[Weekly Compilation of Presidential Documents Volume 37, Number 9 (Monday, March 5, 2001)]
[Pages 386-390]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to the National Conference of State Legislatures

March 2, 2001

    Mr. Secretary, thank you for the three introductions. [Laughter] 
When I was looking for people to serve in the Cabinet, one of the places 
I looked was for fellow Governors, because I strongly believe that there 
needs to be appropriate balance between the Federal Government and the 
State governments. And I found a good one in Tommy Thompson. He's going 
to do a great job, and I'm so honored that you're here. I appreciate you 
all having me. I see some familiar faces--Mr. Speaker. I'm glad you all 
are here. I want to thank Senator Costa and Senator Saland for inviting 
me. I've got something to say about the budget, and this is a pretty 
darn good forum to do so.
    Before I begin, though, I want to thank the folks from Quebec who 
are here. And where are you? There you are, sir. Thank you for being 
here. I'm looking forward to coming to Quebec City in April. I had a 
good visit with the Prime Minister of Canada the other day, and I'm 
confident our nations will continue our long friendship together and 
work together for the good of our two countries and our hemisphere. I 
understand we've got some folks from South Africa as well.
    Well, thank you all for coming. Welcome. I'm sure glad you're here. 
Any Texans here, speaking about foreign countries? [Laughter] Darn it. 
[Laughter] One of the things that I talked about with the Governors, all 
of whom were here the other day, was a new federalism initiative. And my 
administration is going to listen to people at the State and local level 
to make sure we clearly define the role of Federal Government and State 
Governments and then have a--by Executive order, put a group together to 
make sure it actually happens.
    A lot of times in Washington, as you know, we tend to talk, and 
sometimes the talk isn't backed up by action. And so we're going to work 
hard to make sure that the new federalism becomes reality.
    And it's important. Take a matter like education. One of my 
priorities as the Governor of Texas was education; one of my priorities 
as the President is to make sure every child gets educated. But I can 
assure you, this administration understands the importance of local 
control of schools. And we don't believe in the federalization of the 
public school system, that one size does not fit all when it comes to 
education.
    And of course, ours is an administration that doesn't care whether 
your Governor or your speaker or your leader of the senate is

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a Republican or a Democrat, if you believe in local control of schools, 
you do so in a nonpartisan way. So we look forward to working with the 
Congress to pass power out of Washington, to make those Federal programs 
that are prescriptive in nature become supportive of local efforts to 
meet--so that each local State and district can chart their own path to 
excellence for children.
    One of the reforms that I think that is going to be crucial is to 
work with States and local jurisdictions to develop strong 
accountability systems, that in return for Federal money that you must 
show us whether or not children are learning to read and write and add 
and subtract.
    We will not have a national test. A test devised at the national 
level will undermine local control of schools. But I think it's a 
perfectly appropriate question to say, for example, with disadvantaged 
students, those with Title I money, that--measure--measure on an annual 
basis. You develop the standards, you develop the test, but show not 
only the President but show everybody else whether or not the schools 
are meeting the objectives. And if they are, we'll praise teachers like 
we should, all across the country. But if not, instead of just accepting 
the status quo, if it's okay to shuffle kids through the system who 
can't read, it will serve as a catalyst to change.
    And this is a substantial reform. On one side, you'll have people 
say, ``Well this is not the proper role of the Federal Government, to 
insist that local jurisdictions show us whether or not children are 
learning.'' I reject that argument. We're a results-oriented nation. And 
there's no better--no important place to find positive results than in 
our public schools and no important place to find negative results and 
correct them early than in our public schools.
    And they're going to hear people say, ``Well, it's racist to test.'' 
Listen, I went through this argument in the State of Texas. It is racist 
not to test. It is important to test, because we believe all children 
can learn, and therefore, when we find certain children not learning, 
let's correct it. See, the attitude is, ``If certain kids can't learn, 
let's just not hold people accountable; let's just quit and move them 
through the system.'' That's unacceptable to me. I know it's 
unacceptable to you. I believe it's going to be unacceptable to both 
Republicans and Democrats in the Congress. The cornerstone of reform is 
flexibility at the local level, coupled with strong accountability 
measures.
    Many of you all know the debates, oftentimes, on important matters 
like education, revolve around who spends the most money. And the truth 
of the matter is, the Federal Government's got a limited role when it 
comes to the expenditure of taxpayer's money in public schools. I mean, 
we fund about 7 percent of the total budgets across the Nation.
    But there is an important role for the Federal Government, 
particularly for disadvantaged children. And so we've increased our 
education budget by more than any other Department in the Federal 
Government. The debate here of course will be, ``Well, it's not 
enough.'' But for those who argue that, sometimes they're not--they 
don't have to do what the executive branch does, which is to present an 
overall budget, to make it work. And that's what I want to explain to 
you all, how our overall budget works.
    First, there was a contest at the end of the last session to figure 
out who could spend the most money. It didn't matter what your party 
was, it looked like. The budget grew by 8 percent. That's a substantial 
growth in Federal expenditures. My budget slows discretionary spending 
down to 4 percent. That's more than the rate of inflation. It's a pretty 
high increase in the expenditures, but it's nothing close to what was 
happening over the last 3 years, on average, and at the end of last 
year.
    That's caused some consternation because in Washington, the 
definition of a cut is that you haven't increased the budget as much as 
anticipated. You may be actually increasing spending, but that's called 
a cut up here. I've had to learn new accounting. [Laughter] But we grow 
the discretionary spending by 4 percent.
    We protect entitlements. All of the payroll taxes will be set aside 
for Social Security and only Social Security. We double the Medicare 
budget over a 10-year period of time. We increase Medicare in the first 
year, to

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meet all needs, and including having a prescription drug program for 
poor seniors to be administered by the States.
    It is a budget that meets needs. And by the way, we pay our soldiers 
more money. We've got an increase in pay for the men and women who wear 
the uniform. As an aside, I think it's very important for my 
administration to send this message to Congress and to the country, that 
we'll first develop a strategic vision of military spending, a strategic 
vision of the military, and then we'll figure out how to spend the 
money, as opposed to let's spend the money first and then maybe develop 
a strategic vision afterwards. It's called planning. And one of the 
things that executive branch folks must do is to help plan the proper 
expenditure of money, and that's what we're going to do. But we do 
increase the military budget, starting with the personnel, to make sure 
folks are better housed, better paid, and better trained.
    And as an aside--a second aside--the Commander in Chief must set a 
clear mission for all Departments, particularly the Department of 
Defense. And the mission is to be prepared to fight and win war and, 
therefore, prevent war from happening in the first place. It's a clear 
mission and a clear statement of purpose.
    There is a lot of discussion about paying down debt. And it's a 
healthy discussion. We pay down $2 trillion debt over a 10-year period 
of time in our budget. That's the largest amount of debt ever paid by a 
country in history. I think that's an accurate statement. There is also 
debt at the local level. It's called consumer debt. And so, while a lot 
of us up here talk about Federal debt, one of my jobs is to make sure 
the Nation stays focused on the debt that burdens the working folks in 
America. People have got a lot of credit card debt. And when you couple 
that with high energy prices, some of the people that you know are in a 
pinch. And we'd better do something about it. It's important for our 
economy to do something about that. It's important for the lives of 
people who struggle to get ahead to do something about it. And that's 
part of the basis for the tax relief package.
     But before I talk about the tax relief, I also want to tell you, 
we've set aside $1 trillion over 10 years for contingencies. That can 
mean a lot of things. Contingencies can mean, ``Well, maybe the numbers 
weren't as good,'' or ``I think they're going to be better than they 
anticipate,'' by the way. It could be that we need money for 
emergencies, which we probably will, maybe need a little more money for 
some of the agricultural sector around the country. There are 
contingencies set aside.
    And finally, that leaves money left over. And the big debate here--
and you go through the debate every single budget session--is what to do 
with it. And I am going to make the case, not only here in Washington 
but traveling around the country, that we need to remember who paid the 
bills in the first place.
    I'm trying to be as--to bring as much common sense to Washington as 
I can. And the speech I gave the other night was an attempt to say, 
here's the priorities; there's money left over. Here's the debt 
repayment; there's money left over. There's a commonsensical way to 
budget by setting aside contingencies, and there's still money left 
over. And by the way, these numbers are based upon conservative 
assumptions.
    The first year, the budget is based upon a 2.4 percent growth. It 
averages a little more than a 3 percent growth over the next 10 years. 
We can do better than that in America. America can grow our economy. 
We're too strong a nation. We're an entrepreneurial nation. We've just 
got some unbelievable productivity gains to be achieved in our economy.
    People take a pessimistic view about how to project revenues, and 
that's fine. But I just want you to know I'm much more optimistic than 
the point of view here in Washington. People say, well, what happens 
if--you know, gosh, what happens--maybe we need a trigger mechanism, 
that's kind of the discussion. So, therefore, if the surpluses don't 
materialize--well, there's two reasons why surpluses won't materialize. 
One is that the revenues aren't quite as expected because the economy 
has slowed down, in which case we need to accelerate tax cuts. You see, 
tax relief will put money in people's pockets, which will help give the 
economy a second wind. Or, a reason the surplus may not materialize

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is because Congress has overspent. So it seems like to me we need to be 
careful about any trigger mechanism that ought to be on spending to make 
sure that we don't overspend surpluses.
    The tax relief package is well thought out and well designed. Of 
course, I would say that. [Laughter] But we've spent a lot of time on 
it. As opposed to trying to figure out what number sounded like it made 
sense, we actually calculated the cost of fixing parts of the Tax Code 
that are unfair. For example, the death tax is unfair. Many of you come 
from agricultural States; you know exactly what I'm talking about.
    The marriage penalty is unfair. The Tax Code itself is unfair, 
because it's like we erect, as I said in the campaign, a tollbooth right 
in the middle of the road to the middle class. One on one side, people 
struggling to get to the tollbooth pay a higher marginal rate on 
additional dollars earned than people who are successful. If you're a 
single mom, like I said in my speech, and you're trying to get ahead and 
you're making in the low $20,000 salary range, as you lose earned-income 
tax credit, as you start paying the 15 percent bracket, as you pay 
payroll taxes, your marginal rate is nearly 50 percent on additional 
dollars earned, and that is not right. And that's not the America that 
we all want our country to be. It sends the wrong message.
    And therefore, we dropped the bottom rate from 15 percent to 10 
percent and doubled the child credit, which will make the marginal rates 
on people starting to get ahead less, and that's important. Access to 
the middle class is a fundamental part of the American experience.
    We also drop all rates. The temptation, of course, as you know, in 
tax policy is for people to say, ``Well, I'll get to decide who gets the 
tax breaks. Let me make those decisions.'' It's called targeting. I 
don't think we ought to try to figure out who is targeted in and 
targeted out. I think if you pay taxes, you ought to get relief.
    Finally, there will be a lot of discussion about whether or not we 
ought to drop the top rate. Well, first of all, if everybody who pays 
taxes ought to get relief, then you ought to--need to drop all rates. 
But secondly, I want to remind you all that when you drop the top rate 
from 39.6 to 33 percent, it enables small businesses and entrepreneurs 
to more likely be able to expand their businesses. Because if you 
inquire, you'll find a lot of the small businesses in your districts and 
in your States are unincorporated small businesses and/or sub-Chapter S 
businesses. And the top rate reduction I view as a way to create an 
environment in which the entrepreneurial spirit can continue to move in 
America.
    One of the most hopeful statistics I heard was in the great State of 
California, where there are over 700,000 Latino-owned small businesses 
in that State. That's a fantastic statistic about the American Dream and 
the American experience and the whole concept of owning something. One 
of the things that distinguishes our great land is people can own their 
own business or own their own home. And the idea of encouraging the 
entrepreneurial experience to flourish, particularly in the small 
business sector, is what I think good public policy is all about.
    So tax relief is not only to--as a way to kick-start the economy 
that is in fact slowing down, but tax relief is also an opportunity to 
achieve certain objectives, to make the code more fair, and to make the 
small business person more likely to employ additional folks. And that's 
my case. I think we're going to get it done.
    And I'd like your help. I'm going to travel the country a lot, which 
I'm finding to me is important, not only to make the case, but it's 
important to remember where I came from. And I came from many of the 
neighborhoods that you all represent, just good, honorable, hard-working 
people. I cannot tell you what an honor it is to be the President and to 
drive in those cars with the American flag flying and to see people 
lining the roads, waving to the office. It reminds me of the greatness 
of the country. And it's the people of America. You know that just as 
well as I do. The people of this great country is what makes this place 
so special, this land so special. And all public policy must recognize 
that, and work to empower people, so they can help themselves. My budget 
does so. That's what the budget is all about. And I

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want to thank you for giving me a chance to come by and make my case.
    God bless.

Note: The President spoke at 10:20 a.m. in Presidential Hall in the 
Dwight D. Eisenhower Executive Office Building. In his remarks, he 
referred to California State Senator Jim Costa, president, and New York 
State Senator Steven M. Saland, president-elect, National Conference of 
State Legislatures; and Prime Minister Jean Chretien of Canada.