[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.