[Weekly Compilation of Presidential Documents Volume 39, Number 2 (Monday, January 13, 2003)]
[Pages 44-47]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks at the National Capital Flag Company in Alexandria, Virginia

January 9, 2003

    Thanks for having me, Al. First, we just had a really good 
discussion about how to make sure America is as promising as possible, 
how do we grow our economy, what's the role of Government, who do we 
trust when it comes to the people's money. And I want to thank Al for 
assembling the group and providing this opportunity for me to come and 
speak to you all and to the country about America.
    First, the great thing about America, it's represented by guys like 
Al. He owns his own business. It's his. He's realizing his dream. The 
true strength of America is the entrepreneurial spirit of America, is 
the fact that Al, who had gone from firefighter to CEO--it can happen--
and not only CEO, but CEO of a thriving business. And I know Al's wife 
and daughter are really proud of him for taking a risk.
    But by taking risk, he is not only realizing a dream, he's also 
helping other people find work. The backbone of the U.S. economy is the 
small business. And to be able to talk about economic vitality and 
growth in a small business is a joy for me.
    So thanks for having me. Thanks for what you do. Thanks for making 
all those flags that fly on the limousines. [Laughter] I'm proud to be 
traveling behind your flag. [Laughter]
    I want to thank Hector Barreto, who is the Administrator of the 
Small Business Administration, for being with us.
    I'm proud that our Senator from the State of Virginia is with us, 
George Allen. I'm honored George is here. He's a good fellow. If you've 
got any complaints about things, just take them to George. [Laughter] 
But I'm proud to call him friend.
    I want to thank the vice mayor of Alexandria who's here. Where are 
you? Thank you, sir. Mr. Mayor, thanks for coming. I'm honored you're 
here. My little brother is a resident of Alexandria, so go light on his 
property taxes. [Laughter] I'm going to try to go light on his income 
taxes. [Laughter]
     I appreciate so very much the folks that joined us to talk about 
their own individual circumstances and the policies that I've 
articulated. I am oftentimes asked, ``How is the economy doing?'' And 
it's doing pretty darn well, given the fact that we've been through a 
recession, which is three quarters of negative growth. We've been 
through an attack on America, which many folks in this neighborhood, 
obviously, witnessed the consequences of firsthand. That caused our 
economy to slow down. It caused people not to get on airplanes and go to 
hotels. It was a shock to our economy. And then we had some of our 
citizens not tell the truth, that they thought that they could fudge the 
numbers to get ahead. And that created a lack of confidence. And we've 
dealt with all three of these things, and our economy is growing.
    In spite of the fact that we had three major effects, the economy is 
showing positive growth. Matter of fact, we're the strongest, most 
resilient economy in the entire world, which should say something. So 
we're pretty darn good, but we're not good enough. And that's what I'm 
concerned about.
    I say we're not good enough because there are some in the corporate 
world that don't have the confidence to expand like they should be 
expanding, and too many of our citizens are looking for work. Too many 
people who want to work can't find a job, and that concerns me. And so 
one of my jobs is to deal with problems. If you see a problem, instead 
of hoping it goes away, just be forthright and lay out a plan to deal 
with it. And that's what I'm doing. That's what I did in Chicago, and 
that's what I 'm going to do again today, to talk about why I've--why I 
said what I think is important.
    First, in order to deal with the recession, in June of 2001, I 
signed a law that allowed people to keep more of their own money. In 
other words, it was tax relief for all citizens. We've reduced the tax 
rates for everybody who pays taxes. And it was phased in over a period 
of years for the sake of economic vitality. I mean, it was good enough 
in January of '01, the theory that if you let people have more of their 
own money, it

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would help the economy. That same theory still holds.
    See, if Congress thought it was good enough in '01 to let people 
keep more money, they ought to think about it's good enough in '03 to 
let people keep more of their own money. And the phase-in is in '04 and 
'06. And all we're asking Congress to do is take the law they've already 
passed and accelerate the tax relief to today. As a matter of fact, when 
they pass that, I'll then get the Treasury to make it retroactive. And 
if we make it retroactive, the Treasury will then account for that 
retroactivity, so that you get immediate money into the economy. You'll 
notice the effects of the tax relief quickly.
    All people who pay taxes should get tax relief. The tax relief is 
already in place. If tax relief is good enough 3 years from now for the 
American people, given the circumstances today, it's good enough today. 
And Congress needs to hear that. The plan is fair.
    And the other thing we're going to do is accelerate aspects. Not 
only the tax rate reductions but the marriage penalty ought to be 
accelerated. The benefits of the marriage--of reducing the marriage 
penalty ought to be accelerated. It's a little odd that we have a 
marriage penalty to begin with. [Laughter] It seems like we ought to not 
penalize marriage; we ought to encourage marriage.
    We ought to speed up the increase in the child credit. If you're a 
mom or a dad, you ought to get an increase in your child credit. And we 
ought to accelerate the reduction of the lowest tax rate from 15 percent 
to 10 percent. And these are all items that allow me to tell you that 92 
million Americans benefit from this.
    You hear a lot of talk in Washington, of course, about this benefits 
so-and-so, or this benefits this, the kind of the class warfare of 
politics. Let me just give you the facts that, under this plan, a family 
of four with an income of $40,000 will receive a 96-percent reduction in 
Federal income taxes.
    Now, that may not mean a lot of money to some of the big shots. It 
means a lot of money for the family of four making $40,000. The income 
taxes would drop from $1,178 a year to $45 a year. That's real 
significant money for this family. It's money that family would have to 
save, invest, to help with the credit-card squeeze. It's money that the 
family would have to make decisions on their behalf.
    Somebody asked me earlier, ``Why can't Congress see the wisdom of 
this?'' And one of the answers is, is that some in Congress would rather 
spend the money themselves as opposed to trusting you to spend your own 
money, at least that's how I view the debate.
    This tax relief is real, and it's significant. I was with Wayne and 
Candi--I was with Wayne. They're going to save $2,500 a year. The folks 
at the so-called roundtable--it happened to be square, by the way. 
[Laughter] Wayne was with us. We were talking about his family. Joe and 
Kristen, two hard-working Americans that have got two children, they'll 
have a yearly savings of $900, an 18-percent reduction in what they pay 
to the Federal Government.
    This is a fair plan. It is an important plan. And it's a plan that 
will help people find work, because it will help keep this economy 
growing.
    Secondly, one of the things in the plan is how do we affect the 
small-business owner. If 70 percent of the new jobs in America are 
created by small business, then we ought to be figuring out how to 
create incentives for small business to grow. That makes sense.
    The first thing is that most small businesses pay--file their small-
business income on their personal income tax returns. Most are small 
businesses or limited partnerships--most small businesses are limited 
partnerships or sole proprietorships. Al is not. He's a C corp, so he 
pays at the corporate level, but many small businesses are.
    So when you reduce the rates on everybody who pays taxes, you're 
reducing the taxes on small-business owners, which gives that small-
business owner more money to invest in the growth of the business, which 
means it's more likely he or she will be able to hire somebody 
additionally. When you reduce the income tax rates on Americans, you're 
affecting small business, and that's important for people to know. It's 
a fact, and it's a real fact.
    As well, I've asked the Congress to raise the deduction from $25,000 
to $75,000--in

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other words, the amount that a business can deduct from the investment 
of equipment. And this makes sense for a company like the National Flag 
Company. See, it is a capital-intensive business. It requires 
sophisticated machinery to run this business, as the folks who work here 
know. It's pretty darn sophisticated, isn't it? [Laughter]
    If this plan were to go through, the company, Al tells me, since he 
is the company, or part of the company, or the decisionmaker in the 
company, says that he would buy two more machines, which would create 
more job opportunities for people. In other words, this is a plan that 
says that if you are willing to take risk and invest more, that there's 
a benefit for doing so. It's an incentive for small business to 
increase.
    It's aimed at small business; it makes sense for small business. And 
if Al makes the decision to buy more equipment and to hire more people, 
imagine all the different Als around the country that are making the 
same decision. It's the cumulative effect of his decision as well as 
millions of others that will enable me to predict that more jobs will be 
created, more opportunities for growth. The people making the machines 
will have more opportunity. And it will have a positive effect 
throughout our entire economy.
    The third aspect of this plan is on dividends. A dividend is money 
that a company gives back to investors out of their profits. Right now 
this country taxes dividends twice--or income twice, in the sense. In 
other words, you tax the profit at the corporate level, and that's good. 
Profits should be taxed. And when the profit is distributed to an 
investor, it gets taxed. I don't think it's fair to tax that dollar 
twice. And I think the Congress ought to abolish the double taxation on 
dividends. That's a fair principle.
    And it will have other effects as well. Fifty percent or half of all 
the dividend income--50 percent of all the dividend income in America 
goes to our seniors. There's a way that seniors have been--many seniors 
have invested and use the dividend income as part of their retirement. 
If you get rid of the double taxation of dividends, you help seniors in 
their retirement, and that makes sense. That's good public policy, it 
seems like to me.
    The average tax savings for taxpayers 65 and older who receive 
dividends will be $936 per year, per tax return. That's--that will help. 
That will help people. Abolishing the double taxation will increase the 
return on responsible investing, which will draw more money into the 
markets, which will make it easier for people to have capital to build 
plant and equipment, which means more people will find work.
    I mean, this is a plan to encourage growth, focusing on jobs. And 
the Council of Economic Advisers has predicted that these proposals will 
create 2.1 million new jobs over the next 3 years. That's good for the 
American people. It's good for our economy.
    See, I want people who need to put bread--food on the table to be 
able to do so, more people working. They're looking for work and can't 
find work. That's--that's sad.
    I signed a bill yesterday, by the way, to extend unemployment 
benefits. I want to thank both Republicans and Democrats, Senator Allen 
and others, for getting that done. See, they showed yesterday that when 
they get their mind to something and forget politics and focus on the 
good of the American people, we can get some things done. And I signed 
the bill yesterday. They hadn't been in town but 2 days and got the bill 
to my desk, and that's good.
    They need to be thinking the same way about this jobs package. They 
need to understand that the proposal I made will put $59 billion out the 
door in 2003 alone, which is short-term stimulus. They need to 
understand that we've got to be thinking long-term for the United States 
of America, that the role of Government is not to create wealth but to 
create an environment in which the small business can grow to be a big 
business, in which people are comfortable about investing, in which 
people have the ultimate confidence in our system.
    We got a lot of big problems ahead of us here in America. We're 
fighting a war, and the war goes on. I knew that the farther we got away 
from September the 11th, the more likely it would be that I would 
continue to have to convince people that we live in a dangerous world, 
and we do.
    And this year, the year '03, we're going to do like we did last 
year; we're just going

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to keep hunting them down, one at a time. It doesn't matter where they 
try to hide. We'll find them and bring them to justice. We'll be dealing 
with weapons of mass destruction in order to make the world more 
peaceful.
    And here at home, we've got some obstacles to overcome as well. And 
one of those obstacles is to make sure people can find work, make sure 
this economy is strong and vibrant and hopeful, that the future is 
optimistic for every single citizen.
    But there's no doubt in my mind we'll overcome these obstacles. 
There's no doubt in my mind that the world is going to be a more 
peaceful place, because of the United States of America. There's no 
doubt in my mind that we'll prevail in the war on terror, no matter how 
long it takes. And there's no doubt in my mind, when Congress does the 
right thing, that more of our Americans will have a more hopeful future, 
because they'll be able to find work.
    Thank you, Al, for giving me a chance to come by. May God bless you 
and your families, and may God continue to bless the greatest nation on 
the face of the Earth, the United States of America.

Note: The President spoke at 10:05 a.m. in the company's sewing room. In 
his remarks, he referred to Albert Ulmer, Jr., president, National 
Capital Flag Company, his wife Joanne, and their daughter, Caitlin; Vice 
Mayor William Cleveland of Alexandria; and Wayne and Candi Page, and 
Joseph and Kristen Pappano, who participated in a roundtable discussion 
with the President prior to his remarks. The Office of the Press 
Secretary also released a Spanish language transcript of these remarks.