[Public Papers of the Presidents of the United States: George W. Bush (2006, Book I)]
[May 3, 2006]
[Pages 844-852]
[From the U.S. Government Publishing Office www.gpo.gov]
Remarks to the American Council of Engineering Companies
May 3, 2006
Thanks for the warm welcome. Thanks for inviting me. [Laughter] I
was looking for something to do this morning. [Laughter] I'm really
thrilled to be here. I thank you, Mr. Chairman, for letting me come by. I've got something to talk to you
about, about the economy. What I'm really thrilled is, is that the
American Council of Engineering Companies would allow a history major to
come by to speak to you. [Laughter]
I want to first say, I appreciate the good work you do for the
country. I want you to know that I know how vital your contribution to
America is. And it means a lot, and thanks a lot for doing what you're
doing. I remember the work you did to help repair the Pentagon after
September the 11th. I know full well the work that members of your group
do to help construct schools and hospitals in some of the world's newest
democracies, particularly Afghanistan and Iraq. And for those of you who
encourage your employees to do that or if you've done that yourself,
thank you from the bottom of our Nation's collective hearts.
I know that members have been down to help rebuild the communities
along the gulf coast. And for those of you who have been down there or
may live down there, you know what that storm did. I mean, you talk
about wiping out a part of our country; it just flat did. And it makes a
difference in people's lives when good-hearted citizens come down and
lend their talents and expertise to help rebuild. I've been down there
quite a bit; Laura, as a matter of fact, was down
in New Orleans last night, and she's there this morning and heading over
to Mississippi. And it's amazing what the collective compassion of
America has done to help lift the spirits of our fellow citizens. And
some of our Nation's engineers were down there helping.
I also want to thank you for helping to build on this country's
prosperity. Through your hard work, your vision, your ingenuity, you're
helping this economy of ours. You know, I like to remind people that the
government's role is not to engineer the economy. The government's role
is to create an environment in which people can find work, risk capital,
grow their companies, so that, collectively, we all benefit.
I appreciate the entrepreneurial spirit represented here in this
room. One of the most important jobs of government is to make sure the
entrepreneurial spirit remains strong. We want America to be
entrepreneurial heaven, the place where people can come and realize
their dreams.
Laura sends her best. I'm a lucky man to have
her as my wife. I believe the country is lucky to have her as the First
Lady. She is a--[applause]--she's pretty busy. She's busy telling me
what to do and not what to say. [Laughter] It's an interesting life in
the White House, as I'm sure you can imagine. There's nothing better, to
have somebody by your side who you love, right here in the middle of
Washington, DC. [Laughter] And Laura is that way. You
[[Page 845]]
know, people--my friends from Texas always ask me what it's like to be
the President, living in the White House and everything, and it's pretty
interesting. I've got a 45-second commute. [Laughter] And the good news
is, I commute to a house that's warm, and that's because of Laura.
So she sends her very best to you. I wish she
were here, but she's, as I said, down in New Orleans helping the people
on the gulf coast get their lives back together. As you might remember,
she's a librarian, and she's talking about her foundation to help
rebuild the libraries down there in the gulf coast of our country.
Anyway, she's doing just good. I know you didn't ask, but I'm telling
you anyway. [Laughter]
I want to thank--not only thank Ed,
but I also want to thank the chairman-elect of the ACEC, Jeff
Daggett. I want to thank Dave
Raymond. I want to thank all the members
for letting me come by.
Let me start by telling you, look, I understand there's a lot of,
kind of, different opinions about our economy. And you'll hear a lot of
different opinions, particularly as the political season approaches. Let
me just give you some facts so you can draw your own conclusions, so the
American people can draw their own conclusions about whether this
economy is strong or not.
In the first quarter of this year, America's economy grew at an
impressive rate of 4.8 percent. The strong start follows a strong 2005
when our economy--American economy grew at 3.5 percent. Now, let me put
that in perspective for you. Our economy's growth in 2005 was faster
than Japan, more than twice as fast as France, and more than three times
as fast as Germany.
The American economy is the fastest growing of any major
industrialized nation in the world. Productivity has been growing at the
highest rate in decades. An economy that is productive is one that will
help increase the standard of living for our American people, and we are
a productive nation.
We've added jobs for 31 months in a row. We've added more than--
[applause]--and that's totaled 5.1 million new jobs for the American
people, and that's good news. The national unemployment rate has fallen
to 4.7 percent. That is lower than the average of any decade since the
1950s. The job market for college graduates is the best it's been in 5
years. The American people are going to work in record numbers, and
that's important. Construction spending is at an alltime high. Business
confidence is strong, and business investment is growing. Business
investment is an indication of confidence in the future. People invest
because they think the future is going to be brighter. And when people
invest, it helps this country remain productive, and it helps people
find work.
Small businesses are flourishing. I know many of you all are small-
business owners, and I applaud you for having the courage to start your
own business and manage your own business. But small businesses are
flourishing in America, and that's important. Most new jobs in America
are created by small businesses, and when the small-business sector is
strong, it means people are going to find work. The number of Hispanic-
owned businesses is growing at three times the national rate, and that's
a positive development.
One of the things I try to do is promote an ownership society. We
want people owning their own business. There's something that encourages
somebody to think about the future of the country when they own their
own company. The number of African American-owned businesses is growing
at four times the national rate. Real after-tax income has grown by
almost 9 percent per person since I took office.
Homeownership recently reached record levels. That's important. I
mean, I love the idea, when somebody opens a door to where they live,
says, ``Welcome to my house; welcome to my piece of property.''
[[Page 846]]
It is good for our society to encourage ownership.
Consumer confidence is at its highest point in nearly 4 years.
Household wealth is at an alltime high. These are the facts which say to
me, this economy is powerful, productive, and prosperous. And we intend
to keep it that way.
One of the most important explanations for this strong economy is
low taxes. When I came to Washington, taxes were too high, and this
economy of ours was headed into a recession. Not only did we have a
recession; there was a stock market correction, corporate scandals, an
attack on the United States of America. This country went to war to
defend ourselves; we had natural disasters. It's amazing the statistics
I just read are as strong as they are, given what we've been through.
But I believe a lot of the reasons why the statistics are strong is
because we let people keep more of their own money under the theory that
if you have more of your own money in your pocket to save, invest, or
spend, this economy will do just fine.
Part of creating a wealth in which--an environment in which the
entrepreneurial spirit is strong is to let people have more of their
money, is to unleash the great creative talent of the American people.
And that's what we did. I worked with Congress to cut the taxes on
everybody who pays taxes. It wasn't one of these tax cuts where, you
seem okay, you get a tax cut, and you're not, and you don't. My attitude
was, the only fair way to treat people is if you pay taxes, you get tax
relief.
So we reduced taxes for every American who pays taxes, and that's
more than 110 million people in all. And I want to remind you about the
tax relief. First of all, we doubled the child tax credit. We thought it
made sense to help people who've got children. Secondly, we put--we
reduced the marriage penalty. We did not think it made sense to penalize
marriage. We cut the taxes on capital gains and dividends to encourage
business investment.
I understand, with more investment, this economy of ours will grow.
That's what you want to encourage; you want to encourage people to
invest. And it's important for people who watch the economy and try to
figure out why we make decisions we make to understand that the more
investment there is in the private sector, the more likely it is someone
will be able to find work. And so we created incentives in the Tax Code
for our small businesses to purchase equipment. We rewarded family
businesses and farmers and ranchers by putting the death tax on the way
to extinction.
The cumulative effect of these tax cuts left $880 billion in the
hands of American workers and businesses. And they have used that money
to fuel our economic resurgence. It's the American people, people such
as yourself, that used your own money to help make this economy as
strong as it is.
There's a business owner today named Gregg Ten Eyck. You know old Gregg. I just named him. Where are you?
There he is, right there. [Laughter] I hope you're okay with--is that
your son? Your son? Yes. Is it okay to mention the old man's name in
public? [Laughter] Good, because I just did. Gregg is--runs an
engineering company in Denver, Colorado. He brought his family. Thank
you all for being here. He files as a subchapter S corporation. Most of
you know what that means. For those of you who don't, it means that he
pays taxes on business income at individual income tax rates.
See, most small businesses are subchapter S corporations or limited
partnerships, and therefore, the business pays tax at an individual
income tax rate. And so by cutting individual income taxes--rates across
the board, we cut taxes on small businesses like Gregg. And there's a reason why you would want to do that. If
most new jobs are created by small businesses in the United States and a
primary objective is to help people find work, it then makes sense to
leave more money in
[[Page 847]]
Gregg's hands so he can spend it to expand his business.
He also took advantage of the new
investment opportunities to purchase computers and software that help
make him more competitive. Not only did it make him more competitive,
but somebody had to make the computers that he purchased. There's an
effect throughout the economy when government provides incentives for
people to invest. And the fundamental question facing our country is,
who do you want making decisions with his own money? Do you want Gregg
making the decisions, or do you want somebody in the Halls of Congress?
This administration thinks the money is better left in Gregg's hands.
The most important connection for the American people to what I just
said about encouraging investment and reducing taxes is this:
Gregg's added--Gregg's business added
employees for the past 5 years in a row. And this year, he plans to add
a few more. Stories like Gregg's prove the tax cuts are doing what we
want them to do, and that's to get this economy growing so people can
find work. That's what we want.
The problem is that these tax cuts are scheduled to expire in the
next few years. So when Congress passed them, they didn't make them a
permanent part of the Tax Code. They said, we'll give you some tax
relief for a while, but the tax relief is scheduled to go away. And of
course, if that were to happen, it means your taxes are going to go up.
The prospect of higher taxes, the notion that there's uncertainty in the
Tax Code makes it difficult for small-business owners and company execs
to plan. How can you plan if you're uncertain about what the future is
going to be when it comes to the Tax Code?
Obviously, if you think a big tax crease is incoming--a big tax
increase is coming, it will make you less likely to invest. Investment
leads to a more productive society; investment leads to job. The lack of
investment will make us less competitive and make it more likely there
won't be new jobs created.
And so there's uncertainty in the Tax Code because the Congress made
sure that the tax cuts would expire. At a time of high gasoline prices--
I know energy prices is on your mind, like a lot of other folks--at a
time when there's growing competition in the world, the last thing the
American people need is a tax hike. And so my message to the Congress is
this: In order to keep this economy strong, Congress needs to make the
tax relief permanent.
By the way, there's a struggle here in Washington about who best can
spend your money. [Laughter] Some are very anxious for the tax cuts to
expire; some want to repeal the tax cuts now. Many of those are members
of the loyal opposition here in Washington, DC, who've objected to tax
relief all along the way. When Congress first cut taxes back in 2001,
most of the Democrats in Congress voted against it. One leading
Democrat said that tax cuts were a huge
mistake. We have a philosophical difference here in Washington; nothing
wrong with that. There's nothing wrong with having differences of
opinion. Another predicted that the tax cuts would do nothing to create
jobs. A year-and-a-half ago, a Democrat Senator informed us the economy
may be on the brink of collapse. The Democrats' record of pessimism has
been consistent; it's been consistently wrong.
If the people have their way--who want this tax relief to expire--
the American people will be hit with $2.4 trillion in higher taxes over
the next decade. That's 2.4 trillion that would be taken out of the
pockets of firms like Gregg, taken out of the
pockets of those who are raising their children. It would be handed over
to Government; that's where the money would go. It would be taken out of
the economy and given to people here in Washington, DC, to spend. A tax
increase would be disastrous
[[Page 848]]
for business, disastrous for families, and disastrous for this economy.
Congress has an opportunity to pass a progrowth measure that would
keep key elements of the tax relief in place. The House and the Senate
are close to completing a bill that would extend the tax cuts on
dividends and capital gains for two more years, through 2010. The bill
would also extend incentives for small businesses to purchase new
equipment. All these provisions have been successful over the past few
years. By improving access to capital, the tax cuts on capital gains
have led to more investment, more growth, and more job creation.
The tax cuts on the dividends has resulted in more dividend payments
to investors and large savings for our seniors who rely on fixed
incomes. The small-business expensing incentives have helped many
businesses like yours expand and hire new workers. There is no reason
for Congress to allow taxes on the job creators to go up. So the House
and the Senate have got to resolve their differences and pass progrowth
legislation, so I can sign it into law.
Congress also needs to take action on the other side of the ledger
as well. And by that I mean, we've got to restrain spending. See, what
you'll hear in Washington is, we must balance a budget by raising your
taxes. The problem is, that's not the way Washington works. What happens
is, they'll raise your taxes and figure out new ways to spend your
money. [Laughter] The best way to reduce our deficit is to keep
progrowth economic policies in place so the economy expands, which will
yield more tax revenues, and be wise about how we spend your money.
It's difficult in Washington for people to set priorities when it
comes to spending your money. I have set priorities, and our number-one
priority is to make sure that the men and women in our uniform have what
it takes to defend America and win the war on terror--[applause]--which
means we must show discipline in other areas of the budget. You know
what that means. You can't spend every--your money on everything you
want to spend it on. You have to set priorities. And that's what
Congress needs to do.
We're actually making good progress on spending restraint. There are
two types of spending: discretionary spending and mandatory spending.
Mandatory spending, which I'll talk about a little bit later on, is
relief programs that escalate based upon formula. Medicare and Social
Security are the two programs that you're most familiar with.
Discretionary spending is where the Congress can decide whether or
not to increase or decrease a particular budget. Every year since I took
office, we've slowed the growth of discretionary spending that's not
related to the military or homeland security. The last two budgets have
actually had cuts in this kind of spending. We've reduced the spending.
What we've asked Congress to look at is, we said, look, why don't
you analyze whether or not a program is working? See, every program
sounds great; they all have got good titles, but sometimes they don't
deliver results. And when they don't deliver results, we shouldn't spend
taxpayers' money on it. In 2007 budget, we've identified 141 programs
that are performing poorly or not fulfilling essential priorities. We've
asked Congress to get rid of them. If they're not working, eliminate
them.
With a disciplined approach to spending, we're on our way to cutting
the deficit in half by 2009, and that's a positive goal. Congress is
considering a piece of legislation that will test its commitment to
spending restraint. I've requested a bill that would provide emergency
funds for the war on terror and hurricane relief. Unfortunately, there
are some here in Washington trying to load that bill up with unnecessary
spending. This bill is for emergency spending, and it should be limited
to emergency measures.
[[Page 849]]
And so I've told the Congress--I'd like to reiterate it here for
you--that anything above $92.2 billion for this emergency spending bill,
plus the funding to prepare for a pandemic flu emergency, will be
vetoed. The Congress needs to hear me loud and clear: If they spend more
than 92.2 plus pandemic flu emergency funds, I will veto the bill. It's
important for there to be fiscal discipline in Washington, DC, if we
want to keep this economy strong.
There are other ways to make sure we're wise about how we spend your
money. I'm going to work with Congress to reduce the number of what's
called earmarks for special projects. [Applause] Sounds like you know
what an earmark is. [Laughter] Earmarks are often an award of Federal
funds to projects without a proper hearing. In other words, people just
kind of slide them in there in these bills. And as a result, I don't
think the taxpayer gets the best result for their money. It's not--I
don't think you can prioritize if you have a system of people just
slipping spending in bills without proper hearing.
I appreciate the Senate work on sensible earmark reform. Today the
House of Representatives is taking up a measure that includes earmark
reform. And I encourage both bodies of Congress to get the job done, to
have meaningful, real earmark reform. I look forward to signing such a
bill if it comes to my desk.
Congress also can pass the line-item veto. By the way, earmark
reform may not require--it's really a matter of Congress having the will
to do what's right; same with the line-item veto. A line-item veto would
allow me to eliminate wasteful spending items without having to veto the
entire bill. And this will be a useful way to help bring fiscal
discipline to Washington, DC. The Congress needs to pass a line-item
veto quickly. I look forward to working with members of both political
parties to achieve budgetary reform so we can do the job you expect us
to do.
The biggest problem we've got, however, is--for our budgetary
health--is the entitlement spending programs like Social Security and
Medicare. If we're wise about keeping progrowth policies in place and
fiscal restraint, we can get this deficit down. We're on a trajectory to
do so by--cut it in half by 2009. But there's a large problem looming
out there, and it's because baby boomers like me and you--[laughter]--
well, some of you--are getting ready to retire. We're getting to that
age where the Government has made us a promise. And there's a lot of us.
There's a lot of baby boomers. There's a baby boomer bulge--in more ways
than one. [Laughter] And we're living longer than anybody thought when
they first designed these programs.
And I don't know about you, but I like to get exercise; I'm wise
about the choices I make in terms of drinking and all that. And as a
result--and medicine has improved--we're living longer lives. So you've
got a lot of people getting ready to retire who are going to live longer
lives, and we've been promised greater benefits than the previous
generation. People running for office say, ``Vote for me; I promise to
increase your benefits in these entitlement programs.'' And sure enough,
they won and did what they said they were going to do.
But the problem is, is that there are fewer payers per beneficiary
into the system than ever before. In other words, there is a heavy
burden on a young generation of Americans coming up to pay the promises
that Congress has made. And I really, really think that Congress has got
to address this issue with me.
I tried last year. I took it on, Social Security in particular, and
went around the country saying, ``Folks, we got a problem''--on the
theory that when the people said we got a problem, Congress would
respond. Well, I got half of it right. [Laughter] People said, ``We got
a problem.'' And it's so political up here that it's difficult at this
stage of the game to get people to come together, to come with a
bipartisan
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solution. Look, we don't have to cut programs. It's like making sure you
slow your car down to the speed limit. You don't have to put it in
reverse. There are commonsense ways to keep the promises to the
generation that is fixing to retire but make sure that future
generations will have a sound Social Security and Medicare system.
So I just want to assure you this issue is on my mind a lot. I like
to remind people that the job of a President is to confront problems, no
matter how difficult they may look, and not pass them on to future
Presidents. I also believe--[applause]. So we're in the process of
working with Democrats and Republicans to come together to forge a
bipartisan solution so that we can say we did our duty, that we came and
we made the system work better. It's a really important issue.
And so when you hear people talking about the budget, the current
account deficit is important; it's really important. But these unfunded
liabilities will serve to be a major drag on our economy if we don't do
it now. Now is the time to do it. The longer we wait, the more difficult
it's going to be for people to come together. So you'll see me working
with Democrats and Republicans, hopefully, to come up with a solution
that will address this problem.
One of the interesting challenges we face is whether or not this
Nation will lose its confidence or not. We live in a global economy, as
you well know. And some people in the country really wonder whether it's
worth the competition, whether it makes sense to try to compete with
these new and growing economies like China and India. I, first of all,
know it's important for us to compete and to be confident. If we want to
remain the economic leader of the world, which I happen to believe is
good for our people, we shouldn't fear the competition. We ought to
welcome it, and we ought to develop a strategy so that we can remain the
leader. And here's some ideas.
Obviously, we've got to do something about energy. A global economy
means that when demand for energy goes up in India and China, which it
is, it causes our gasoline prices to go up. When the price of crude goes
up, because of international demand increase is greater than the supply,
your gasoline prices go up. And so it's--and my attitude about this is
to make sure you're not being mistreated at the pump, you're being
treated fairly, but also recognize now is the time to spur strong
research and development into using other ways to power our cars, such
as hydrogen or ethanol or batteries that can give the first 40 miles on
electricity, as opposed to gasoline. Now is the time.
And so I look forward to working with Congress to press ahead hard
on research and development. And we're close to some amazing
breakthroughs. Cellulosic ethanol may be on the verge of becoming
commercially viable. We're close to these new battery technologies that
will enable people to drive the first 40 miles in a city not using
gasoline. Ethanol is on the move. We must, as a nation, in order to stay
competitive, diversify away from crude oil. I know it sounds weird for a
Texan to say--[laughter]--but I'm telling you, it is essential for our
economic security and national security to do so.
We've got a challenge when it comes to making sure our health care
is available and affordable. There is a debate here in Washington. There
are some who say, ``Let's let the Government run it, set the price, set
the supply.'' I'm strongly against that. I believe we've got to empower
the doctor-patient relationship. And we put out a lot of good ideas, two
that I think will interest you. One is to make sure the small businesses
can pool risk across jurisdictional boundaries so they can buy insurance
at the same discounts--[applause].
And secondly, do something about these junk lawsuits that are
running up the cost of medicine. Do you realize there are over
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1,500 counties in America--about, they estimate--that do not have an ob-
gyn? That is harmful for our health care system. It's discouraging to
the America people. A lot of it is because of these lawsuits. And the
lawsuits not only make medicine less accessible, but docs practice
defensive medicine. If you think you're going to get sued, you prescribe
more drugs than necessary or more procedures than necessary so that you
can make your case in a court of law. And this is--these lawsuits harm
medicine. It makes the cost of medicine difficult for you, and it makes
it hard for you to afford it for your employees.
When I came to Washington, I said, this isn't really a national
issue; States ought to deal with it. Then I realized that the cost of
defensive medicine and the cost of raising premiums costs our
Government--you--about $28 billion a year because of Federal health
programs such as Medicare, Medicaid, veterans' benefits. And so I've
called upon Congress to get a bill to my desk that is rational,
reasonable, and common sense, that does something about these junk
lawsuits.
Another initiative I think you'll be interested in is this: To stay
competitive, we got to make sure our children have the skill sets
necessary to fill the jobs of the 21st century. That skill set happens
to be based upon math and science. I think you know what I'm talking
about. And as well, in order to be a competitive nation--one that
doesn't fear the future, but welcomes the competition and says, look, we
can compete, recognizes the importance of research and technology--the
research and development tax credit needs to be a permanent part of our
Tax Code in order to make sure that people invest in the future, come up
with new ideas.
As well, I've committed the Government to double research in basic
sciences over the next 10 years. The Government has got a vital role to
play. People say to me, why should the Government invest in basic
sciences, basic research--research for the basic sciences? And the
answer is, is because it's amazing what happens, what research can
bring, such as the Internet. The Internet came to be as a result of
Government research monies spent at the DOD. There's unbelievable things
that can happen when we unleash the creativity of the American people,
and the Federal Government ought to be a rational part of that.
But the other answer--the other real challenge we face is whether or
not our kids can compete. And the American people have got to understand
that if our children do not have the basics in math and science, they
will then not have the skill sets necessary for the jobs of the 21st
century. And in a global economy, those jobs will go somewhere else.
And now's the time to get it correct. And we're making pretty good
progress, in my judgment. First of all, as people who are results-
oriented people, I think you'll appreciate the approach we took in the
No Child Left Behind Act, which basically said, in return for spending
Federal money, particularly for Title I students, the poor students--
which I support--why don't you show us whether or not we're getting
results? It's kind of an odd concept, isn't it--[laughter]--we spend;
you measure.
You notice I didn't say, the Federal Government will design the
test. I don't believe in federalizing schools. I believe in local
control of schools, but I do believe in accountability. And so
therefore, we said to the States, in return for Federal participation,
develop accountability systems so we know. There's all kinds of debates
that take place in public education. One of them is, does the curriculum
work that you're using? The best way to figure it out is to measure.
The second part of this system is that when we find children falling
behind early, there's extra money--supplemental service money we call
it--to get tutoring so that the children are not left behind. In other
words, we're tired of this business about socially promoting students.
We want to make sure that people get promoted based
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upon knowledge. And our system is working.
There's a--there's an achievement gap in America that's got to be
closed for the future of this--to make sure this country's future is
bright. And we're closing it. How do we know? Because we measure. And we
need to apply the same rigor, by the way, that we apply to reading to
math and science. It turns out that we're doing fine in fourth grade
math, and we're doing fine in eighth grade math, but when kids get into
high school, when it comes to the rest of the world, we're falling down.
And so therefore, it makes sense to measure in junior high and provide
supplemental services for math to make sure that our children have got
the skill base necessary to become the engineers and scientists.
AP works--Advanced Placement program works. If it's--if you're
involved with your schools in your community, you know what I'm talking
about. It's important to set high standards. The Government ought to
help train 70,000 teachers to become Advanced Placement teachers to
raise the standards for our children. We need 30,000--30,000 scientists
and engineers to become adjunct professors, so to speak, in the
classrooms to make sure that--[applause]. I can go on forever.
Here's the deal, though. Here's what I'm trying to explain to you:
We don't need to fear the future because we're going to shape the
future. We'll make sure our children are educated. We're going to make
sure we do something about these junk lawsuits. We're going to make sure
that we do something about energy. Why I wanted to talk to you today,
though, is to make sure that you understand that in order for this
country to be competitive, in order for us not to fear the future, we
got to keep your taxes low.
I appreciate you for what you do for our country. Thanks for letting
me come by and share some thoughts with you. God bless you.
Note: The President spoke at 11:25 a.m. at the Grand Hyatt Hotel. In his
remarks, he referred to Edward J. Mulcahy, chairman, and David A.
Raymond, president, American Council of Engineering Companies.