[Weekly Compilation of Presidential Documents Volume 37, Number 11 (Monday, March 19, 2001)]
[Pages 455-458]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to Small-Business Owners

March 16, 2001

    Thank you all for coming. Be seated. [Laughter] Madame Secretary, 
thank you very much for the kind introduction. I want to welcome you all 
to the White House, the people's house. I can't tell you what an honor 
it is to live here. It's been a fantastic experience for me and Laura 
and our family, and we take our responsibilities seriously.
    I want to welcome you. I want to welcome the entrepreneurs of 
America. First, I want to recognize Hector Baretto, who is the nominee 
for the Small Business Administration--Hector--and president of the Utah 
State Senate, Al Mansell, is here, as well. Al, thank you for coming.
    Before I introduce the folks behind me, I'd like to say something 
about commonsense budgeting, something you get to do every day, 
something our Federal Government ought to do with your money. And that 
is, take a commonsense approach about what we do with the people's 
money. And it means setting priorities, understanding whose money it is 
we're spending. And the best way to do this is to say, what are our 
priorities?
    Education is a priority, and we need to focus on education. But I 
also remember where I came from. It's one thing to spend money at the 
Federal level; it's another thing to make sure we understand how to 
achieve educational excellence for every child. And that means trusting 
local folks to chart the path to excellence. The people who care more 
about the children in a respective community are the people who live in 
the community. And so while we'll focus some Federal resources, we need 
to trust the local people by passing power out of Washington, DC, to run 
their public schools in America, and at the same time, we've got to 
insist upon results.
    You do that every single day with your businesses. The Federal 
Government ought to start doing that, as well. And so we're going to 
say, ``There's more money for you but show us whether or not children 
are learning to read and write and add and subtract. You measure, you 
show us so that not one single child gets left behind.''
    Another priority is the defense of the country. It's a solemn, 
solemn task of the President to keep the peace, which means we've got to 
prioritize spending in the military. And it starts with making sure we 
pay our troops more money. And so my budget says, there's more money for 
those who wear the uniform and better housing for those who wear the 
uniform and taking care of the veterans, for those who used to wear the 
uniform.
    Another priority is health care. We've got a plan to take care of 
the working uninsured by refundable tax credits. We double the Medicare 
budget over a 10 year period of time. Another priority is to make sure 
that the Social Security system is safe and secure. And it starts with 
spending the Social Security money on only one thing--Social Security.
    So this is a budget that I submitted that sets priorities. It 
increases what's called discretionary spending by 4 percent. That's 
enough to fund our priorities and keep our commitments without 
overburdening working folks and small-business owners. Now, part of the 
consternation here in Washington is that I don't want to spend as much 
money as they used to spend up here. By setting priorities and focusing 
and remembering whose money it is we're spending, I think we can slow 
the rate of growth down.
    You see, at the end of last time, the last session, discretionary 
spending increased 8 percent. That's a lot, particularly when you're 
talking in terms of trillions. And so we've said, ``Let's be responsible 
with the people's money. Let's focus, let's meet needs, but let's always 
remember whose money it is in the first place.''
    There is a lot of discussion about debt reduction, and that's a 
worthy discussion. The budget I submitted pays down $2 trillion in debt. 
That's all the debt that's coming due over the next 10 years--that's $2 
trillion over

[[Page 456]]

10 years. People say, ``Why don't you pay down more?'' And for those of 
you who have debt, long-term debt, know there is a cost to prepaying 
debt. And it doesn't make any sense to pay a premium to prepay debt with 
the people's money. That's not good fiscal policy. It doesn't bring any 
common sense to the budget.
    But when we discuss debt, I also want Members of Congress to 
understand there is more than just Government debt. There is credit card 
debt that burdens working people. There is debt in the private sector. 
And it seems to make common sense to me that when we're planning what to 
do with the people's money that we not only pay debt at the national 
level, but we give people some of their own money back or don't take it 
in the first place, so they can manage their own debt, so that small 
businesses can manage their debt.
    I set aside money in our budget over a 10 year period, the 10-year 
budget, for contingencies. So there is a trillion over 10 that's not 
spent, just in case something comes up. What I'm trying to do is to lay 
out exactly what we've got planned for the country. We increase 
discretionary spending by 4 percent. That's greater than the rate of 
inflation. That's greater than most people's paychecks have risen by. We 
pay down debt by $2 trillion. We set aside a trillion debt of 
contingencies--I mean, $1 trillion of contingency money. And the debate 
is, what to do with the rest, because, you see, incredibly enough, as a 
result of your hard work and the tax burden on the American people, 
there is still money left over. And so what do we do?
    And by the way, before I tell you what I think we ought to do, I 
want you to know the assumptions in the plan are conservative 
assumptions. For example, over the 10 year period it is assumed our 
economy will grow at 3.2 percent. We can do better than that in America. 
We don't have to have such a pessimistic view of the productivity of the 
American people and the ingenuity of the entrepreneurs and the hard work 
of small-business people. We'll do better than that.
    So I want to assure my fellow Americans that the assumptions in the 
budget are very conservative assumptions. After all, in the first 4 
months of this year the cash flow coming into our Treasury is $40 
billion more than anticipated. And it seems like to me that if you're 
collecting $40 billion more than you thought, somebody is being 
overcharged.
    And so we've submitted a plan to Congress to provide meaningful tax 
relief. Let me give you some of the principles of the plan. First, I 
don't believe in targeting tax cuts. I don't think the U.S. Congress 
ought to be able to pick and choose the winners in society. ``You get 
the tax relief, and you don't get the tax relief.'' It makes sense that 
everybody who pays taxes, if we're going to have tax relief, ought to 
get tax relief. That's the fair way to do things.
    We need to begin the process of making the code more simple. And a 
good place to start is to reduce the number of rates there are. So we 
shrink the rates from five to four and drop all rates. The Tax Code is 
very unfair to people at the bottom end of the economic ladder. If 
you're struggling to get ahead in America, say for example, you're a 
single mom, raising children, and you're at the $22,000-a-year range, 
for every additional dollar you earn, the way this code is structured 
today, you pay a higher marginal rate on that dollar than someone who's 
making over $200,000. As the lady who's struggling to get ahead, trying 
to put food on the table for her family, makes additional dollars over 
time--if you're a waitress, for example, working late at night--that 
additional dollar is taxed at a higher rate than someone making 
$200,000. That's incredibly unfair, and it's certainly not what 
America's about, as far as I'm concerned.
    America ought to be about rewarding hard work, not punishing hard 
work. And so we drop the bottom rate from 15 percent to 10 percent and 
increase the child credit from $500 to $1,000 per child. The code is not 
only unfair at penalizing people who live on the outskirts of poverty, 
the code also sends the wrong signal when it comes to marriage. And we 
have a marriage penalty in the Tax Code that we need to fix. And so my 
plan that I'm submitting to Congress does just that.
    But I want to talk about two other aspects of the tax relief package 
that are very important and sometimes misunderstood. I strongly believe 
we need to drop the top rate from

[[Page 457]]

39.6 to 33 percent. I've heard all the rhetoric about what that means, 
and so have you. But overlooked in the political hyperbole that tends to 
take place in our process is the fact that dropping the top rate from 
39.6 to 33 percent serves as a stimulus to small-business growth in 
America.
    The Treasury Department released a report earlier today on small-
business owners who pay personal income taxes and small businesses which 
pay at the highest rate of 39.6. According to the Treasury Department, 
nationwide there are more than 17.4 million small-business owners and 
entrepreneurs who stand to benefit from dropping the top rate from 39.6 
to 33 percent.
    The role of Government is not to create wealth. The role of 
Government is to create an environment in which the entrepreneurial 
person in America who works hard and dreams big can realize his or her 
dreams. That's the role of Government.
    I've got three folks standing up here that will serve as vivid 
examples of small-business folks from respective States. And I want to 
explain the impact of what dropping the top rate means in terms of the 
number of people, number of small businesses, who will be affected. 
Again, I repeat for America to hear: Most small businesses don't pay 
corporate taxes; most small businesses are sole proprietors or 
Subchapter S's. And their businesses are subject to personal income tax 
rates.
    Patty Nathe of the State of Florida represents a State where there 
is one million small businesses and entrepreneurs who will benefit when 
we drop the top rate. Dennis Fugo from Ohio--Denise Fugo, who happens to 
be head of the National Restaurant Association, represents a State that 
has more than 630,000 small-business owners and entrepreneurs who will 
benefit. And Brad Drake from the State of South Dakota, an entrepreneur 
and small-business owner, represents a State with 55,000 small-business 
owners and entrepreneurs in a State who will benefit from dropping the 
top rate from 39.6 to 33 percent.
    It is very important for Congress to hear from you. It is also 
important for Congress to understand the impact small businesses have on 
our economy and to always keep that in mind. If we want to have a strong 
economy and a strong America, it is important to understand that small 
businesses generate 51 percent of the private sector GDP and that small 
businesses provide 75 percent of the net new jobs in America.
    The small-business owner is incredibly important to the future of 
this country. And this tax relief plan is aimed at encouraging capital 
formation and capital growth in the small-business sector of America. 
And the Congress must understand that and must hear from you all.
    The tax relief plan will increase cash flow of small businesses, 
giving folks more resources to buy more equipment and, as importantly, 
hire more workers. This tax relief plan gives people a chance from both 
political parties to send a clear signal that we are allies here in 
Washington of the small-business owner, not adversaries, that we 
encourage small business growth, that we understand the importance of 
the entrepreneur in the American economic sector.
    And I hope as you all become involved in this process, that you help 
fight through the noise, the background chatter, the kind of political 
clutter that tends to fog the real issue. And the real issue is, how do 
we get money in the pockets of our entrepreneurs, after we meet basic 
obligations of Government, after we increase discretionary spending by 4 
percent, and pay down taxes?
    The fundamental debate is, what to do? And the apologists, those who 
don't stand on the side of the entrepreneur, want to say, ``Use every 
excuse in the business to keep your money in Washington.'' They want to 
grow the size of Government. I don't. I want to grow the size of the 
private sector by giving you your money back.
    And there's another debate that's taking place that affects you 
directly. And it's about the death tax. I don't think it's fair to tax a 
person's assets twice. I don't think it's fair for the small-business 
owner or the farmer or the rancher to work their life so they can pass 
their asset or their business on to a relative or a family member and 
have it taxed twice, once when you make the income and secondly after 
you die. I hope--I hope--that you stand with us, not only to make sure 
that the tax relief plan is fair, staying with us to

[[Page 458]]

make sure that dropping that top rate--people hear what it does for the 
incredibly vital sector of America, the American economy, which is the 
small-business sector--but also stand with us in sending that message 
loud and clear, that we need to get rid of the death tax in the Tax 
Code.
    I urge you to let your Senator know, or Senators know, what your 
opinion is. I believe you can have a big impact on how folks think up 
here. I certainly feel like we're making progress by reminding people of 
the practicalities of budgeting and the commonsense approach to what to 
do with your money.
    But you need to let people know what they ought to be doing with 
your money, too. And a choice is--the choice is growing our economy or 
growing the Government. I just want to assure you that we've got ample 
money to meet our needs. And if we don't pass money back, I just know 
what's going to happen to it. It's going to be spent. [Laughter]
    It's like the grandmother in Council Bluffs, Iowa, said during a 
speech. She said she has baked a lot of cookies in her day. And she's 
seen children and grandchildren come through her house. And every time 
she's left the cookies on the plate, they have been eaten. [Laughter] 
And that's how I view the budget process. [Laughter]
    Finally, I want to urge you to be involved in your communities. I 
know you are in hiring people. But as entrepreneurs and concerned 
citizens, it's also important to be involved in your schools, to help 
fund and staff the programs that literally change America, one face at a 
time.
    You see, the great strength of America are the people of our 
country, the dreamers and doers and people who can accomplish things. 
People not only figure out how to make a living by using their brain but 
also figure out how to make their neighborhoods better by following 
their hearts. I hope you sponsor mentoring programs, so that all 
children feel like somebody cares about them in our society. I hope you 
get involved with after-school programs, that may be sponsored by the 
Boys and Girls Clubs of America. The greatness of the country really, 
really exists because Americans care about our future.
    There is a role for Government, but I understand how limited it is. 
I oftentimes tell people I wish I could sign the law that says we'll 
love each other like we'd like to loved ourself. That's not the role of 
Government. But it is the role of the President to lift the spirit of 
the country and to call upon the best. And the best are sitting right 
here. And I urge you to go back to your community and make a difference 
in somebody's life.
    God bless you all, and God bless America.

Note: The President spoke at 2:35 p.m. in the East Room at the White 
House. In his remarks, he referred to Secretary of Labor Elaine Lan 
Chao, who introduced the President.