    [Public Papers of the Presidents of the United States: George W. Bush (2006, Book I)]
    [June 27, 2006]
    [Pages 1216-1222]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the Manhattan Institute for Policy Research
    June 27, 2006

        Thank you very much. Thanks for letting me come by to say a few
    words. Larry, thanks for the introduction.
    I do want to congratulate the Manhattan Institute for being a think tank
    for new ideas and better ways for our Nation to handle some of the
    problems we face. I appreciate your thought; I appreciate your works.
    For those of you who support the Manhattan Institute, I thank you for
    supporting them. For those of you who serve on the Board of Trustees,
    thanks for helping. And thanks for inviting me here today.
        I want to talk about our economy. I want to talk about ways that we
    can--the executive branch can work with the Congress to convince the
    American people we're being wise about how we spend our money. One of
    the things I want to assure you is that I believe that this country
    ought not to fear the future; I believe we ought to put good policy in
    place to shape the future. And by that I mean we shouldn't fear global
    competition. We shouldn't fear a world that is more interacted. We
    should resist temptations to protect ourselves from trade policies
    around the world. We should resist the temptation to isolate ourselves.
    We have too much to offer for the stability and peace and welfare of the
    world than to shirk our duties and to not accept an international
    community.
        I know some in our country are fearful about our capacities to
    compete. I'm not. I believe that we can put policies in place that will
    make sure we remain the most entrepreneurial country in the world, that
    we're capable of competing in the world.

    [[Page 1217]]

    And one way to do so is to keep progrowth economic policies in place and
    be wise about how we spend the people's money. And that's what I want to
    talk about.
        I do want to thank my Director of Office of Management and Budget,
    Rob Portman, who has joined us today. He
    has done a spectacular job as the person partially responsible for
    tearing down trade barriers and to making sure our Nation was treated
    fairly in the trade arena when he was head of USTR. And now I've asked
    him to come over and manage OMB. It's a powerful position. The person
    who knows how the money is being spent is generally the person who's got
    a lot of influence in government. So I put a good friend in there to
    make sure we're able to work with the Congress to bring some fiscal
    austerity to the budget.
        I want to thank Senator Thad Cochran, who is the chairman of the Senate Appropriations
    Committee. It's awfully generous of the Senator to be here today. He's a
    good fellow and a fine United States Senator, and we're proud to have
    him in our midst.
        I want to thank Senator Judd Gregg, who's
    the chairman of the Senate Budget Committee. I've known Judd a long
    time. I've had to--when I was running for President, I was asked to
    debate my opponent a couple of times, and one of the things you do prior
    to debating your opponent is you have somebody serve as the opponent,
    and that happened to be Judd Gregg in both elections. [Laughter] And I
    had to kind of reconcile myself with the fact that he whipped me in--
    every time we debated. [Laughter] He's a good man who's just introduced
    some interesting ideas onto the floor of the United States Senate about
    how to deal with some of the fiscal problems and financial problems this
    Nation faces.
        I'm proud to be here with John McCain--
    speaking about debates--[laughter]--we had a few. But one thing we agree
    upon is that this country needs to have a line-item veto. And I'm proud
    the Senator is here, and I appreciate you coming. I might add, one of
    the many things we agree upon.
        I'm proud to be here with Congressman Paul Ryan, who's the House bill sponsor of the line-item veto, as
    well as Congressman Mark Udall. Thank you both
    for being here. Congratulations on getting that bill out of the United
    States House of Representatives. I'm also honored that Congressman Mike
    Castle, Congresswoman Marilyn
    Musgrave, and Congressman Henry
    Cuellar from the great State of Texas, has
    joined us. Thank you all for coming.
        For those of you who are working the Halls of Congress to get a
    line-item veto out, thanks for doing what you're doing. One of the
    reasons I've come to give you a speech on the line-item veto is to
    encourage you to continue working hard with members of both political
    parties to get the job done.
        We're growing. This economy of ours is strong. And that's good news.
    It's amazing where we've come from, if you really think about it. We've
    been through a recession; we've been through a stock market correction;
    we've been through corporate scandals; we've been through an attack on
    our country; we've been through two major operations to defend the
    United States of America; and we've been through amazing natural
    disasters and high energy prices. And yet we're growing. We're the envy
    of the industrialized world. The growth in the last year was 3.5
    percent; it was 5.3 percent in the first quarter of this year. That's
    good news. It means the entrepreneurial spirit is strong, that people
    are investing and people are making wise decisions with their money. And
    as a result of the growing economy, the national unemployment rate is
    4.6 percent. That's low. That means your fellow citizens are going to
    work. That means people are having a chance to put food on the table.
    And that's a positive indication of how strong our economy is.

    [[Page 1218]]

        We're a productive nation. Productivity is on the increase. That's a
    result of investments that are being made in the private sector. A
    productive economy is one that will yield higher wages for the American
    people. The more productive you are, the more likely it is your wages
    will go up, which means a higher standard of living for the American
    people. And I want to thank the Manhattan Institute's support for
    progrowth economic policies, policies that really send a clear signal
    that we are still the land of dreamers and doers and risk takers.
        The cornerstone of our policy has been to keep taxes low, see. We
    believe, and you believe, that the more money a person has in their
    pocket, the more likely it is this economy is going to grow. We trust
    people to make the right decisions on how to spend, save, and invest.
    That's certainly not necessary--necessarily the common policy here in
    Washington. There's some good and decent folks who think they can spend
    your money better than you can. I just don't agree with them. And one of
    the reasons why this economy is strong is because we cut the taxes on
    everybody who pays taxes in the United States. If you have a child, you
    got extra money. If you're married, we did something about the marriage
    penalty. It doesn't make any sense, by the way, to penalize marriage.
    Society ought to be encouraging marriage.
        If you're an investor, you got tax relief because we cut the taxes
    on the dividends and capital gains. If you're a small business, it's
    likely that you pay taxes at the individual income tax rate because
    you're more likely than not to be a sole proprietorship or a subchapter
    S corporation. Seventy percent of new jobs in America are created by
    small business, and it made sense to let our small-business
    entrepreneurs keep more of their own money to save and invest and expand
    their businesses. The tax relief we passed is working, and the Congress
    needs to make the tax relief we passed permanent.
        One of the benefits of keeping taxes low and growing your economy is
    that you end up with more tax revenues in the Federal Treasury. I know
    that seems counterintuitive to some people. You'll hear people say,
    ``Let's balance the budget by raising taxes.'' By the way, that's not
    the way Washington works. They'll raise your taxes and figure out new
    ways to spend your money.
        It turns out that when you encourage economic vitality and growth,
    the Treasury benefits from it. In 2005, tax revenues grew by almost $274
    billion, or 15 percent. That's the largest increase in 24 years. The
    economy is continuing to grow, and tax revenues are growing with it. So
    far this year, tax revenues are more than 11 percent higher than they
    were at the same point last year, which is significantly better than
    projected. These increased tax revenues are part of how we intend to cut
    the deficit in half by 2009. In other words, Rob Portman will be giving a report to the Nation about how we're
    doing on the tax revenues; I think you're going to find that progrowth
    economic policies means that more revenues are coming into the Treasury
    than anticipated, which makes it easier to deal with a current account
    budget deficit.
        But there's a second part of the equation to dealing with the
    current account budget deficit, and that is, how we spend your money.
    Now, I'm going to talk about discretionary spending in a minute, but I
    just want you to understand that a significant problem we face is in our
    mandatory programs. And I know you know that. Those would be programs
    called Medicare and Social Security and Medicaid.
        As you might recall, I addressed that issue last year, focusing on
    Social Security reform. I'm not through talking about the issue. I spent
    some time today in the Oval Office with the United States Senators, and
    they're not through talking about the issue either. It's important for
    this country. I know it's hard politically to address these

    [[Page 1219]]

    issues. Sometimes it just seems easier for people to say, ``We'll deal
    with it later on.'' Now is the time for the Congress and the President
    to work together to reform Medicare and reform Social Security so we can
    leave behind a solvent balance sheet for our next generation of
    Americans.
        If we can't get it done this year, I'm going to try next year. And
    if we can't get it done next year, I'm going to try the year after that,
    because it is the right thing to do. It's just so easy to say, ``Let
    somebody else deal with it.'' Now is the time to solve the problems of
    Medicare and Social Security, and I want your help. I need the Manhattan
    Institute to continue to agitate for change and reform. You've got a big
    voice. You got creative thinkers, and if you don't mind, I'd like to put
    this on your agenda and let you know the White House and Members of the
    Senate and the House are anxious to deal with this issue and get it done
    once and for all.
        In the meantime, we've got to do everything we can to control the
    spending that Congress votes on and approves every year. That's called
    discretionary spending. My administration is doing its part on
    discretionary spending. Every year since I took office, we've reduced
    the growth of discretionary spending that is not related to the military
    or homeland security. And the reason why we haven't reduced the growth
    on spending for the military is because so long as we've got troops in
    harm's way, they're going to have whatever it takes to win the war on
    terror.
        We will not shortchange the people who wear the uniform of the
    United States military. As the Commander in Chief of this fine group of
    men and women, I have got to be able to look in the eyes of their loved
    ones and say, one, ``The mission is worth it,'' and two, ``This
    Government and the people of the United States support your loved ones
    with all we got.'' And that's exactly how I'm going to continue to
    conduct this war on terror.
        But apart from defending our country, the last two budgets have cut
    nonsecurity discretionary spending--have cut the nonsecurity
    discretionary spending. And that's not easy. It's not easy to do that,
    but the Congress delivered, at least on last year's appropriations
    bills. And they're working on this year's appropriations bills. Our view
    is, taxpayers' dollars should be spent wisely or not at all. One of Rob
    Portman's jobs is to analyze programs that
    are working or not working. Look, every program sounds good, I know. But
    we're focusing on the results of the programs. Are they achieving the
    objectives that we expect?
        One of the first tests of this year on whether or not the
    administration can work with the Congress on fiscal restraint was on a
    supplemental spending bill. That's a bill that was passed to provide
    emergency spending for our troops overseas and for citizens that had
    been hit by Katrina and to prepare for the dangers of a pandemic flu. I
    felt those were important priorities that needed to be a part of the
    supplemental bill, and so we sent that bill up.
        Obviously, there was some noise coming out of the Congress at first;
    people had different opinions. And that's a good thing about democracy;
    you'll find there's all kinds of different opinions here in Washington,
    DC. People had different views about what ought to be in that bill.
        Part of my job is to help bring some fiscal discipline to
    Washington. So I said that if the Congress exceeded a limit that I
    thought was wise, I would veto the bill. Congress acted responsibly. And
    it was hard work, and I applaud Senator Cochran for his hard work on this measure. He brought the
    House together with the Senate, and they took out $15 billion in
    spending that had been added to the bill. It came under the spending
    limit I had set. And it's a good example of fiscal restraint set by the
    Congress. I appreciate so very much your leadership on that issue, Mr.
    Chairman. Thanks for working with us.

    [[Page 1220]]

        I believe another crucial test for the Congress is to whether or not
    the Congress will pass a line-item veto. And that's what I want to talk
    to you about today. A line-item veto would be a vital tool that a
    President could use to target spending that lawmakers tack on to the
    large spending bills. That's called earmarking, and that's become quite
    a controversial subject here in Washington, DC.
        I happen to believe that, a lot of times, earmarking results in
    unnecessary spending. See, part of the job of the President and the
    leaders in the Congress is to set priorities with the people's money. If
    you don't set priorities, the tendency is to overspend. And sometimes, a
    lot of times, the earmark doesn't fit into the priorities that have been
    set through the budgetary process. A lot of times earmarks are inserted
    into bills at the last minute, which leaves no time, or little time, for
    debate. Part of the process--a good process is one in which Members are
    able to debate whether or not spending meets a priority, whether it
    makes sense. Earmark sponsors are often not required to provide their
    colleagues with a reasoned justification for proposed spending. And not
    surprisingly, the process often results in spending that would not have
    survived had it not been subject--subjected to closer scrutiny. Part of
    a good legislative process is for Members to take a good look at whether
    or not a spending request meets a priority or not.
        And the process has changed. And according to the Congressional
    Research Service, the number of earmarks has increased from about 3,000
    to 13,000 over the last decade. In other words, this process is taking
    place more and more often. I don't think that's healthy for the process.
    Matter of fact, I think it's circumventing the process. Now, that's up--
    obviously, up for the Legislature to determine whether I'm right or not.
    The President proposes, and the legislative body disposes, and I'm
    proposing a way to help deal with this problem. And that way is to pass
    a line-item veto.
        Now, here's why it's necessary. First of all, part of the problem
    with the line-item veto is that it's oftentimes deemed to be
    unconstitutional. As a matter of fact, I know there are people in this
    room that helped pass the line-item veto in 1996. President
    Clinton was the President then, and the
    Congress--in my judgment--wisely gave him the line-item veto. And yet
    shortly thereafter, when he started using the line-item veto, the
    Supreme Court struck it down because they concluded that it
    unconstitutionally permitted the President to unilaterally change a law
    passed by the Congress. In other words, the bill didn't pass
    constitutional muster.
        And so we dealt with this issue. We figured out that, obviously, any
    line-item veto would again be challenged to our highest Court. And so we
    proposed the following type of legislation: When the President sees an
    earmark or spending provision that is wasteful or unnecessary, he can
    send it back to the Congress. And Congress is then required to hold a
    prompt up-or-down vote on whether to retain the targeted spending. In
    other words, the Congress is still in the process.
        The line-item veto submitted would meet the Court's constitutional
    requirements. And that's important. Members of Congress need to know
    that we've thought carefully about this, and we've worked with them to
    make sure that that which is passed is constitutional.
        The other thing the line-item veto needs to do is it will shine the
    light of day on spending items that get passed in the dark of the night,
    and that will have--in my judgment--a healthy--it will send a healthy
    signal to the people that we're going to be wise about how we spend
    their money.
        The bill I submitted will be an effective tool for restraining
    Government spending because it will address a central dilemma created by
    unwarranted earmarks. And here's the dilemma: When Members of

    [[Page 1221]]

    Congress are faced with an important bill that includes wasteful
    spending in the bill, they have two bad options. On the one hand, they
    can vote against the whole bill, including the worthwhile spending, or
    they can vote for the whole bill, including the wasteful spending. When
    such a bill comes to the President, it creates a dilemma. I've
    negotiated year after year on a top-line budget number. And Congress has
    met that top-line budget number, which means it's very difficult for the
    President, then, to veto the appropriations bills that have met the top-
    line budget number, because the next year's budget negotiations will be
    meaningless. You can imagine Members of the United States House or
    Senate walking into the President's office and saying, ``Wait a minute;
    we met your number last year, and you vetoed the bill, so forget
    negotiations.''
        I want to be a part of the budgetary process. It's an important part
    of the President's working with Congress, and I'm not going to deal
    myself out of the budgetary process. So my point is, they can meet the
    size of the pie, but I may not like some of the slices of the pie. And
    therefore, what do we do about it? And one way to deal with it is the
    line-item veto. The President could approve the spending that is
    necessary, could redline spending that is not, and then let the Congress
    decide whether or not the President is right. It's a fair process; I
    believe it's a necessary process.
        Many Members in Congress, I know, want to do the right thing. And so
    one of the interesting things about the line-item veto is it will help
    deal with that dilemma I described, either all or nothing when it comes
    to voting for appropriations bills. You know, sometimes a Member of
    Congress gets a special project for the district, and they go back and
    tout the project. Then you have Members who don't agree with earmarking,
    and they don't have any special project to tout to the district. And yet
    the people in their district are voting for the special project for the
    other person's district. And I think the line-item veto--I know the
    line-item veto would help resolve this dilemma.
        You see, if there's an opportunity for the President to redline
    certain programs and hold them up to the light of day, it will probably
    mean Members of Congress are less likely to propose the earmarks in the
    first place. Rather than being able to move a special project into the
    bill without hearing, this--the President would have the opportunity to
    say, ``Wait a minute; this doesn't make much sense; it doesn't seem to
    fit into the priorities. This special project, this unusual study''--
    [laughter]--``or this particular project, this doesn't make sense.''
        I believe that part of a budgetary reform program is the line-item
    veto, the opportunity to put the light on such programs. And that will
    help Members resolve the dilemma of either voting for an important bill
    with bad items in it or being a part of trying to put bad items in it in
    order to justify their existence in the Congress.
        The good thing about the line-item veto, it has bipartisan support.
    We've got a Democrat Member from the United States Congress who
    supported that bill strongly. Governors have had the line-item veto. I
    met with Senator Ben Nelson earlier
    this morning in the Oval Office; he talked about what an effective tool
    it was to have the line-item. Did you have it, Engler, when you were Governor? Engler had it. It's an important
    part of relating with the legislative process. And by the way, these
    aren't just Republican Governors with the line-item veto; they're
    Democrat and Republican Governors who are using that line-item veto
    effectively.
        The line-item veto has bipartisan support in the Congress. Thirty-
    five Democrats joined more than 200 Republicans in the House to get the
    bill passed. That's a good sign. I was disappointed, frankly, though,
    that more Democrats didn't vote for the bill, especially those who are
    calling for fiscal discipline in Washington, DC. I mean,

    [[Page 1222]]

    you can't call for fiscal discipline on the one hand and then not pass a
    tool to enhance fiscal discipline on the other hand. You can't have it
    both ways, it seems like to me.
        Now the Senate is going to take up the measure. And again, I want to
    thank the Senators who are here for strategizing on how we can get the
    bill moving. Senator Frist is committed to
    getting the bill moving. Senator McCain is one
    of the important cosponsors, as is Senator John Kerry. I remember campaigning against him in 2004, and I
    remember him talking about the line-item veto, and I appreciate the fact
    that he's living up to the political promises he made. It's a good sign,
    and I applaud Senator Kerry for taking the lead on the line-item veto.
    And I hope members of his party listen to his justifications for that
    important piece of legislation.
        What's really interesting is we've had Senators on record for the
    line-item veto. After all, the Senate passed a line-item veto in 1996.
    And for those Senators who passed the line-item veto in 1996, I hope
    they still consider it an important vote in 2006. Ten years hasn't made
    that big a difference. It was good enough 10 years ago; it's good enough
    today, for those who voted for the line-item veto.
        Oh, I know this town is full of all kinds of politics, but we ought
    to set politics aside. We need to set politics aside when it comes to
    reforming Social Security and Medicare, and we need to set politics
    aside so that the President can work with the Congress to bring fiscal
    discipline to our budgets. That's what the taxpayers expect from those
    of us who are honored to serve.
        So that's my opinion on the line-item veto. I hope you can feel--
    tell I feel strongly about it. I think it makes sense, no matter who the
    President may be. I think it makes sense for a Republican President to
    have a line-item veto, and I think it makes sense for a Democrat
    President to have a line-item veto. And I urge the United States Senate
    to pass this important legislation so we can reconcile whatever
    differences there are between the House and the Senate version and show
    the people that we are serious about being responsible with their money.
        Thanks for letting me come by and say hello.

    Note: The President spoke at 10:58 a.m. at the JW Marriott Hotel. In his
    remarks, he referred to Lawrence J. Mone, president, Manhattan Institute
    for Policy Research; and former Gov. John Engler of Michigan.