[Public Papers of the Presidents of the United States: George W. Bush (2007, Book II)]
[December 17, 2007]
[Pages 1555-1569]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks on the National Economy and a Question-and-Answer Session in 
Fredericksburg, Virginia
December 17, 2007

    The President. Thank you, all. Please be seated. Ralph, thanks for the invitation. Thanks for the gift; it was 
planted by the first George W. [Laughter] I'm glad to be here at the 
Rotary Club. I have spent some quality times at rotary clubs, whether it 
was asking for votes or selling baseball tickets. [Laughter] I could 
never get admitted to any of the clubs in Texas cause my voice wasn't 
good enough. [Laughter] But I'm proud to be with you. Thanks for letting 
me come by and share some thoughts with you about our economy, what's 
happening in Washington. And if time permits, I'll be glad to answer 
some questions, if you have any.
    I also want to thank the chamber for having me as well. Appreciate 
what you'redoing. People say--they're probably wondering why would--old 
George W. has got something important to say; why would he bother to 
come to a place out in the country? And the answer is, because this is 
where jobs are created; this is where dreams are lived; this is where 
values are upheld. And so I'm proud to be with you. It kind of reminds 
me of being in Texas, to come to a place where there's just down-to-
earth people that are trying to do what's best for their families and 
their communities. And so I'm honored to be with you. I appreciate you 
letting me come by.
    Ralph, thanks for the invitation. I also 
want to thank Bob Hagin. And I'm proud to be 
here with Congressman Eric Cantor from Richmond, 
Virginia, as well as newly

[[Page 1556]]

elected Congressman Rob Wittman. 
Appreciate you being here. Good luck. I'm looking forward to working 
with you. I want to thank the speaker of the House of Delegates--you call them delegates, right? Yes. Bill 
Howell, a good man; good to see you, Mr. Speaker. Appreciate you being 
here. Senator-elect Richard Stuart, is that 
right? Yes, appreciate you, Richard. Thanks for coming as well. John 
[James]* Lacy, past president of Rotary 
International has bothered to come over. Mr. Lacy, thank you for 
serving.
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    *White House correction.
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    You know, I tell the people of our country every time I can that the 
great strength of America is not our military--although I intend to keep 
it strong--or the size of our wallets. But the great strength of America 
are the hearts and souls of our fellow citizens who take time out of 
their everyday lives to love a neighbor like they would like to be loved 
themselves. That's what rotaries mean to me.
    People are saying, ``Well, how can we best foster the well-being of 
the community in which we live? What can we do, as loving human beings, 
to work with our youth like you do at this--here at this rotary club?'' 
And so I want to thank you for what you're doing. I thank you for adding 
to the great compassion of our country. Societies change one heart and 
one soul at a time. And I hope you have found what others have found, 
that if you're part of that helping somebody's life improve, it improves 
your own.
    Laura sends her very best. She's doing just 
fine. She's a fabulous wife, great mother, and a wonderful First Lady. 
And she is--she and I are having the great joy of welcoming people to 
the White House during the holiday season. It's a pretty spectacular 
place when you see the trees and all the great garlands. And they do a 
fine job of decorating the White House. I just put on the lights on the 
trees. [Laughter] But we're having a joyous time.
    I want to talk a little bit about our economy and some of the 
challenges we face and then answer some questions. First of all, I put 
forth what some would consider a controversial proposal--that's in 
Washington, DC; at least those in Washington consider it controversial--
and that is, cutting taxes on people helps the economy. There's quite an 
appetite for your money in Washington. People can figure out all kinds 
of ways to spend the taxpayers' money. My attitude was, particularly in 
the face of recession and after a terrorist attack, that the best way to 
help this economy recover was to let people keep more of their own 
money.
    And so I worked with the Congress to cut taxes on everybody who pays 
taxes. Now, sometimes in the Nation's Capital, they'll say, ``Well, some 
people get tax cuts and others don't.'' That's not my attitude. My 
attitude was, if you're paying taxes, you ought to get tax relief, and 
so we cut taxes. And I mean we cut them on everybody. And when you cut 
them on individuals, it turns out you also are cutting taxes on small-
business owners. Most small businesses in America are subchapter S 
corporations, or limited liability partnerships, which means that the 
owners of the companies pay individual taxes. In other words, the 
company is subject to the individual tax rates. And so cutting 
individual taxes not only helps consumers and families, but it also 
helps small businesses.
    And the plan worked. If you think about where we were coming out of 
2001 and where we are today, you can't help but say the plan worked. 
Cutting taxes helped stimulate economic growth. Why? Because most new 
jobs are created by small-business owners. And if you let a small-
business owner have more money to save or invest or spend, it means he 
or she is more likely to hire somebody. And so we've had a pretty good 
economic run here in the country, 6 years of growth. We've had 51 
straight months of increased job employment. It's

[[Page 1557]]

the largest--longest period of uninterrupted job growth in the Nation's 
history. People are working; productivity is high. In other words, our 
economy is becoming more productive as a result of the advent of new 
technologies. And that means people are more likely to get paid more.
    And yet there are some challenges. There's a credit issue and a 
housing issue. In other words, what I'm about to tell you is, is that 
the Congress cannot take economic vitality for granted. There are some 
positive things Congress can do to make sure that the economy continues 
to grow and people are working and realizing dreams, and there's some 
negative things they can do. And the most negative thing the Congress 
can do in the face of some economic uncertainty is to raise taxes on the 
American people. If you want to figure out a way to slow this economy 
down, just start taking money out of people's pockets or making it 
harder for small businesses to grow and invest.
    So one thing I want to share with you today is, I'll veto any tax 
increase. I don't think Congress needs more money. I think they need to 
learn how to set better priorities.
    And that's what you're watching play out here in Washington. The 
President submits a budget, and then the Congress can either accept it, 
run over it, ignore it. And then the Congress--or the Constitution 
wisely gives a President veto power in order to make sure the President 
stays involved in the process. And I'm pleased to report that we're 
making some pretty good progress toward coming up with a fiscally sound 
budget, one that meets priorities, helps on some emergencies, and 
enables us to say that we've been fiscally sound with the people's 
money.
    The next couple of days will be interesting to watch. As I say, I'm 
hopeful, and I appreciate those on Capitol Hill are working hard to come 
up with a good appropriations package. And that appropriations package, 
by the way, must also include funding for our troops in harm's way.
    Now, I understand people in Washington and people around the country 
may not have agreed with my decisions on how to protect America. I know 
that, and that's fair. That's what democracy should be all about. When 
people have a difference of opinion with the President, they ought to 
feel comfortable expressing that difference. And it turns out, quite a 
few citizens are willing to do that. [Laughter]
    But there should be no difference of opinion when it comes to making 
sure our troops have the funding they need, and there should be no 
difference of opinion about whether our commanders on the ground ought 
to be those who decide or those who recommend to the President and the 
Congress the best way to proceed.
    And so we'll be watching very carefully as the Congress works 
through how to spend your money coming down the stretch here before 
Christmas. They can't have any gimmicks--accounting gimmicks in there, 
or, you know, sometimes they'll use the appropriations process to pass 
law that otherwise didn't make it to the floor of the House or the 
Senate. I'm sure that doesn't happen, Mr. Speaker, in--[laughter]. Sometimes it happens in Washington, 
though. [Laughter]
    And so I'm looking forward to working with them to come up with a 
good bill. But they need to fund these troops. And they don't need to be 
putting artificial timetable for withdrawal on the money that we're 
asking to make sure the men and women who courageously serve the United 
States of America have what it takes to do the job they've been asked to 
do.
    If the Congress can't get the job done--in other words, those jet 
fumes will start to be moving out pretty here--pretty soon here, later 
on this week--if they can't get the job done, then I've got a suggestion 
for them: And just pass a 1-year continuing resolution. That's all they 
got to do. If they can't get the job done--like I'm hopeful

[[Page 1558]]

they will--then all they got to do is just take what's called a 
continuing resolution, get the people's business done that way, and go 
on home. They got to make sure they fund the troops, though, on the way 
out of town.
    There's another issue that's coming down I want to bring your 
attention to--and by the way, the House looks like they're coming up 
with a reasonable plan, Eric and Rob. So we're watching very carefully. I don't know if 
you ever heard of the Alternative Minimum Tax--[laughter]--well, this 
was aimed at super-rich years ago, but the plan wasn't indexed for 
inflation. And all of a sudden, middle class citizens are fixing to be 
stuck with this bill. And Congress needs to fix the AMT, and they need 
to do it quickly.
    And the Senate, by the way, passed a good version of an AMT fix, so 
you're not going to get stuck with a higher tax bill. And by the way, 
it's just not individuals. Again, if you're incorporated through a 
limited partnership or subchapter S, you'll end up paying higher taxes 
as well. But they need to move quickly on this piece of legislation 
because the longer they delay, the more likely it is that there's $75 
billion of refund checks that will be late. People are going to be 
wondering why they didn't get their refund check on time. And the answer 
is, it's because there's been a delay in the AMT fix. Now, the positive 
news is the Senate passed a good bill, and the House of Representatives 
needs to get it done quickly.
    People are concerned around this country about housing. Here's my 
attitude on housing: One, the Government should never bail out lenders; 
two, some people bought a house that they shouldn't have been in the 
market; three, there are speculators who thought they could get--buy 
nice--one of these reset mortgages, and flip it, make some money. I'm 
sure none of them are in the Chamber, but nevertheless--[laughter]--
that's what happened. But there are some people that are creditworthy 
that should be encouraged to stay in their homes.
    And the issue--the housing issue has changed. I can remember the 
first home I bought in Midland, Texas. I remember going down to the 
savings and loan and sitting down with the savings and loan officer and 
negotiating with the savings and loan officer. Well, this day and age, 
you know, these mortgages have been bundled. So the savings and loan 
doesn't own the mortgage anymore, or the bank doesn't loan the mortgage 
anymore. The local lending institute doesn't loan the mortgage anymore; 
it's owned by some international group, perhaps, or it's been bundled 
into an asset. And so there's hardly anybody to negotiate with. And so 
some lenders aren't sure where to turn. They have creditworthiness; they 
may get pinched as their interest rates reset.
    But it seems like to me it's in our interests to help people stay in 
their homes. And there's--we've got a couple of ways to do so. One is 
through the FHASecure. It's a way for the--Alphonso Jackson and his Department, which is HUD, to help 
creditworthy people renegotiate and stay in their homes. Congress needs 
to get a bill to my desk that will make it easier for FHA to continue to 
help people stay in their homes. We're not bailing people out; we're 
helping them refinance their money. We're helping them, you know, own--
we're helping them stay in a part of the American Dream is what we're 
doing, and it's worthwhile to do that.
    And the other is what's called HOPE NOW, and this is the Treasury 
Department bringing the private sector together--lenders, investors, 
mortgage counselors--to help people renegotiate, to help people 
understand what is possible when it comes to finance and recourse and 
stay in your house.
    And so I am concerned; I know you're concerned about the housing 
industry. We all should be. We've been building a lot of homes, and all 
of a sudden, fewer buyers

[[Page 1559]]

are showing up. And it's going to take a while to work through the 
housing bubble. But we can mitigate some of the issues, and I'm 
concerned about people who are creditworthy enough to live in their 
homes not being able to deal with the resets. And so I just want to let 
you know we got a strategy.
    And Congress can help. They can pass the FHA modernization bill, 
which will help us. And the other issue that they can pass that would 
really help the homeowner is that when you renegotiate, if you happen to 
have a mortgage and--that you're going to have trouble meeting, you can 
find somebody to renegotiate with, and you do. And part of that loan may 
be forgiven for tax purpose, you actually have to pay tax. It doesn't 
make any sense if somebody is struggling to stay in their house and the 
Tax Code says you get to pay more tax after you've renegotiated your 
loan. So we need to fix the Tax Code, and the Senate bipartisan way is 
passing a good piece of legislation. I hope the House takes it up.
    Two other issues, and then I'll answer some questions. One, I know 
if you're a small-business owner, you're concerned about health care, 
and you should be. And the fundamental question facing the country is, 
what can the Government do to make health care more affordable and more 
available? And there's a classic philosophical divide in Washington. On 
the one hand, there are those who believe that government is the fix, 
that government can best decide the allocation of resources in health 
care. And then there are those of us who believe that we ought to push 
for more consumer--a consumer-driven health care system.
    Part of the problem in health care is that there is no consumerism. 
I shouldn't say ``no consumerism.'' Obviously, that's a--there is some 
consumerism. But when a third party pays your bill, you tend not to 
worry about price. If somebody else pays your bill, you're not really an 
active consumer. And therefore, the question is--part of the issue with 
price is, how do you encourage consumerism? And here's one way: change 
the Tax Code. The Tax Code now says if you work for corporate America--
big company--you get a tax benefit, but if you're a small-business owner 
or you're out on your own, you have to buy health care with after-tax 
dollars.
    And therefore, there's a disincentive for people to be purchasing 
health care on the individual market, and therefore, the individual 
market hasn't grown. So I propose to Congress that we allow families, 
everybody, regardless of your employment status, to be able to deduct 
$15,000 off your income taxes, or $7,500 as an individual, all aimed at 
level the playing field so that an individual market begins to grow. So 
step one to consumerism is for individuals to have more options in the 
marketplace so they can become involved directly in buying better 
insurance for their families.
    Step two is for there to be transparency in pricing and quality, and 
the Federal Government can help. We're a huge health care consumer. And 
one of the things that Secretary Leavitt 
is doing is saying that if you're interfacing with the Federal 
Government, then you got to post your price. I don't know how many of 
you ever go to your doctor and say, ``What are you charging, you know, 
compared to your neighbor?'' I suspect you do that when it comes an 
automobile, but you don't when it comes to buying--to purchasing health 
care. I never have, frankly. I don't remember asking my buddies in 
Midland, who are my doctors, ``How much are you charging relative to the 
person down the street?''
    So--but the Government can help with pricing transparency. So we're 
now getting people to--providers to not only post a price, but also, 
we're developing a qualitative index so that people are able to compare 
price and quality. Now, that--this is a novel concept, I readily 
concede. But if you're interested in more consumerism, then there has to 
be transparency in the health care industry.

[[Page 1560]]

    Third, there needs to be products like health savings accounts 
expanded. If you're a small-business owner, I strongly urge you to look 
at a health savings account for a way to help your employees or yourself 
save for everyday expenses--medical expenses on a tax-free basis and 
coupled with a catastrophic health plan. The whole purpose is--there is 
to give you more decisionmaking in your health care--with your health 
care and portability.
    Because one of the issues facing America, particularly if you're a 
youngster, is, can you take your health care plans with you? It turns 
out, most young Americans have changed jobs, like, seven or eight times 
by the time they're 35 years old. And the inability to carry a good 
health care plan with you, a plan that you own, a plan of which the 
dollars inside your plan are earning tax free, creates frustrations for 
people. This economy is changing. And therefore, the health care 
industry needs to change with it and provide flexibility for our 
workers.
    Fourth, small businesses ought to be allowed to pool risk across 
jurisdictional boundaries. Well, that means if you're a restaurant owner 
here, you ought to be able to pool your employees with a restaurant 
owner in Texas so that you can go into the market and buy insurance at 
the same discounts that larger companies get.
    Fifth, health care needs to be better at incorporating information 
technologies. I don't know, I mean, I suspect you'll find some of your 
docs still writing files by hand. That's a little antiquated these days. 
The trouble is, most doctors aren't very good writers to begin with. 
[Laughter] And so we're using Government leverage to help information 
technology take hold so that there is higher productivity increases in 
health care, less inefficiency and waste. My dream is for all of us to 
have a medical electronics record within a decade. My only caveat is, I 
want to make sure that your material is private and that nobody can 
access it; it's your material alone. But nevertheless, it makes sense 
for all your medical records to be on a single chip, which will help 
take the inefficiencies out of health care and help keep the pressure 
off cost.
    Finally, if you're truly interested in making sure health care is 
available and affordable, then you need to join the outcry on these 
frivolous and junk lawsuits. There are too many lawsuits running too 
many doctors out of practice. We have an ob-gyn crisis in America, in 
some States, because junk lawsuits are making it impossible for people 
to practice their skills. And they just--they get sick of it and say, 
``I'm out of here. I don't want to practice anymore.'' And plus, every 
time there's a lawsuit, it drives up the cost of medicine. That means 
you have to pay more. Because why? Because many doctors practice 
defensive medicine. They say, ``Well, if I'm fixing to get sued, I want 
to make sure I administer as many tests as possible, so that my practice 
and my techniques can stand up in a court of law,'' which runs up the 
cost of medicine.
    Now, obviously, there ought to be--needs to be recourse for 
malpractice. Nobody wants to deny anybody their right to have a claim in 
the court of law. That's one of the great things about America, is if 
you've got a claim, you ought to be able to take it to the court of law. 
But we can--and we can pass law that protects somebody's right to go to 
the court of law and do something about these junk lawsuits. And you 
know, it's tough. Boy, the trial lawyers are tough in Washington. In all 
due respect to the trial lawyers here, you're very powerful politically. 
We kept--we got the bill out of the House of Representatives. Time and 
time again, it got blocked in the United States Senate.
    So here's a commonsense way to move forward to help small businesses 
and individuals deal with health care costs. And that stands in contrast 
to those who really believe the Federal Government can run it better 
than the individual consumer. And I'm not saying those are bad people 
who

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articulate that position, I'm just telling you I think it's wrong for 
America.
    Finally, energy, we're too dependent on oil from overseas. That 
sounds strange for a Texas guy to say, I know. But dependency on oil 
creates economic security issues and national security issues and 
environmental issues. And so I proposed a bill that would encourage--let 
me just--most oil is consumed through automobile usage. So I want to 
talk to you about automobile usage and electricity, and then I'll answer 
some questions.
    I have proposed a bill--and I'm hopeful it will get a pass by the 
Congress--that increases CAFE standards, which is the fuel economy 
standards, in a reasonable way without sacrificing automobile safety. 
And I've also proposed that we reduce gasoline usage by 20 percent over 
the next 10 years by using alternative fuels. Now, I wouldn't have done 
that if I didn't think it was practical and possible.
    If you're a hog grower--which I suspect there's not too many around 
here--but you're a little concerned about the use of ethanol with corn 
at its base because the price of corn is high. Ethanol is beginning to 
spread in the Midwest, and it's causing the price of corn to go up.
    But that's going to be relieved as a result of research and 
development. One of these days, the scientists tell me--and I believe--
that we'll be able to manufacture fuel for your automobiles from 
switchgrass or biomass or wood chips. And then all of a sudden, if you 
really think about it and are optimistic about America's capacity to use 
technology to change our way of life, then all of a sudden, you begin to 
see the rationale for saying that we can reduce gasoline usage by 20 
percent over the next 10 years. I believe it's coming, I really do.
    I also believe that a part of that mix is going to be new battery 
technologies that will enable you to drive the first 40 miles on 
electricity. And for those of you who are worried about the size of the 
vehicle, it won't look like a golf cart. [Laughter] It will be a normal 
size vehicle.
    On electricity, there's a lot of talk about electricity. I 
understand that, and there should be. If America wants to solve its 
dependency on foreign sources or wants to solve its environmental--deal 
with environmental concerns, we need to aggressively spread nuclear 
power. If you're generally an environmentalist, if you're worried about 
greenhouse gases, then you need to be in the forefront of supporting 
nuclear powerplants. If you're worried about whether or not we can 
continue to have the electricity necessary to foster economic growth and 
vitality, you ought to be for nuclear power. I know that's not 
necessarily politically correct in some circles, but I believe the 
engineering is safe, and I know we can come up with ways to dispose of 
the waste in a safe way.
    And so those are some of my thoughts, other than I hope you all have 
a great holiday season. I'd be glad to--I hope you can tell I'm an 
optimistic fellow. We've been through a lot over the last 7 years; we 
really have. But I'm absolutely convinced this country is strong and 
vibrant. We're in the lead when it comes to the freedom agenda. I 
believe the decisions that have been made over the last 7 years are 
going to lead peace. Sometimes I know it's hard for you to tell it. But 
I'm convinced that when people look back at this era, they're going to 
say,``Thank goodness the United States of America never abandoned its 
belief that freedom is universal.''
    I happen to believe there is an Almighty, and a gift of that 
Almighty to every man, woman, and child is freedom. And I believe it's 
in our Nation's interest to act upon that belief. And so I come to you 
today as a man honored to serve a great country, with some ideas on how 
we can stay strong economically, and a great faith in the capacity of 
freedom to bring the peace we want.
    And with that, I'll be glad to answer any questions, from anybody 
other than the

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press corps. [Laughter] If I wanted to have a press conference, I'd call 
a press conference. Right, Herman [Ken Herman, 
Cox News]?
    Mr. Herman. [Inaudible]--Mr. President.
    The President. I can't hear you. He's from Texas, forgive him. 
[Laughter]
    Yes, ma'am.

Oil Industry

    Q. I'm from that county outside Texas called Oklahoma.
    The President. There you go. We love Oklahoma in Texas, except when 
you come down and beat our football teams. [Laughter]
    Q. That is a bad thing.
    They seem to be closing a lot of the refineries and capping off 
different oil wells, et cetera. Are they saving our oil, or what are 
they doing?
    The President. What happens, you know, an oilfield plays out. And 
many of the fields you're referring to in Oklahoma or parts of Texas are 
just old, and there's little to recover.
    One of the interesting things that is taking place around the 
country, though, is that the higher price of oil has caused people to 
invest in new technologies, and the new technologies are enabled--
enabling some to be able to get more of the reserves out of the 
reservoirs. But when a person caps off an oil well, plugs an oil well, 
at this price it pretty well means it's played out; there's not left.
    Now, refineries is a different issue. We haven't built any new 
refineries. Now, we've expanded some refineries. We're not building new 
refineries, and it makes no sense not to increase the supply of 
gasoline. And I mean, if you're concerned about the price of gasoline, 
one way to deal with it is to encourage the expansion of refineries.
    And so one of the proposals I put forth to the Congress was, as we 
shut down bases through the BRAC process, why don't we provide land on 
those old bases for refineries and to encourage the expansion of 
refineries here in the United States. And it's just--anyway, it's--there 
are some who--I don't know why they wouldn't be for something as 
commonsensical as that.
    I'll tell you another thing we ought to be doing, is we ought to be 
exploring for oil and gas in the Arctic--up in Alaska. You can't believe 
the technologies that are now available. You can drill a--on a small 
pad, without creating much of an impact on the environment, and explore 
laterally, in order to develop a field. And they tend to drill in the 
winter, on ice, and they move the rig off in the summer during the melt. 
And so we've got the technologies capable of finding oil and gas 
reserves and hardly leaving a scratch on the environment up there. But 
it's become a cause celebre with a lot of the special interests in 
Washington, DC.
    So I can't tell you why people aren't for refinery expansion. I'm 
just telling you they ought to be. And there are some examples where 
refineries are expanding, like down there in Mississippi, for example, 
in the--Pascagoula. A big refinery has gotten permits on its current 
footprint to expand its capacity, and that's going to be good for the 
country. It's going to take a while. I mean, we will be using oil and 
gas for a while. And it's going to take a while to diversify. And 
therefore, for the sake of our consumers and our economy, we need to 
make sure we got reliable supplies as we develop new technologies. And 
new technologies are coming. It's going to be an exciting era, in my 
judgment.
    Thank you. Yes, sir.

President's Domestic Agenda

    Q.  [Inaudible]--a commercial lender here in Fredericksburg.
    The President. Yes. How do you like the mortgage plan? [Laughter] 
Becaause I don't know----
    Q. Well, the mortgage plan is a little bit tough. And I'm a 
commercial lender as well, so it's great to hear from the President. 
Just two issues that we're looking at

[[Page 1563]]

against valuating--evaluating financial statements, daily on the income 
statements, health care expenses, fuel expenses--what about my big 
customers that are driving diesel-powered equipment? What if fuel goes 
to 3.25 a gallon to $5.00----
    The President. Yes.
    Q. ----while at the same time that you're having an escalated health 
care expenses. So it's great to see you here today and preaching that 
message, because, again, revenues aren't necessarily expanding in this 
soft economy we're in.
    The President. Right.
    Q. So what happens in '08 and '09 when the----
    The President. No, I appreciate that. That's why I'm against raising 
the gasoline tax. In other words, ``We need to raise the gasoline tax.'' 
It comes up about every year in Congress. I'm against it for precisely 
that reason, and--is somebody for it over there? [Laughter] I said, the 
Federal gasoline tax. [Laughter] Mr. Speaker, I wasn't talking about the State gasoline tax. [Laughter] 
But it's--yes, look, that's the concern, and I fully understand the 
pinch some of your folks are going to feel.
    And having said that, this economy is pretty good. There are some--
there's definitely some storm clouds and concerns, but the underpinning 
is good, and we'll work our way through this period. But I couldn't 
agree with you more that there's--your people have got some concerns. 
There's just some fundamental questions that we're going to have to make 
on issues like health care. The quick fix, at least what sounds like a 
quick fix, is going to be, don't worry, we'll handle it for you at the 
Federal Government.
    And to me that would mean that the greatest health care system in 
the world would head toward mediocrity quite rapidly. We don't want 
rationing, people standing in lines. We want the great innovation and 
the private medicine to flourish. And so my only caution is, is that 
people see the health care rising; I hope they don't leap to what sounds 
like a simple solution that would lead to a long-term problem for the 
country.
    Yes, sir.

Transportation Infrastructure/Fuel Efficiency Standards

    Q. You may have noticed that transportation is an issue for us in 
this area, and----
    The President. Actually, the helicopter didn't get stuck in any 
traffic. [Laughter]
    Q. Okay. And I was wondering----
    The President. Yes. What traffic jam? [Laughter] Anyway, yes, it is, 
it's a huge issue.
    Q. Yes, sir. And Homeland Security is moving more people in our area 
here, especially up on 610, and moving a lot of their offices. I was 
wondering if the Federal Government would be able to help us with our 
transportation problem, so that we could better facilitate Homeland 
facility--Homeland Security's problem.
    The President. Yes. You're not looking for that special earmark, are 
you? [Laughter]
    Q. No, no, no, sir.
    The President. Yes, you are--at least you're honest. [Laughter] 
Look, here's the thing about highway funds, a couple of points. First of 
all, I don't know if you know this or not, but the Public Works 
Committee, I guess, is the largest in the House. Is that right, 
Eric? Yes. And the way they get the bills out of 
the House onto the floor is everybody gets a special project. And so 
it's the largest committee, and then everybody gets them a special 
project, and then the bill moves, and then the funding formulas kick in. 
The way it ought to be done is they ought to adjust the funding formulas 
based upon rational measures and then pass these bills without earmarks, 
without special projects. That's just the way it works. A lot of the 
money is spent before it even--the highway bill makes it to the floor, 
and it's just not a good system.

[[Page 1564]]

    Secondly--and so therefore, they need to change the system. This 
isn't going to answer your question specifically. And it's not an 
intentional dodge, by the way; it's a slight dodge--[laughter]--because 
I--you know, you don't want your President walking around promising this 
project to this person or this project to that person. That's just not 
a--that's not what the President's job is to do. The President's job is 
to think strategically for the country and help get fiscal sanity into 
the process.
    Secondly, no question that we're going to have to rethink for the 
long term how to fund highways. Right now the highways are funded as a 
result of gasoline taxes, as you know. Not all of the money from the 
gasoline tax, by the way, goes to highway projects. There's a lot of 
mass transit money spent; there's other things that the money is spent 
on. I'm not making a qualitative judgment; I'm just telling you that not 
every dime collected from the highway tax--for the highway tax goes to 
highways.
    Automobile--I just told you that we're going to become more 
efficient with our automobile; we're raising our fuel efficiency 
standards. In other words, cars and new technology and electricity are 
going to change how often people go to the pump. And so the source of 
revenues that had been kind of the staple of the interstate highway 
system since the fifties is going to change a lot. And so how--what's a 
rational way forward? I talked to Secretary Peters about this, and I have instructed her to think about 
alternative methods of financing highway growth, such as user fees in 
lieu of, or in combination with, current tax structure.
    Now why would you do that? Well, if your automobiles are going to 
get less miles per gallon, then you're going to have to figure out--and 
you need additional highways, you're going to have to figure out a way 
to raise the money. And the user fee is a good way to do it. And if you 
happen to go to a user fee system, one of the interesting things that 
are being used is differential pricing. In other words, you pay a 
different price depending upon the day you drive; in other words, a 
market-oriented system. If one of the things you're concerned about is 
massive traffic jams on your highways, in and out of your community, 
then it may make sense to say to somebody, if you're going to ride 
between 9 and 4, you pay a higher fee than somebody riding before 9 or 
after 4. It's congestion pricing. It's worked in some parts of the 
world. I definitely think we ought to look at it.
    In other words, what I'm telling you is, the funding system is 
antiquated relative to the challenges we're going to be facing. And so 
Secretary Peters is a good, smart soul who is 
looking through different alternatives. It's going to be a tough issue, 
as you found out locally, and it's going to be a tough issue. It's hard 
to get Washington to change sometimes, but we will do our part.
    She's, by the way, very much engaged in 
making sure that the air transportation system is more modern. One thing 
we did over Thanksgiving, and we'll again do for Christmas, is take away 
some of the military flight lanes and provide them for commercial 
airlines. But the truth of the matter is, we need a more rational way of 
allocating gates amongst airlines, so that there is rational--a market-
driven system in place. Anyway, I'm not going to answer your question on 
the special deal. [Laughter] Yes, sir. I'll leave that to your 
Congressman. [Laughter]

Fannie Mae and Freddie Mac Corporations

    Q.  [Inaudible]--Fredericksburg and Stafford area is a high cost of 
living area, and all the proposals for FHA, VA, and conventional loans 
are tied to the Fannie Mae and Freddie Mac limit of 417,000.
    The President. Yes.
    Q. And in this area, that works for some folks, but the interest 
rate on jumbo loans is now 1 percent higher than conforming

[[Page 1565]]

loans. Has there been some effort to try to increase Fannie Mae or 
Freddie Mac?
    The President. There has, in lieu--in conjunction with reforming of 
the two institutions to make sure that they stay focused. The reform 
would make sure they stay focused on their core missions. But there has 
been--and Secretary Paulson has been 
working with Congressman Frank in the House on 
this very issue, which is to raise the limit on jumbos in conjunction 
with reforms. I don't know if it's going to pass this time or not. I 
should have checked before I came. But it definitely is a part of the 
reform agenda that we're working with the House on.
    Yes, sir.

Iran

    Q. Mr. President, my name is Mike West. I'm a Stafford resident 
here. It's a pleasure to have----
    The President. How long have you been living here, Mike?
    Q. Seven years.
    The President. There you go.
    Q. We moved from Charleston, West Virginia.
    My question is, I have three children in the school system here, and 
I'm very concerned about their well-being, living in this country. And 
you've done a wonderful job of protecting our Nation, but I'm concerned 
about the nations like Iraq, who now have nuclear weapons----
    The President. Iran.
    Q. Iran and Iraq both.
    The President. Not Iraq. [Laughter]
    Q. But my question would be about Iran. How is the diplomatic 
channels coming through there, as far as----
    The President. No, I appreciate that, thanks. You all read a report 
the other day that said that Iran had, but halted, a covert military 
nuclear weapons program. I said in my press conference that that report 
came out--that that report says to me, when you read it carefully, Iran 
was a threat, Iran is a threat to peace, and Iran will be a threat to 
peace if we don't stop their enrichment facilities because--I said that 
because there are three components to a nuclear weapons program. The 
first component is having the materials necessary to make a bomb. And 
you can either purchase materials that have already been processed, or 
you can learn how to process yourself. That's the enrichment component.
    That program is still active, in spite of the fact that most of the 
world has said to the Iranians, stop your enrichment. And that's where 
you're watching the diplomacy play out. The ability to weaponize that 
material, in other words, to make it into something that explodes is 
that part of the program is what the intelligence people thought was 
ongoing at one time and suspended.
    And finally, in order to be in a position to say you're a nuclear 
weapon power, you've got to be able to deliver the weapon by missiles. 
And they've spent a lot of time testing their missiles. So two of the 
three components in order to become a power--a nuclear power with a 
weapons system is--they're active. Now, what I told the people, first of 
all, I think Iran is a danger to peace. And I believe that for a variety 
of reasons. I believe with a weapon they would be very destabilizing. I 
believe with a weapon we need to take their threats seriously about what 
they have said about one of our allies, Israel. And therefore, my 
attitude hasn't changed toward Iran. If somebody had them a weapons 
program, what's to say they couldn't start it up tomorrow? Since they 
tried to hide their program before, how would we know?
    And so my point on the Iranian issue is this: They owe an 
explanation to the world. They need to tell the world why they had a 
program that they didn't report. They need to make it clear to the 
international organization, the IAEA, what that program was all about, 
and why they hid it from the world. And so Iran is a danger, and we will 
continue to work with friends and allies to convince them that it is in

[[Page 1566]]

their interests to suspend their enrichment programs. And if they do, 
there's a way forward for them that is different from the way that--the 
path they're headed down now. They're heading down a path of isolation 
right now and economic sanctions. We passed two resolutions out of the 
U.N., and Condi Rice is working on a third.
    And my message to the Iranian people is, one, we respect your 
history and traditions. It's your Government that is isolating you from 
the world. It's the decisions that your Government has made that is 
making it more difficult for you to put food on the table, making it 
more difficult for your family to realize their dreams. And there's a 
better way forward for the Iranian people than to have a Government that 
is nontransparent, that's hidden a program, and that refuses to listen 
to the demands of the--of most of the civilized world, which is, give up 
your--suspend your program.
    Interestingly enough, today Russia sent some enriched--or is in the 
process of sending enriched uranium to Iran to help on their civilian 
nuclear reactor. If that's the case, if the Russians are willing to do 
that, which I support, then the Iranians do not need to learn how to 
enrich. If the Iranians accept that uranium for a civilian nuclear 
powerplant, then there's no need for them to learn how to enrich. And so 
I appreciate your question.
    Yes, sir.

Care for Wounded Military Personnel

    Q. I'm Jeff Davis. I'm a retired marine Vietnam veteran, and I want 
to be assured that our wounded warriors are getting the health care that 
they deserve.
    The President. Yes. I appreciate you saying that. I want to be 
assured of that too, Mr. Davis. First of all, 
thank you for serving. I feel a particular sense of obligation to make 
sure that the man or woman I send into combat gets the very best care 
possible. I will tell you, sir, that the doctors and nurses providing 
our military health care are fabulous. And the health care these troops 
are getting is excellent, no ands, ifs, or buts about it.
    The bureaucracy, however, needed to be reviewed and fixed. You're 
taking these kids, unlike Vietnam, that are getting wounded in Iraq, 
they're coming straight off the battlefield, getting fine care there. If 
need be, they're in Germany getting intensive care. And they're here in 
the United States of America. Laura and I are going to Bethesda and 
Walter Reed on Wednesday and Thursday. Two reasons: One, to tell those 
troops we love them; and two, to tell those docs and nurses who are 
working overtime to give them fabulous care this country appreciates 
what they're doing.
    Now, as you read, the Walter Reed deal, that was a bureaucratic 
foulup. Secretary Gates moved on it very 
quickly. It should show you our intensity in making sure that our troops 
get the very best care. The veterans system, in our judgment, can be 
fixed and improved. And that's why I asked Bob Dole and Donna Shalala to come 
together to make sure that veterans' benefits match the needs of these 
troops coming out of combat in Iraq and Afghanistan.
    We've got to make sure that--here's what happens. You get 
transferred from the Department of Defense into the Veterans 
Administration, and sometimes that transfer isn't too smooth. So we 
believe there ought to be a seamless system. There needs to be health 
information technology for our troops. Our families need to have a case 
study--a case worker with them all the time.
    So we're making good improvements, and we've addressed the 
bureaucratic shortfalls. We'll probably find others. But you need to 
know, sir, that I am absolutely convinced I can look the parents of 
our--and loved ones of the troops in our eyes and say, your kid is going 
to get fabulous health care, and they deserve it.
    Yes, sir.

[[Page 1567]]

Alternative Fuel Sources

    Q. Thank you, Mr. President. With regards to research and 
development into mileage in cars--and I'm a hybrid owner myself----
    The President. There you go.
    Q. ----is there anything that is being done to--I understand the 
issue with the ethanol plants is there's no outlet for ethanol, other 
than 10 percent over at Exxon. Is there anything being done with that 
respect?
    The President. Yes. Listen, a couple points there. First of all, the 
first hurdle to the use of ethanol is to have automobiles that are 
capable of using ethanol. And most automobiles are flex-fuel vehicles. 
You've probably--you've got one, and you just don't know it. Meaning, 
you use gasoline or ethanol and the engine works either way.
    Secondly, the fuel blends probably in this area are 10 percent, but 
out in the Midwest, they're up to 90 percent. And the reason why is this 
market is going to develop regionally. And by that I mean, if--
obviously--what's interesting is that the most significant penetration 
of high-concentrated ethanol is in the Midwest, where there's corn. And 
if this area doesn't have the fuel stocks necessary to make ethanol, 
it's the--there's not a pipeline system that will enable a lot of 
ethanol to get here. And so what you're going to have is local 
production or regional production to fuel the capacity of you to be able 
to have more ethanol available at the pump.
    The issue is the manufacturing of the product in the region as 
opposed to once the product is here in the region, that you're capable 
of finding an outlet that will deliver it to you. And that's why this 
research into different raw materials for ethanol is going to be very 
important. So you can envision, if you can start using wood chips--you 
got you some wood around here--and all of a sudden, it becomes a viable 
source of input into an ethanol plant.
    But out in Midwest, I repeat to you--I think they call it E-90, or 
something like that, which is 90 percent ethanol--is now available in a 
lot of pumps. And one of the concerns about the folks who live out there 
is, how do you get more of it available? And the marketplace tends to 
work. People start showing up demanding ethanol, and all of a sudden, 
somebody figures out how to supply it.
    But it's making pretty good market penetration in the Midwest. It's 
an interesting map to look at, and I believe the reason why is because 
since corn is now the main source of ethanol, that's where you get to 
get your corn. But hopefully, this research and development in a 
relatively quick period will come up with different alternative sources 
for ethanol. And I think it will, I really do, otherwise I wouldn't have 
put the 20-10 initiative.
    Alrighty. Yes, sir.

Health Care Reform

    Q. I'm a physician, and I happen to agree with your attitude about 
health care. And I think that the consumerism aspect of it needs to be 
emphasized. I think we're going to have too many options out there to 
offer to the American public, and we won't be able to afford all of 
them. We can't hardly afford it now. But do you have new legislation out 
that you may propose for next year that would try to implement some of 
the ideas that you have, other than the health savings account?
    The President. AHPs, we'll run it again, associated health plans. 
That's the plan that enables small businesses to pool across 
jurisdictional boundaries. And again, that's economies of scale, 
economies of spreading risk, which to me is a rational plan. It's 
opposed by different groups, by the way. It sounds logical and sounds 
rational, but evidently such a plan gets crossways with some of the 
interests in Washington, otherwise it would have passed.
    Secondly, we'll run the tax deductibility again, which would be a 
significant change

[[Page 1568]]

in enabling your patients to be treated just like the patient that works 
for a large corporation. And that's going to be a vital part, doc, of 
making sure that people stay--making sure that we have a consumer-driven 
system.
    We may run tort reform again; I'll see what it looks like. As I say, 
we passed it out of the House twice, if I'm not mistaken; went nowhere 
in the Senate. So there's three alternatives for you right there.
    How's your practice?
    Q. Doing well, thank you.
    The President. That's good. I'm going to tell you something: We have 
fabulous health care in America, just so you know. I think it's very 
important--before people start griping about the health care system 
here--and of course, there's always grounds for complaint--just to 
compare it with other systems around the world. And one of the reasons 
our system is expensive is because some of the new technologies that are 
coming on line, they happen to be saving lives. And can we become more 
efficient deliverers of health care? You bet. Are there things we can 
do? Absolutely. But whatever we do, we don't want to undermine the fact 
that we got great health care. I'm very proud of our docs, nurses, 
researchers. There's some just fabulous research going on in our 
country. And to me, that's in our national interest that we spend money 
on medical research, so that we can stay on the leading edge of change.
    One more, and then I've got to get home. Yes, ma'am.

Stock Market

    Q. Hi, Mr. President, I'm Kate Hopper, and I wanted to extend my 
holiday wishes to you and your family from all of our family.
    The President. Thank you, thank you. I'm fired up about the 
holidays.
    Q. I wanted to ask you--I'm a financial adviser here in 
Fredericksburg, and I wanted to ask you what your thoughts are on the 
market going forward for '08, and if any of your policies would make any 
difference?
    The President. No, I appreciate that. Was it Kate?
    Q. Yes.
    The President. No. [Laughter] I'm not going to answer your question. 
If I were an investor, I would be looking at the basic fundamentals of 
the economy. And early on in my Presidency, somebody asked me about the 
stock market, and I thought I was a financial genius, and it was a 
mistake. [Laughter] The fundamentals of our--of this Nation are strong.
    One of the interesting developments has been the role of exports in 
overall GDP growth. When you open up markets for goods and services, and 
we're treated fairly, we can compete just about with anybody, anywhere. 
And exports have been an integral part, at least of the 3d quarter 
growth. But far be it for me--I apologize--for not being in the position 
to answer your question. But I don't think you want your President 
opining on whether the Dow Jones is going to be--[laughter]--going up or 
down.
    I appreciate you giving me a chance to come by. In the old days, the 
entourage wasn't quite as big, but we're glad that you were--you 
welcomed us all. I really do hope your families have a blessed Christmas 
and a holiday season. May God bless you all, and may God continue to 
bless our country. Thank you very much.

Note: The President spoke at 11:25 a.m. in Yak-a-Doo's restaurant at the 
Holiday Inn--North. In his remarks, he referred to Ralph Sutton, 
president, Stafford Rotary Club; Robert Hagin, former executive 
director, Morgan Stanley Investment Mgmt.; and former Sen. Robert J. 
Dole and former Secretary of Health and Human Services Donna E. Shalala, 
Cochairs, President's Commission on Care for America's Returning Wounded 
Warriors.

[[Page 1569]]