    [Public Papers of the Presidents of the United States: George W. Bush (2007, Book I)]
    [January 30, 2007]
    [Pages 75-81]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on the National Economy in East Peoria, Illinois
    January 30, 2007

        Thank you all. Thanks for letting me come by. Please be seated.
    Thanks for the warm welcome. It's good to be in the heartland of
    America. Thanks for coming to let me visit with you a little bit about
    our economy. I really want to thank the good folks at Caterpillar for
    letting me come by. I like it when they say, ``Team Caterpillar.''
    That's a good sign. It means people are working together for the common
    good.
        You know, people from Texas like to say, things are better in Texas.
    Well, when you tour the Cat plant here, it's--I'm having second thoughts
    about if things are better in Texas. [Laughter] I'm impressed by the
    machinery I have seen. More importantly, I'm impressed by the workers I
    have met who are putting the machines together. I thank them for--
    [applause]. And I'm impressed by a culture of excellence and
    accomplishment that is the spirit of Caterpillar. I also appreciated the
    chance to drive a D-10. If you've never driven a D-10--[laughter]--it's
    a cool experience. [Laughter]
        I'm going to go to New York City tomorrow to deliver a speech on the
    state of the economy, but I really want to spend a little time here in
    Peoria to see how things are going. I was at Sterling Brothers--Sterling
    Family Restaurant today--Sterling Brothers?--Sterling Family, yes, run
    by two brothers--
    and met with some small-business owners, social entrepreneurs, as well
    as business entrepreneurs. I wasn't surprised by what I heard. It
    reminded me about the greatness of America. I heard about people willing
    to work hard to achieve dreams and people realizing that when they
    achieve dreams, they have an obligation to help others. It seems like to
    me the community spirit here in Peoria, Illinois, is strong.
        And that's the way our economy is as well. It's a strong economy.
    And the fundamental question is, what are we going to do to keep it
    strong? It's one thing to say, today's economy is strong. I say it
    because inflation is down, interest rates are down, wages are on the
    increase, unemployment rate nationally is low, people are working

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    and putting more money in their pocket. And the question facing the
    country is, what are we going to do to make sure it's strong tomorrow?
    As I said to Congress: ``We don't need more Government; we need more
    enterprise.'' And so I want to spend a little time talking with you
    today, talking about the economy.
        Before I do, I want to thank Congressman Ray LaHood. He's been bugging me ever since I got elected President.
    Well, I didn't tell you what he's bugging me about. He's bugging me to
    come to Peoria. He said, ``When are you going to show up?'' [Laughter] I
    kept saying, ``As soon as possible.'' The moment has finally arrived,
    and I'm glad I came. Thank you for the invitation.
        I appreciate Jim Owens, the chairman and
    CEO of Caterpillar. I thank Bob Williams
    for helping me with the tour. I thank Gerry Shaheen, who is the group president of Caterpillar. I want to thank
    the workers I met with today. I spent some time with people on the line,
    talking about the education programs here at this fine company. I thank
    the leaders of the UAW who have welcomed me here. I thank the folks up
    and down the line who put up with me and all the cameras. I just don't
    travel alone these days, in case you've noticed. [Laughter]
        I want to thank Mayor Jim Ardis, mayor of
    Peoria, Illinois. I met him at the airport. It was about minus 10.
    [Laughter] I said, ``Do you want to get in the limousine?'' He said,
    ``As fast as possible.'' [Laughter] So we drove over to the Sterling
    Family Restaurant together. I was impressed by your young mayor. I want
    to thank the local and State officials who've joined us. I appreciate
    you serving. I appreciate you doing what you think is right for the
    community that you represent. But most of all, thanks for letting me
    come.
        See, people say, ``Why would you want to go to Peoria?'' And I just
    told you, I want to get out of Washington and sit down with folks that
    are really the backbone of this country. And I wanted to come to one of
    America's great companies, and that's Caterpillar.
        The good folks here show others that in the manufacturing world, we
    can compete. And that's really what Americans wonder, Can you compete in
    a global economy? And my answer is, darn right you can, with good
    policy. And in this company, you've shown how to compete. And I want to
    spend some time explaining that to the American people, why competition
    is important, and why America can compete with anybody, anytime,
    anywhere, and why it's in our interest to do so.
        First of all, it's important for people to know that Caterpillar
    employs 48,000 workers across America. Secondly, more than half those
    workers are here in Illinois; 17,000 of them right here in Peoria.
    Caterpillar has great workers because it has got good training programs.
    Caterpillar can employ new people because it makes good product that
    people want.
        I appreciate very much the notion that you all are in this deal
    together. That's what ``team'' means, that everybody works together for
    the common good, and if it benefits one, it benefits all. And that's the
    spirit I have found here. And our job in Government is not to get in
    your way, our job in Government is to put progrowth economic policies in
    place that mean companies like Caterpillar, which do the right things,
    can succeed. And let me talk about--some of what that means.
        First, it means keeping taxes low. Oh, there's a debate in
    Washington that says, we need more taxes. We don't need more taxes. It's
    important for you to keep your own money. You work hard for your money,
    and I understand workers are saying, ``Am I going to have more money in
    my pocket?'' That's what we want. And one way to make sure you don't
    have more money in your pocket is for the Government to raise your
    taxes.
        And so we cut taxes. Listen, we've been through a tough economic
    period in this

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    country. You remember it--right after the--we headed into a recession in
    early 2001, then the terrorists attacked us. And the question was, could
    we recover? And I worked with Congress to cut taxes before the terrorist
    attack and after the terrorist attack. And I believe one reason why the
    recession we went through was one of the shallowest in American history
    is because we cut the taxes. See, when you have more money in your
    pocket to spend or save and invest, the economy benefits, as far as I'm
    concerned. And so one of the challenges we face is making sure that we
    keep the taxes low.
        We cut the taxes on everybody who paid taxes. We increased the child
    tax credit. Look, if you've got a child, we want to help you. We reduced
    the marriage penalty. I didn't like a Tax Code that penalizes marriage.
    I thought we ought to be encouraging marriage, not penalizing marriage
    in our society. We cut taxes on capital gains and dividends, cut the
    taxes on small businesses.
        And all those tax cuts affected the performance of Caterpillar. You
    see, the tax cuts helped your workers have more money in their pocket. I
    happen to believe that if the workers have got more money in their
    pocket, they're going to be a more satisfied worker. I know it sounds
    not very sophisticated to say that, but I suspect it's true. If you got
    a safe workplace, a workplace where people are working together; you're
    a better satisfied worker if you're keeping more of what you earn. And
    that's what the tax cuts have helped provide.
        We helped small businesses with expensing provisions. That's an
    accounting term that says, if you buy new equipment, you get a tax
    benefit for buying new equipment. That helps people in Caterpillar,
    because it encourages small businesses to use your products. It also
    helps make sure the small-business sector remain vital. Seventy percent
    of new jobs in America are created by small businesses. And if you're
    interested in coming out of a recession and interested in people
    working, it makes sense to provide tax incentives to help the small-
    business owner in America. And that's what we did.
        Capital gains and dividend tax cuts benefit people who invest in
    your company. One of the things--reasons this company is strong is,
    you're able to attract capital. People say, ``Well, I like what the
    workers are doing; I like the product that's being put together. We want
    to invest; we want to work alongside of the good people here in
    Caterpillar.'' And the tax incentives that we provided by cutting
    capital gains and dividends encouraged that kind of investment.
        We extended the research and development tax credit. I mean, one
    reason why Caterpillar is a modern, competitive company is because
    you're always investigating new methodologies; you're investing in
    research. And therefore, in the Tax Code, we tried to encourage research
    and development. And so the tax cuts have worked. And I hope you don't
    fall prey to people in Washington saying, we need more of your money in
    order to balance the budget. I don't think so.
        I think what we need to do is to set priorities like you set
    priorities with your money and make sure we focus on that which is
    necessary to do. And the most important priority we have is to defend
    this homeland from attack. And we better make sure that when we have a
    man or woman in our uniform in harm's way, they get all the equipment,
    all the support they need to defend the United States here in the 21st
    century.
        I have an obligation to submit a budget. It's one thing to stand up
    here and say, ``We don't need to increase your taxes, we can set
    priorities and balance the budget,'' so next Tuesday, I'm going to do
    just that. I'm going to submit a budget for Congress to look at that
    shows how we can balance the budget in 5 years and keep your taxes low.

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        I want to talk a little bit about trade. Trade is an important
    subject here at Caterpillar, and the reason why is because a lot of the
    product you make here, you sell to somebody else; sell overseas to
    another country. That's trade, and, yet, it's a topic of hot debate. The
    temptation is to say: ``Well, trade may not be worth it. Let's isolate
    ourselves. Let's protect ourselves.'' I think it would be a--I know it
    would be a mistake for Caterpillar workers to do that. I think it would
    be a--I know it's a bad mistake for the country to lose our confidence
    and not compete.
        Let me give you some interesting statistics. First of all, we're the
    largest exporter in the world. Last year, we exported a record $1.4
    trillion worth of goods and services. Now, in order to export something,
    somebody has to make it. In other words, when I talk about numbers,
    behind the numbers is people who are providing the service and/or making
    the product. So the more one exports, the more likely it is people are
    going to be working.
        Exports account for about 11 percent of our economy. One in six
    manufacturing jobs in the United States depends on manufacturing
    exports. We also benefit when people invest here. There are people who
    have good-paying jobs as a result of somebody saying, ``I want to invest
    in the United States.'' And so when I'm talking about opening markets,
    I'm making sure that not only is our market open, but somebody else's
    market is open. And we expect people to treat us just the way we treat
    them. All we ask for is, be fair with the American people.
        We've got free trade agreements. That's how you make sure that we're
    treated fairly. Our market is open, and we want their market open. We
    got--these free trade agreements really represent only a small fraction
    of the GDP. In other words, they're not necessarily with significant
    economies, and yet they account for 42 percent of American exports.
        One way to look at trade is this: We're 5 percent of the people of
    the world; that means 95 percent live outside of America, and shouldn't
    we try to put ourselves in a position where we can sell goods and
    services to those 95 percent? I think it makes sense to do so.
        We've pursued trade agreements. The way it works is, you have
    bilateral trade agreements; in other words, with the United States and,
    say, Chile. And then we have regional trade agreements and world trade
    agreements. One world trade agreement is called the Doha round of the
    WTO. It's basically attempting to make sure that everybody gets treated
    the same way, in the same fashion, so that the world markets are open.
        Again, I repeat to you: I strongly believe that if we can compete
    with people on a level playing field, nobody can compete with us. And so
    the key is to make sure the rules are fair. We had bilateral agreements
    with three countries when I first became President; they're now up to
    13, and we've got 3 more in the mill.
        Let me talk to you about Caterpillar. Half the products you make in
    America are exported. It's an interesting statistic, isn't it? You walk
    by one of these things. It's sold right here in the United States, but
    the other one right here is sold overseas. Cat sells more than 300
    products in foreign markets. It's just not the D-10 I drove that gets
    sold overseas; there's 299 other products manufactured by this company,
    by American workers, that are sold overseas.
        Free trade agreements are helping. We did a free trade agreement
    with Chile. Chile has become Caterpillar's fifth largest export market
    since that free trade agreement. In other words, because we lowered
    trade barriers and said, ``You treat us the way we treat you,'' it has
    enabled this company to sell more product than ever before, which means
    people are working, when you have to make the product.

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        The free trade agreement completed with Australia took effect in
    2005. Caterpillar exports to Australia have grown by 26 percent. In
    other words, opening markets benefits people who produce goods that
    people want. And people want Caterpillar product. Why? Because they
    work. They generally don't break down; the master craftsmanship is
    great; and there's a demand for them.
        Opening China's market--I understand trade with China is considered
    controversial. I know that. But I want to tell you something, if you're
    a Caterpillar worker or a Caterpillar shareholder, what that has meant;
    it meant that Caterpillar exports to China have increased by 40 percent
    since the market was opened. That's helped to create more than 5,000 new
    jobs right here in America.
        We're going to continue to negotiate free trade agreements. And by
    that I mean, we just want people to treat us fairly. I'm confident in
    our ability to sell American product and services overseas if the
    playing field is level.
        A little bit on health care, you've got a good health care plan
    here, thanks to Caterpillar employees. A lot of small businesses don't.
    The cost of health care is on the rise; you know it. Some things we can
    do to make the health care system better is to make sure that customers,
    the patients, are more in charge of their lives and their plans. I'm
    worried about frivolous lawsuits that are running up the cost of health
    care. Do you know that there's about 1,500 counties in America where the
    ob-gyn has left because of frivolous lawsuits. And when somebody gets
    sued all the time, they practice more medicine than is necessary, and it
    runs up your cost?
        Health care needs to have new information technologies. I met some
    people on the floor that are running some pretty sophisticated computer
    ware, and we need information technology in health care. The old system
    of carrying handwritten files is not efficient, runs up the cost of
    medicine for you, and leads to errors. Most doctors can't write very
    well to begin with. [Laughter] It's hard to read their writing. We need
    to change the Tax Code in a fair way that treats everybody fairly. In
    other words, I've got a plan I'm going to spend a little more time with
    in New York tomorrow.
        I want to talk about energy tomorrow in New York. I'll give you the
    summary here. Dependency on oil puts us in a position that--where
    terrorists can harm our economy. When you're dependent on a product, and
    you import that product, if somebody were to inflict damage on a energy
    infrastructure, it could cause the price of your energy to go up. Or if
    you're dependent upon product from a hostile regime, it means you're in
    a position of vulnerability.
        And so I'm going to work with the Congress to spend some of your
    money on technologies that will change the way we live. One of the
    interesting things that's happening is, is that there's some new battery
    research taking place. And I believe within relatively short order,
    Americans will be able to drive the first 20 miles, and eventually 40
    miles, on a new battery. And you can imagine, particularly in the big
    cities, if people are using electricity to drive their car--and by the
    way, the car is not going to look like a golf cart. [Laughter] Not
    exactly looking like one of these things, but nevertheless--[laughter]--
    it will be normal size, something you actually want to use. But you can
    imagine how this battery technology can change our dependence on oil,
    because if we reduce the use of gasoline, you reduce your use of oil.
    And if most of your oil's coming from overseas, you're reducing your
    dependency upon oil from overseas.
        I'm a big believer in ethanol. You've got a lot of farmers around
    here who--[applause]. Fifteen years ago, or 20 years ago, if people
    stood up here and said a lot of people would be using a corn product to
    drive their cars, they'd have said, ``Man, what--the guy has kind of
    lost it, hasn't

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    he?'' But it's happening. We're up to about 6 or 7--I think it's 6 or 7
    billion gallons of ethanol per year now.
        We're going to run into a constraint pretty soon, though. It turns
    out, corn is needed for more than just ethanol. You got to feed your
    cows and feed your hogs. And that's why we're spending some of your
    money on what's called cellulosic ethanol research, so we can use wood
    chips or other agricultural wastes to make ethanol, to power our
    automobiles.
        I believe we can reduce our consumption of gasoline by 20 percent
    over the next 10 years, in order to be able to meet a goal of becoming
    less dependent on oil. And it's coming. These are new eras, and it's
    exciting times.
        This is a global issue, obviously. It's an issue, for example, when
    demand for oil goes up in a place like India or China, it affects the
    price that you pay at the pump. And therefore, it makes sense for us to
    help these developing countries with new technologies that will not only
    make them less dependent on hydrocarbons but better stewards of the
    environment.
        And so I appreciate what Caterpillar has done. They're involved with
    what--we set up what's called the Asia-Pacific Partnership on Clean
    Development and Climate. I don't know if you know this, but you've sold
    more than $50 million worth of equipment to a large coal mine in China
    to help capture methane gas and turn that into energy. In other words,
    you're not only making Cats, you're making interesting product that will
    enable us to be better stewards of the environment. And I thank you for
    that.
        And my only point to you is, is that in order for us to be
    competitive, in order for us to remain the economic leader of the world,
    we're going to have to promote new technologies that make us less
    dependent on oil. And it's coming. These are exciting times. I'm very
    optimistic about meeting the future because of new technologies.
        I do want to say one thing about education. I really appreciate the
    worker program--the education program for the workers here. I think Cat
    spends about $900 a worker to help make sure our workers have the skills
    necessary to be competitive in the 21st century. But good education
    starts early. And we need to make sure our public schools, particularly
    in the early grades, get it right.
        There's a piece of law I signed that I'm very proud of called the No
    Child Left Behind Act. The spirit says, we're going to raise standards.
    If you have low standards, you get lousy results. I used to call it the
    soft bigotry of low expectations. If you don't believe a kid can learn,
    guess what's going to happen: he's not going to learn. And so inherent
    in--the No Child Left Behind Act says there is a role for the Federal
    Government. After all, we're spending a fair amount of money, and we
    ought to expect good results for that money.
        So we said, ``In return for Federal money, we expect you, the local
    districts, to set high standards and to measure.'' I've heard every
    excuse for not measuring: You're teaching the test; you're testing too
    much. How can you solve a problem unless you measure? And what we need
    to do is figure out who can read or write early, and have extra money to
    help those who can't read or write.
        We have an achievement gap in America that we better do something
    about if we're going to be competitive. And by that I mean, when you put
    out the test scores, the minority students test below white students.
    And that's not good enough. And we'd better make sure all our children
    can read early, not just a handful. And therefore, I like the idea of
    holding people accountable. And we say, we'll measure as a diagnostic
    tool to correct problems early. And at some point in time, if schools
    refuse to change, there needs to be a consequence; there needs to be
    accountability. This isn't antiteacher, this is proteacher.

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    And it's proparent, and equally importantly, it's prochild.
        And Congress needs to reauthorize this bill. It's working. The
    achievement gap is closing. How do I know? Because we're measuring; we
    can measure success in schools. It's in our interest as a country to
    make sure every child gets a good education, and it's important to start
    early.
        Oh, I'm sure you've heard about all the reading debates, what works
    and what doesn't. Well, you're able to determine what works or what
    doesn't by measuring. And a measurement system says to a school: We
    appreciate your hard work; thanks for being in the classroom; but you
    might think about changing your curriculum since you're not meeting
    standards.
        And then what this country needs to do is to recognize that we need
    to help poor students go to college. That's why we're expanding and
    increasing Pell grants. And then what this country needs to do is
    understand the importance of community colleges and support community
    colleges, to help older workers gain new skills necessary to fill the
    jobs of the 21st century.
        In order to compete, we got to have an education system that makes
    sure all children from all walks of life have skills necessary to fill
    the jobs of the 21st century. We got to be confident and open up markets
    so that our companies that produce products, goods, and services that
    people want are able to sell them overseas. We got to have a Tax Code
    that keeps taxes low on the people who are working for a living. We got
    to have a health care system that is patient centered, not government
    centered. And we got to make sure that we don't lose our confidence. And
    if you really knew America like I'm able to see it, which is to see the
    compassion and the decency and the courage and the strength of the
    people, you'd share the same confidence I have about the future of this
    country.
        I'm honored to be with you. Thanks for letting me come to the
    heartland of the United States. God bless.

    Note: The President spoke at 11:52 a.m. at Caterpillar, Inc. In his
    remarks, he referred to Robert T. Williams, vice president, Caterpillar,
    Inc. The Office of the Press Secretary also released a Spanish language
    transcript of these remarks.