    [Public Papers of the Presidents of the United States: George W. Bush (2008, Book I)]
    [January 7, 2008]
    [Pages 36-41]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on the National Economy in Chicago
    January 7, 2008

        Thank you all. Thank you all very much. Thanks for coming. I'm glad
    to be here with the members of the Illinois Chamber. Mr. Mayor, thank you very much. You've given me a lot to do
    today. [Laughter]
        First thing is, the mayor runs the
    school system. And I went by Horace Greeley Elementary, and the reason I
    did is because Horace Greeley is a blue ribbon school. I remember awhile
    back, everybody was a blue ribbon school. But that's not the way it is
    these days because we're judicious in who gets awarded a blue ribbon
    school. A blue ribbon school is one which sets high standards and
    measures and achieves results.
        Mr. Mayor, you're a reformer when it
    comes to education because you understand when we find mediocrity, when
    we find schools that aren't teaching, we're going to have to do
    something about it if the United States wants to remain competitive in
    the 21st century.
        Then the mayor had me briefed by the
    2016 Olympic committee bid team, and you got a good bid. I'm absolutely
    convinced that Chicago will represent the entire country the right way
    if the Olympics are here in 2016. Mr. Mayor, you've put together an
    outstanding team, and I just want to--[applause]--I just want the judges
    to understand that the United States of America stands squarely behind
    Chicago's bid.
        I am really pleased to be here at the Union League Club. I did a
    little research into the history, and it turns out, Winston

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    Churchill came here in 1932, right before I was born. [Laughter] When
    people think of Churchill, of course, they marvel at what he managed to
    do with the English language. When people think of me--[laughter]--never
    mind, Congressman Emanuel. [Laughter] I
    appreciate the Congressman for joining us. He'd been with me all day
    long.
        You know, there's a lot of partisanship in our Nation's Capital. I
    bet both of us would say, too much. But it--I appreciate the fact that
    when the President of the United States came to his district,
    he showed up. It shows a lot about the man. I'm
    honored you're here. Thanks for coming.
        I do want to talk about keeping our economy growing and creating
    jobs for our citizens. I had a New Year's resolution, and it was to make
    sure that Congress keeps the taxes low and to make sure that when we
    spend your money, we do it wisely or not at all. And it's a resolution I
    intend to keep.
        Before I talk a little bit about the economy, I do want to thank Joe
    Dively, who's the chairman of the Illinois
    Chamber who's hosting this event. I want to thank the chamber members
    who are here. I'm honored that you'd take time out of your day to give
    me a chance to come and visit. I'm sure you know what I know, that many
    Americans are anxious about our economy. And this frankly is not
    unprecedented.
        Over the last 7 years, over the span of my Presidency, we've had
    other challenges. There have been other times when people have been
    anxious about the economy. After all, we've been through a recession,
    terrorist attacks, corporate scandals, wars in Afghanistan and Iraq, as
    well as devastating natural disasters. It's 7 years we've had experience
    in dealing with anxiety. Every time, our economy absorbed those shocks;
    we dealt with them and managed to grow and prosper.
        In other words, this is a resilient economy because we rely on the
    free enterprise system. Our economy is flexible; it is--motivates people
    to take risk. We are the most prosperous nation in the world. There's a
    sense where we can be optimistic. We have seen anxiety--dealt with
    anxiety before; this isn't the first time.
        We have a strong foundation in our economy, but we cannot take
    economic growth for granted. That's what I want to share with you. I
    understand that while there is a foundation that would be the envy of a
    lot of other nations, we cannot take growth for granted. We confront
    economic challenges, from the downturn of the housing sector to high
    energy prices to painful adjustments in some of the financial markets.
        Recent economic indicators have become increasingly mixed. Last
    Friday, we learned that our economy has now had 52 months of
    uninterrupted job growth. That's a record. That's the longest period of
    job creation on record. Our entrepreneurs are taking risks. Our small
    businesses are expanding. Yet we also learned that our jobs are growing
    at a slower pace and that the unemployment rate ticked up to 5 percent.
    So in other words, on the one hand, we're continuing to set a record; on
    the other hand, there's mixed news. Same when it comes to pricing. Core
    inflation is low--except when you're going to the gas pump, it doesn't
    seem that low, or when you're buying food, it doesn't seem that low. So
    core inflation is low, but energy and food prices are on the rise--have
    risen. Consumer spending is strong, yet housing values are declining.
    The mixed report only reinforces the need for sound policies in
    Washington, DC, policies which do not create more regulation and create
    more lawsuits.
        Policies include opening new markets for U.S. goods and services.
    One of the interesting adjustments that has happened in our economic
    horizon has been that trade has been a significant part of growth. In
    other words, when you open up markets where our goods and services are
    treated

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    fairly, we can compete with anybody, anytime.
        It's in our interests that we open up markets. It's in our interests
    that we demand people treat us the way we treat them in the marketplace.
    And we got some trade votes that will be coming up this year: Colombia,
    Panama, and South Korea. It's in the interest of economic vitality and
    growth that we provide opportunities for businesses, large and small, to
    be able to sell goods and services.
        Secondly, energy prices--there is no quick fix. As a matter of fact,
    I signed good legislation, passed by Republicans and Democrats, that
    enable us to begin to diversify away from oil and gas, and that's good.
    But the diversification isn't going to happen overnight. We ought to be
    exploring for more oil and gas in the United States of America, and I'm
    convinced we can do so in environmentally friendly ways. And the truth
    of the matter is, if we're deeply concerned about the environment and
    want to make sure we're wealthy enough to deal with environmental
    challenges, we ought to be using nuclear power.
        We're working on policies to reform our mortgage markets. But most
    importantly, the smartest thing we can do is to keep taxes low. In a
    time of economic uncertainty, we don't need to be taking money out of
    your pocket. In a time of economic uncertainty, we ought to be sending a
    clear signal that taxes will remain low. Now, I've worked with Congress
    to cut taxes, and progrowth economic policies work. When you cut taxes,
    it means that people have more money to save, spend, or invest, more
    money in your pocket, more money where you can do--you can support your
    family, or if you're a small-business owner, you can reinvest to create
    more job opportunity in the community in which you live.
        It turns out, tax cuts have helped our economy overcome
    uncertainties. Economic growth yielded more revenues for our Federal
    Treasury. And when you combine that with spending discipline, then that
    deficit is beginning to shrink, particularly as a percentage of GDP. Our
    deficit percent of GDP is low relative to historic averages. It's
    possible to keep taxes low, grow your economy, and deal with your
    deficit, is what I'm trying to explain to you.
        In times of uncertainty, it's very important to make sure that the
    people on the frontlines of job growth--that would be the entrepreneur--
    knows taxes are going to remain low. And so one of the first basic
    principles that I'll be talking to Congress about is, this
    administration will use its authorities to keep taxes low.
        I don't think there are many folks who believe that Washington
    really needs more of your money; I certainly don't. Unfortunately,
    Americans could be facing higher taxes unless Congress takes action to
    stop it. You see, in less than 3 years, the tax cuts that we passed are
    set to expire. That creates uncertainty. If you're an entrepreneur
    thinking about investing, and all of a sudden, you're looking at a
    horizon where your taxes may be going up, it creates uncertainty. We
    don't need more uncertainty in an uncertain market. If Congress allows
    this to happen, we'll see an end to the measures that have helped our
    economy grow, including the 10 percent individual income tax bracket,
    the reductions in the marriage tax penalty, and reduced rates on regular
    income, capital gains, and dividends.
        And one of the interesting things that happens if taxes go up--
    people say, ``Well, we're just going to tax the rich.'' The problem is,
    many small businesses pay taxes at the individual income tax rate
    because they're subchapter S's or limited partnerships. And we don't
    need to be running up taxes on small-business owners. After all, 70
    percent of new jobs are created by small businesses in America.
    Increasing the tax burden on small businesses will make it less likely
    people will be willing to create new jobs.

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        And so I will strongly urge that the Congress keep taxes low. One
    way to do it is to make sure that all the tax cuts we passed are made
    permanent. If you're interested in taking uncertainty--[applause]. One
    of the other taxes that's going to return will be the death tax, which
    is being phased out. And in 2011, it kicks back in, which means it's
    going to be hard on estate planning, let me put it to you that way. I
    hope a lot of people don't decide to move on just because of the tax
    cut. [Laughter] I'm absolutely convinced we can do a better job of
    having the estate tax put on the road to extinction and then let it pop
    back up. It makes no sense.
        Listen, the estate tax is a lousy deal, particularly for farmers and
    small-business owners. I mean, you get taxed twice. You tax it when you
    build your business, and then they tax you when you die. And I'm
    absolutely convinced that there is a deal to be done in getting rid of
    the estate tax once and for all for the sake of economic vitality and
    growth and fairness.
        I want to tell you what it means if these taxes go up. If you're a
    single mom with two children and 30,000 in earnings, her taxes will go
    up by 67 percent, or about $1,600. If the taxes aren't made permanent,
    this is going to affect a lot of Americans in very negative ways. If
    you're an elderly couple with $40,000 in income, they would see their
    taxes go up by about 155 percent, or $900. Now, that may not sound like
    a lot to some of us in Washington, where they throw around numbers in
    billions; it means a lot to an elderly couple making $40,000 a year.
        Twenty-six million small-business owners would see their taxes go up
    by nearly 17 percent, or $4,000 on average. For somebody struggling with
    health care costs and 4,000 more dollars goes over to the Federal
    Government, it's going to make it harder for you to stay in business. It
    just doesn't make any sense, in times of uncertainty, to be sending
    uncertain messages about the Tax Code. And so I'm looking forward to
    working with the Congress to get these Tax Codes--cuts made permanent.
        Secondly, the Federal Government can play a positive role. We can
    play a negative role if we get too aggressive. If we overregulate, it's
    a negative role. If we pass law that--and opens up businesses and firms
    and small businesses to lawsuits, that's a negative role. We got too
    many lawsuits in America to begin with, in my judgment. But there are
    some things we can do to help.
        For example, the housing market--what's interesting about the
    housing market is that, you know, in the old days, you'd sit down with
    your lender and work out a deal. And then if you came on a hard time and
    you're still creditworthy, then he would help you refinance the loan.
    Well, those mortgages that have been made in recent times have been
    bundled up into financial instruments and sold. So it's hard to get the
    borrower and the lender face to face to help the borrower stay in the
    home. That's the challenge.
        Now, Hank Paulson and Alphonso
    Jackson, that would be the Secretary of
    the Treasury and the Secretary of Housing and Urban Development, have
    come together with an innovative plan called HOPE NOW. It doesn't cost
    one dime of your money, but it's the use of Federal influence to bring
    investors and counselors and lenders and servicers of loans together to
    help find those who have creditworthy--to help them stay in their homes.
    In times of uncertainty in the housing market, it makes sense to help
    people refinance loans.
        And Congress can help as well. By the way, they passed good law. You
    know, I don't know if you know this or not, but if you refinance your
    home, it's a tax liability for you. The value of the--the computed value
    of the difference between what was viewed as your value of your home and
    the new one after refinancing--new value after refinancing was a tax
    liability. It made no sense. Somebody is trying to stay in their home,
    and they get refinanced,

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    and then there's an additional tax liability. It makes it harder to stay
    in the home. And we passed good law to make that easier.
        But there's some other things we can do together. In other words,
    there's a constructive role for the Federal Government that I believe
    will help us during these times of uncertainty, and one of them is to
    expand the reach of the Federal Housing Administration. In other words,
    this is a program all aimed at helping creditworthy people refinance
    their home so they can stay in it during this times of uncertainty.
        Now, look, there are some people that probably shouldn't have bought
    a home in the first place. There are speculators that don't deserve
    help, in my judgment. But there are good, solid, hard-working Americans
    that we can help stay in their home by providing a--by helping them on
    refinancing.
        Another place where Congress and the administration can work
    together is dealing with tax-exempt bonds. Tax-exempt bonds, some of
    them for the housing purposes, can be used to help people buy a new
    house. I believe, in this time of uncertainty, we ought to have the
    authority for tax-exempt bonds to be used to help somebody stay in their
    current house. In other words, these are constructive ways to deal with
    the problem we face. Congress needs to pass a reform bill to strengthen
    the regulation of Fannie Mae and Freddie Mac so they can stay focused on
    their core mission, which is housing. And I'm looking forward to working
    with the Congress to help us through this period of correction in the
    housing market.
        Now, secondly, we can help people deal with health care. There's a
    fundamental debate taking place in Washington. I'm on the side of, let's
    strengthen private medicine rather than weaken private medicine. I'm on
    the side that says, the more consumerism, the more choices people have
    in health care, the better off the health care system will be. I'm on
    the side of saying to small businesses, health savings accounts are a
    smart way for you to be able to insure your people. I'm on the side of
    small businesses by saying, I believe businesses ought to pool--be
    allowed to pool risk across jurisdictional boundaries. That's fancy
    words for, if you're a restaurant in Chicago, you ought to be able to
    put your employees in the same risk pool as a restaurant in Texas so you
    can get discounts on your insurance, just like big companies can get
    discounts on their insurance.
        And I'm for changing the Tax Code. The current Tax Code penalizes
    people who go shopping for health care in the individual market. If
    you're a small-business owner, you know what I'm talking about. It's
    hard to go find insurance in the individual market because the Tax Code,
    frankly, discriminates against the individual relative to the person who
    gets tax--health insurance through corporate America. And I think all
    families ought to get a $15,000 deduction for health care, or
    individuals a $7,500 deduction for health care, regardless of where they
    work.
        And all of a sudden, the playing field gets level, and it's more
    likely an individual market begins to grow. And when you couple that
    with transparency of pricing and information technology, you can begin
    to see the emergence of a health care system that's patient reliant,
    that focuses more on the doctor-patient relationship and less on
    instruction from Washington, DC. And there's a fundamental debate, and I
    strongly believe the Government, by passing good policies, can help us
    deal--help small businesses deal with health care, is a key issue.
        And so those are some of the things I'm looking forward to working
    with Congress about to deal with these times. As I say, we've been
    through this before. People said, ``Are you optimistic?'' I said,
    absolutely, absolutely optimistic. Do I recognize the reality of the
    situation? You bet I do. If during my 7 years as President have I seen
    the great American economy bounce

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    back? I have. People say, ``Why do you think?'' I say, because our
    people are optimistic, hard-working, decent people. That's why. I mean,
    this economy rests in the hands of the American people, not in the halls
    of our Government.
        Winston Churchill, when he came here, by the way--I dug out a quote
    that I'd like to read to you. He said: ``Some . . . regard private
    enterprise as a predatory tiger to be shot, while others look at it as a
    cow that they can milk. Only a handful see it for what it really is: the
    strong and willing horse that pulls the whole cart along.'' I don't know
    if he said it right here in this very hall, but that's what he said.
    Government policy ought to recognize who's pulling this economy, and
    that would be the entrepreneurs and workers of America.
        So I want to thank you for giving me a chance to share some thoughts
    with you. Thank you for taking risk. Thank you for helping Chicago and
    the area around Chicago. You're one of the really great locations in the
    United States of America. Mr. Mayor, I'm
    honored to be with you again. Appreciate your time. God bless you. May
    God bless America.

    Note: The President spoke at 1:18 p.m. at the Union League Club of
    Chicago. In his remarks, he referred to Mayor Richard M. Daley of
    Chicago, IL.