Laughter]
        The President. If it was that easy, government would be a breeze,
    wouldn't it?
        I'm going to talk about an example of something that is working,
    based upon our

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    analysis, and these are called community health centers. Community
    health centers are run by HHS. Their mission is to provide effective
    health care for the poor and the indigent. It makes sense. If you don't
    believe in the nationalization of health care, which I don't, then it
    does make sense to provide good care for people--primary care for people
    that are poor or indigent.
        And so community health centers, which was an idea during the
    previous administration, is one that we've embraced. We have found that
    these health care centers work really well. I don't know if you've got
    one in Manchester, but they're good. [Applause] You know what I'm
    talking about. And so they analyzed the cost relative to the benefit,
    and it's worthwhile to fund these. And so the budget that I'm submitting
    increases--has a 10 percent increase for community health centers.
        And so that's it. That's why--I hope you get an idea of why I
    submitted the budget I submitted. You know, the budgets really, kind of,
    generally are numbers. They look at numbers, but you've got to
    understand I look behind the numbers and see quality of life issues.
    When I think about the budget, I think about making sure that the
    economy grows. You can't be the preeminent economy in the world if your
    economy doesn't grow.
        When I think about the budget, I think about taxpayers and always
    remember whose money we spend in Washington. It's not our money; it's
    your money. When I think about the budget, I think about difficult
    issues like mandatory spending in Social Security and Medicare and how
    we've got to have political will to not play ``gotcha'' with the issue
    but focus on solving it for a generation coming up. When I think about
    the budget, I think about people that suffer from Hurricane Katrina.
    When I think about the budget, I think about our troops that are doing
    everything they can to spread freedom and democracy so we're safe at
    home.
        And so the budget--you'll hear numbers this, numbers that, but
    you've got to know that those of us who put it together really do see
    the human dimension behind good budgeting. Ours is a nation that is a
    generous nation and a compassionate nation. Ours is a nation that I
    truly believe can achieve anything we put our mind to. And in terms of
    our economic future, we shouldn't fear it, because we're going to shape
    it and continue to lead the world so that people who are in this country
    have got a high quality of life.
        I really appreciate you giving me the chance to come back up here to
    New Hampshire. May God bless your wonderful State, and may God continue
    to bless our country.

    Note: The President spoke at 11:33 a.m. at the Radisson Hotel
    Manchester-Center of New Hampshire. In his remarks, he referred to W.
    Douglas Scamman, Jr., speaker, New Hampshire State House of
    Representatives; Mayor Frank C. Guinta of Manchester, NH; George Gantz,
    chair, and Mike Donahue, chair-elect, board of directors, Business and
    Industry Association of New Hampshire.