    [Public Papers of the Presidents of the United States: George W. Bush (2007, Book II)]
    [July 11, 2007]
    [Pages 946-950]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on the Office of Management and Budget Mid-Session Review
    July 11, 2007

        Thanks for coming. Please be seated. Good afternoon. Welcome to the
    White House. I'm glad you're here. There are certain traditions that all
    Americans look forward to: picnics with the family, Fourth of July
    celebrations, and the Mid-Session Review. [Laughter] It's the time for
    us to take a look at the Federal budget.
        And maybe not all Americans look forward to it, but I'm looking
    forward to talking to the American people about the progress we have
    made when it comes to growing our economy and keeping their taxes low
    and being wise about how we spend the money. The Mid-Session Review is
    important. It lets the American people know how we're doing in meeting
    what we call ``fiscal goals.'' And this year the message is
    unmistakable: America's economy keeps growing; Government revenues keep
    going up; the budget deficit keeps going down. And we've done it all
    without raising your taxes.
        And the person in charge with watching the money here in the White
    House is Rob Portman, Office of the
    Management and Budget. Thank you for being here; appreciate your
    service. I'm proud to be here with Senator Thad Cochran from the great State of Mississippi. Senator, thank you
    for joining us. Two Members from Congress, Jo Bonner and Gresham Barrett; I thank you for taking time to listen to this good
    news. I appreciate all the business leaders and guests who have joined
    us today.
        The release of the Mid-Session Review is a good opportunity to take
    stock of the

    [[Page 947]]

    debate over taxes and spending in Washington. At its core, the debate is
    between two very different economic philosophies and fiscal
    philosophies. One philosophy says that politicians in Washington know
    best, so taxes should be high and Government should decide where to
    spend the money. The other philosophy says that the American people know
    how to spend their own money better than the Government does, so
    Government should spend less and the taxpayer should keep more. And
    that's the fundamental debate here in the Nation's Capital.
        For the past 6 years, my administration and our allies in Congress
    have pursued the second philosophy. We believe the American people can
    spend their money better than the Government can spend it. We believe
    workers and families can spend their money better than the Government,
    and that's why we doubled the child tax credit and reduced the marriage
    penalty and cut tax rates for everybody who pays income taxes.
        We believe that entrepreneurs can put their money to better use than
    the Government can. That's what we believe, and we acted on that belief.
    So we reduced taxes on dividends and capital gains and created
    incentives for small businesses to invest and expand.
        We believe ranchers and farmers and family-business owners can make
    better decisions about the future than the Government can. That's why we
    put the death tax on the road to extinction.
        We also believe taxpayers' dollars should be treated with respect
    because Americans have worked hard to earn them. And we believe that
    taxpayers' dollars should be spent with restraint because Government
    programs are not the solution to every problem. So we've spent the money
    necessary to meet the highest priorities of Government, including
    protecting the homeland and supporting our men and women in uniform.
    Meanwhile, we've tightened spending in other areas. Over the past 3
    years, we've held the growth of annual domestic spending close to one
    percent, well below the rate of inflation.
        Some in Congress disagree with this approach. That's what you expect
    in a democracy. Not everybody agrees with what I have just described.
    They said it would not be possible to cut the deficit and deliver tax
    relief at the same time. They argued for increasing taxes. Well, events
    have proven them wrong. The critics can keep arguing with us, but they
    can't argue with the facts.
        We began cutting the taxes in 2001, and America's economic growth--
    and America's economy has grown for more than 5 years without
    interruption. Real after-tax income has increased nearly by 10 percent.
    That's an average of about $3,000 per person. Our economy has expanded
    by more than $1.9 trillion. During the time when we cut taxes to today,
    our economy has grown by more than $1.9 trillion; this amount is larger
    than the entire economy of Canada.
        Since the tax cuts took full effect in 2003, our economy has added
    more than 8.2 million new jobs. The unemployment rate has fallen to 4.5
    percent; exports are up; the service sector is strong; and more
    Americans are working today than ever before in our Nation's history.
        Behind these statistics are stories of hard-working Americans who
    are finding more opportunity and feeling more secure about their future.
    And I've asked some of them to join me today, and I thank you all for
    being here.
        First, I want to talk about Luther Russell. Luther is here; he owns a small, family fencing business.
    He is like millions of our fellow citizens who are small-business
    owners, and they're working hard. They're working hard not only to
    provide security for their family, they're providing employment for
    others. The truth of the matter is, 70 percent of new jobs in America
    are created by small-business owners, and it's important to have fiscal
    policy that supports our small-business owners. We've got one

    [[Page 948]]

    right here with us: Luther Russell, fence man.
        Thanks to our tax relief, last year he
    filed an income tax, he saved $27,000. That's what tax relief has done
    for the small business, because his business pays taxes at the
    individual income tax rates. See, when you cut individual income tax
    rates for everybody who pays taxes and your business is set up so that
    you pay taxes like an individual does, you're cutting taxes on this
    small-business owner. I like the idea of us being able to meet our
    spending priorities in Washington and Luther having 27,000 more dollars
    in his pocket to expand his business. That's good for America.
        Gary and Elizabeth
    Comparetto are here. They've got 8
    children, and they saved $8,000 a year because of tax relief. Now,
    having 8 kids is an interesting challenge--[laughter]--made easier by
    the fact that because of our tax relief, this good family has got 8,000
    additional dollars so they can do their duty as a mother and father.
        Sharon Hawks is with us, serves in the
    National Guard. Her family is saving $3,600 annually on their taxes. I
    like the idea of our families having more money to be able to set aside
    for education or set aside for savings or to be able to expand their
    home. When I say I'd rather these people be spending their money than
    the Government spending their money, I mean it. It's good for this
    country that this tax relief is substantial and real for working people.
        Jennifer Zatkowski is with us. She
    saved more than $2,000 a year on her taxes, and she's reinvesting the
    money to expand her pet shop. Tax relief makes a significant difference.
    Oh, I know, probably here some in Washington don't think $27,000 is a
    lot for a small business or $2,000 doesn't amount to much. Just ask
    these folks. It means a lot to them. And it means a lot to working
    people all across the United States that we cut the taxes, because men
    and women like these here on this stage are powering our economic
    resurgence. That's how the economy works. When you've got more money in
    your pockets to save, spend, or invest, this causes the economy to grow.
    And we need to keep the Government out of their wallets and out of their
    way in order to keep this economic recovery strong.
        Our economic resurgence has also had a positive impact on the
    Federal budget. A growing economy has led to growing tax revenues.
    Because people are making more money, they're also paying more taxes.
    That pie is growing. The tax rates remain the same, but the pie is
    growing, which has yielded more Federal revenues. Today's Mid-Session
    Review shows that this year's Federal tax receipts are expected to be
    $167 billion higher than last year's. That's an increase of nearly 7
    percent. And over the last 3 years, tax revenues have grown 37 percent.
    That's one of the highest jumps in revenues on record.
        These growing tax revenues, combined with spending restraint, are
    driving down the Federal deficit. The Mid-Session Review estimates that
    this year's deficit will drop to $205 billion. That's down more than
    $200 billion from 2004. It's down more than $43 billion from last year.
    And it's even down from last February's projections. More importantly,
    the size of the deficit is down to only 1.5 percent of America's
    economy. One way to be able to measure how we're doing with the deficit
    relative to other years is to measure it as a percentage of GDP. We're
    estimated to be at 1.5 percent of GDP. That's well below the average of
    the last 40 years. We've achieved all this deficit reduction without
    once raising the taxes on the American people.
        It's good news, but there's more work to be done. A shrinking
    deficit is good; no deficit is better. So earlier this year, I proposed
    a balanced budget that will eliminate the Federal deficit by 2012. The
    deficit is not caused by undertaxing; it's caused by overspending. So
    the budget we proposed keeps us on the path to low taxes and spending
    restraint. And according to

    [[Page 949]]

    the Mid-Session Review, this--that path will lead to a surplus of $33
    billion in 2012. In other words, despite the unprecedented challenges we
    face, the United States is going to be back in the black.
        The policies of low taxes and spending restraint have produced a
    clear and measurable record of success. You can't argue with what I'm
    telling you. These are the facts. Yet, in the face of all the evidence,
    Democrats in Congress still want to take us down a different path. We've
    shown what works. They must not believe us, because they passed a budget
    framework that calls for $205 billion in additional domestic spending
    over the next 5 years. The budget framework they passed calls for 205
    billion additional dollars of Federal spending in a 5-year period. That
    works out to nearly $680 per person. It's no surprise that their budget
    framework also includes the largest tax increase in American history.
        Some of this might sound familiar to some of you older hands around
    here; it's the same old tax-and-spend policy that the Democrats have
    tried before. It would have the same bad result. Tax-and-spend would add
    to the burden of families and businesses. It would affect these good
    folks right here on the stage. Tax-and-spend would put our economic
    growth in jeopardy. Tax-and-spend would turn our back on the progress
    we've made on reducing the deficit. Tax-and-spend policies are policies
    of the past, and I'm going to use my veto to keep it that way.
        The Democrats are also delaying the 12 basic spending bills that are
    needed to keep the Federal Government running. At their current pace, I
    am not likely to see a single one of these must-pass spending bills
    before Congress leaves Washington for a 4-week recess. And by the time
    they return, they will have less than a month before the fiscal year
    ends on September 30th to pass the appropriations bills.
        It's important that they honor the pledges they made when they took
    control of the Congress, and that is they pledged a policy of
    transparent government and fiscal responsibility. Well, now is the time
    to show that they're serious. And one way they can do so is they can
    pass spending bills on time, instead of creating a massive bill at the
    end of the process that will be so large that no one can possibly read
    it and anyone can hide wasteful spending in it. The Democrats should
    honor their commitment to fiscal discipline by passing these bills in a
    way that sustains our growing economy and balances the Federal budget.
        I'm going to work with members of both parties to achieve these
    goals, and as we do, there are other budget challenges we need to take
    on.
        First, there's the matter of earmarks. Earmarks are spending
    provisions that are slipped into bills by individual Members of Congress
    for projects in their own district or State. They're just slipped in the
    bill. Often, the earmarks occur at the last hour and without debate.
    This violates the trust of the public and often leads to unnecessary
    spending. The problem is growing, and over the last decade, the number
    of earmarks has more than tripled.
        So earlier this year, I proposed reforms that would make the earmark
    process more transparent, end the practice of concealing earmarks in so-
    called report language, would eliminate wasteful earmarks, and cut the
    overall number and cost by at least half. Democrats and Republicans have
    taken a good step by agreeing to list all earmarks before bills are
    passed so the public can see them and lawmakers have a chance to strike
    them down, get rid of them. Now Congress needs to uphold the commitment,
    and the Senate needs to make this transparency part of its formal rules.
    The American people deserve to know what they're getting for the money
    they're sending to the Nation's Capital. There ought to be full
    disclosure and full transparency in the appropriations process.
        The matter we need to confront, as well, is the unsustainable growth
    of entitlement

    [[Page 950]]

    programs like Medicare, Medicaid, and Social Security. As the Mid-
    Session Review makes clear, rising entitlement spending is by far the
    greatest long-term threat to America's fiscal health. These programs are
    vital to the daily life of millions of Americans. They are growing
    faster than the economy, faster than inflation, and faster than our
    ability to pay for them. This isn't going to be a Republican challenge
    or Democrat challenge; this is really a generational challenge. And the
    fundamental question facing those of us in Washington today is whether
    or not we have the capacity and the will to confront the challenge now.
        I believe we have a moral obligation to deal with this problem, and
    that's why I've submitted proposals that will help deal with these
    programs. Matter of fact, I remember going to Congress and speaking very
    specifically about how to address the underlying issues of Social
    Security so that older guys like me could look to young Americans like
    some of you here and say, ``We've done our duty to fix this program once
    and for all.'' And I call upon the Democrats in Congress to come forth
    with their ideas as how to fix it, to step forward with some concrete,
    specific proposals. I'll be glad to listen to them, and I expect them to
    listen to mine. That's why we're in Washington. We're here to confront
    problems today and not pass them on so somebody else has to deal with
    them.
        The Federal budget can be complicated, and making decisions about it
    can be quite contentious. Yet we know what it takes for our economy to
    succeed. During these budget debates, it's important to keep in mind the
    lessons of the past. As today's Mid-Session Review makes clear, keeping
    taxes low and restraining spending leads to a vibrant economy, it leads
    to new jobs, it leads to better opportunities, and it leads to a
    shrinking deficit.
        Progrowth policies work, and now is not the time to turn our back on
    them. I'm going to work with Republicans and Democrats alike to continue
    these policies so we can keep our economy competitive, so we can keep
    our economy growing, and so we can remain the world leader for
    generations to come.
        I'm honored you guys are here. Thank you all for coming. God bless.

    Note: The President spoke at 1:03 p.m. in Room 450 of the Dwight D.
    Eisenhower Executive Office Building.