[Weekly Compilation of Presidential Documents Volume 40, Number 51 (Monday, December 20, 2004)]
[Pages 2978-2985]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks at the Closing of the White House Conference on the Economy

December 16, 2004

    The President.  Thank you all very much. Go ahead and sit down. 
First, thank you all for participating in this important series of

[[Page 2979]]

seminars and speeches. I really thank you for sharing your time during 
what is a busy season. I particularly want to thank those who served on 
our panels for speaking clearly and helping people understand some of 
the issues that face our country. You know, it may be just that the 
panel on tax and regulatory burden could become the beloved holiday 
tradition here in Washington. [Laughter]
    I really appreciate the different backgrounds of the people who 
spoke. We had your entrepreneur. We had your academic. We had your 
corporate leader. We just had plain old citizens show up. And I really 
want to thank you. The panels I participated in I thought were great.
    It seems like to me there's some common themes that came through the 
discussions. First, our economy has come through a lot, and it's 
growing. I think people realize that, and that's positive. And there's a 
reason why people say it's growing, besides me, and that's because the 
facts say it's growing. I mean, we're growing at a pretty healthy rate 
of 4 percent over the last year. New jobs are being added. The 
manufacturing sector appears to be stronger. After all, they added 
86,000 new jobs since January. Housing ownership and housing starts are 
still very robust and strong. Interest rates and mortgage rates are low. 
And there's the ingredients for growth available.
    And what I also heard was that the good news shouldn't make us 
complacent. And I'm certainly not. The--one, I understand there's some 
areas of our country which are still struggling. I saw that firsthand 
during this past 90 days of active travel. There are some challenges as 
well that we heard about that we better get after and address now, 
before it's too late. And I intend to work with Members of the Congress 
and members here in this audience in the beginning of a new term to 
address the problems.
    And here's how I see some of the problems. One, we need to update 
our Tax Code. It needs to be easier to understand and more simple. We 
need to make sure our health care system meets the needs of tomorrow. 
It's got to be flexible in its application. Consumers have got to have 
more say in the market. We need to reform our legal systems so the 
people, on the one hand, can get justice; on the other hand, the justice 
system doesn't affect the flows of capital.
    Members of both parties are going to have to get together to work on 
this. This is not one of these series of issues that require a--one-half 
of the body to participate. These issues are big enough for all of us to 
need to work together. These are compelling national issues that require 
a national response.
    I will work hard as the President to get rid of zero-sum politics in 
Washington that says, ``Old George does fine if this passes, and my 
party doesn't.'' We've got to get rid of that. It's got to be that we 
all take risk and share risk and share in the rewards, so that this 
notion about one party benefits over the other if we happen to do 
something positive for our Nation no longer is the pervasive psychology 
here in Washington, DC.
    And I will remind people here in Washington that now is the time to 
confront problems. It's so much easier, in politics and in policy, to 
pass big problems on to future generations. That's an easy pass. But I 
didn't come up here to Washington--and I know a lot of people in my 
Cabinet didn't agree to serve--to pass problems on. I like to confront 
problems. I like to work with people so that we can say we left behind a 
better America after it's all said and done. And I don't have that much 
time here in Washington, so I'm going to--so I'm ready to work. And I 
want to thank you all for helping us highlight the issues that we have 
to work on.
    I want to thank the members of my Cabinet. I'm so pleased to be 
working on these problems with a fine Secretary of Treasury, John Snow. 
You still have a Ph.D., right? [Laughter] In spite of that, I'm 
confident we can get a lot done here in Washington. [Laughter]
    I want to thank my friend Donnie Evans, who's served so admirably 
here in 4 years. I'm going to miss him when he goes back to Texas. I 
appreciate Elaine Chao's service as the Secretary of Labor, and I'm 
pleased she'll be with this administration to work on these issues. 
Joshua Bolten, member of my Cabinet, head of the OMB--thanks for being 
here, Josh. Thanks for your good work. And finally, the Director of my 
National Economic Council, Steve Friedman, has done a

[[Page 2980]]

fabulous job. He has decided to go back into the private sector, for 
which I am a little hostile. [Laughter] But I appreciate your service, 
friend. Good job.
    One of the tests of leadership at all levels of government is to 
confront problems before they become a crisis. And we've heard about 
some of the problems. Let me refresh your memories about the problems we 
have discussed. First, we've heard a lot about the growing burden of 
lawsuits. We have a litigious society, and it is a problem that is clear 
and a problem that we will confront.
    According to a recent study, frivolous litigation has helped drive 
the total cost of America's tort system to more than $230 billion a 
year. That's a lot of lawsuits. The figure is more than twice the amount 
Americans spent on automobiles in 2002. A study published this summer 
showed that tort liability costs for many small businesses run at about 
$150,000 a year. That is a significant burden for a small business to 
bear. We believe, and many of you have--believe that that money can be 
better spent, that it's possible to have a justice system that is fair 
and balanced, that if you have a claim, you should be able to go to an 
uncluttered court to have your claim adjudicated.
    Tort costs in America are far higher than any other major 
industrialized nation. That is bad news for America. It means that other 
nations are able to have a judicial system that is fair and balanced, 
and we're not. It puts us at a competitive disadvantage. And in a world 
that is more closely knit, America and American workers cannot afford to 
be at a competitive disadvantage.
    And lawsuits can just plain ruin somebody's life. Donnie headed a 
seminar yesterday, and I happened to be there, and we heard the story of 
Hilda Bankston. I think Hilda is probably still here. There you go. 
First of all, Hilda was born in Nicaragua--verdad?
    Hilda Bankston. Guatemala.
    The President. Guatemala--see, I wasn't paying very close attention. 
[Laughter] Maybe I'll get the rest of the story right here. [Laughter] 
It's okay to correct the President, just not in front of all the TV 
cameras. [Laughter]
    She and her husband, Mitchell, owned a drugstore in Fayette, 
Mississippi. I've never been to Fayette. I suspect it's one of those 
classic town squares in a southern city where the pharmacist is an 
integral part of the community. People come and go; people probably like 
to hang out and dig the latest gossip and all that--talked about the 
high school football team. The store got swept up in massive litigation 
just because it dispensed prescriptions--certain prescriptions. Small 
pharmacy, main square, Fayette, Mississippi, and a class action lawsuit 
sucks them into the legal system. She sold the pharmacy 5 years ago. She 
has spent countless hours being drug into the court system.
    Here's what she said. She said, ``My husband and I lived the 
American Dream until we were caught up in what has become an American 
legal nightmare.'' She went on to say, ``I'm not a lawyer, but to me, 
something is wrong with our legal system when innocent bystanders are 
little more than pawns for lawyers seeking to strike it rich.''
    All Hilda asked for is a fair system, and the system right now isn't 
fair in this case. And we've got to do something about it. We've got to 
do something about it to make sure we're competitive. We've got to do 
something about it to make sure that there's not excessive costs, and 
we've got to do something about it to make sure people like Hilda don't 
get hurt by a system that was designed to protect people, not hurt 
people.
    The people in Congress must know that excess litigation is not only 
a drag on our economy, but it is a constant source of fear and 
uncertainty--creates fear and uncertainty for people in the business 
community. To keep the economy growing strong in the future, we have got 
to lift the burden and reform our legal systems. The Nation needs class 
action lawsuit reform. The Nation needs to have asbestos legal reform. 
And this Nation needs medical liability reform. I'm looking forward to 
working with Congress to get legal reform done quickly in the upcoming 
legislative session.
    We also heard about the rising cost of health care, which restricts 
access for our families and it makes it harder for employers to cover 
their workers. This problem is clear, and it will be confronted.

[[Page 2981]]

    More than half of the uninsured Americans work for small businesses. 
Small-business owners know their employers well, and the ones I've 
talked to understand they have an obligation and a duty to help take 
care of them. But there's some times they're just not able to do so, 
particularly in the society in which we live today. After all, health 
care premiums have risen by 83 percent per employee over the last 
decade.
    I just mentioned medical liability reform. There is no doubt in my 
mind, by passing real, substantive medical liability reform, it will 
help control the rising costs of health care. I believe small businesses 
should be allowed to join together to pool risk so they can negotiate 
for health care contracts just like big companies are able to do. And 
I'm pleased to report that we're--health savings accounts are beginning 
to work their way through our markets. After all, I just signed up for 
one 2 days ago. When it makes it to my level, you know it's going to be 
widespread these days. [Laughter] HSAs are making a difference.
    Chris Krupinski owns an art and design studio in Fairfax. I talked 
to her last night. She's pretty enthusiastic about HSAs. If you didn't 
hear her talk, you should have. First of all, she is a--she went to 
insurance agent after insurance agent after insurance agent trying to 
find something she could afford, and eventually, she was paying $900 a 
month for insurance for she and her family. Then she heard about health 
savings accounts, innovative ways for people to cover catastrophic care 
for their family, at the same time manage the cashflow needs--their own 
cashflow needs so they can provide primary care as well. Now she pays 
$340 a month for a high-deductible plan, and she puts $290 a month into 
her HSA--puts her own money in, money that will earn interest tax-free, 
money she can take out tax-free, money that's her own money, and she's 
saving money for her family at the same time. In other words, this 
innovative plan enables her to control her own destiny when it comes to 
health care and, at the same time, provides her comfort in knowing that 
if there is a catastrophe, the health insurance will cover it for she 
and her family. She's paying less overall. She chooses her own doctor. 
She saves her own money, and she makes the health care decisions.
    Fast-rising medical costs are a drag on this economy, and so there 
are some things we need to do together: One is expand health savings 
accounts; two, promote association health care plans--Congress needs to 
allow small businesses to pool risk; three, pass medical liability 
reform; four, continue to expand information technology throughout the 
health care system; five, move generic drugs faster to the market. In 
all we do, in all we do to reform health care, we've got to make sure 
the decisions are made by doctors and patients, not by bureaucrats in 
our Nation's Capital.
    A lot of talk in this conference about the Tax Code and Federal 
regulations and the fact that regulations and the Tax Code cost billions 
of dollars a year. In the campaign, in the course of the campaign, I 
said to people, ``The Tax Code is a complicated mess.'' Most people 
understood what I was talking about. Americans spend about 6 billion 
hours a year in filling out their tax returns, or at least trying to 
fill them out. [Laughter] The short form takes more than 11 hours to 
prepare. That's about the same amount of time it took to fill out the 
long form 10 years ago.
    In the last 4 years, we passed major tax relief, and some of it is 
getting ready to expire. Take, for example, the death tax. It's getting 
ready to--the relief is getting ready to expire. In other words, the 
tax--death tax in 2011 is going to come back into being. Frankly, it's 
going to make estate planning awfully interesting in the year 2010. 
[Laughter] I want you to know that the death tax takes up more than 300 
pages of laws and regulations in the current Tax Code. By getting rid of 
the death tax forever, we have simplified the code by 300 pages.
    And not only that, I think it's good public policy. And so does 
Craig Lang. I met him before. He's a dairy farmer from Brooklyn, Iowa. 
His family farm has been in the family since 1860. That's when his 
great-great-grandfather arrived in Iowa. I wonder if he arrived from 
Brooklyn, New York. That would have been interesting, wouldn't it? 
[Laughter] Kind of the life goes full cycle thing. Anyway, Craig wants 
his children, of course, to inherit the farm. When we talk

[[Page 2982]]

about the family farm, one way to make sure the family farm remains a 
family farm is that family members run the farm after the current 
generation moves on. He now, in order to deal with the death tax, which 
I hope expires forever, is now working with a lawyer, a CPA, and an 
insurance agent, just so he can structure things correctly to keep the 
farm in his own family.
    Here's what he said. He said, ``We pay property taxes. We pay income 
taxes, and we pay sales taxes every year. It's simply not fair to be 
taxed again for creating wealth.'' I think Craig has got a lot of dairy 
farmer wisdom. [Laughter] I believe, in order to keep this economy 
growing, in order to send the right message to people who are willing to 
risk capital, all the tax relief we passed must be made permanent. And 
that includes the repeal of the death tax.
    But I also understand that in order to deal with budget deficits, 
which we discussed the morning--this morning, we need to be tough when 
it comes to Federal spending. I look forward to working with Josh. 
Josh's job is to develop a budget that meets priorities and shows fiscal 
restraint. We believe it's possible to do so. As a matter of fact, we 
not only believe it's possible; we believe it is necessary to do so. It 
is important for our fellow citizens to know we're willing to 
prioritize. It's important for the markets to see that we've got enough 
discipline in Washington, DC, to make hard decisions with the people's 
money.
    I look forward to finishing our budget deliberations inside the 
White House. Upon completion, Josh will be sharing the news with the 
Members of Congress and the public. You will see fiscal discipline 
exercised inside the Oval Office this coming budget cycle.
    We understand the effects of paperwork on our administration. Again, 
Josh is in charge of making sure that this administration culls out, as 
best as possible, unnecessary regulation.
    I used to tease people when I was campaigning. We'd have these 
small-business forums--I see one of our participants over here--and I 
would say that I know you fill out paperwork, but what I don't know is 
whether anybody ever reads it in Washington. [Laughter] So one thing for 
certain is we've got to make sure that the paperwork which is never read 
is eliminated to the best extent possible, so our small businesses, in 
particular, and big businesses are able to focus their energies and 
their time and their capital on job creation.
    I'm going to appoint a citizens panel to study the Tax Code and 
recommend simplification proposals. Secretary Snow will be charged with 
that effort. The members of the panel will, of course, include tax 
experts. It will also have people who aren't experts--well, they're 
experts; they'll be experts in paying tax. [Laughter] The idea is to 
take a look at what's possible, what is necessary, and work with 
Congress to get something done to simplify the Tax Code. Now is the time 
to take on this important task.
    In the conference, we heard much about the problems in the education 
system, which is not fully preparing our citizens for the jobs of the 
future. There is no doubt in my mind that if we expect to remain 
competitive in the world, we must educate every child.
    Here is a startling statistic: Most new jobs in America are filled 
by people with at least 2 years of college. That's startling. What makes 
it even more startling is the fact that only one in four of our students 
gets there. That's a learning gap that must be closed. Twenty-five of 
the thirty fastest growing jobs in America require an education beyond 
high school. The median salary for someone with college experience is 69 
percent greater than for someone who never attended college. That's a 
pretty good selling point, to say to somebody, ``We want you to go to 
college.''
    Kay Haycock described the challenge--Kati Haycock described the 
challenge this way here at this forum. She said, ``There are a huge 
number of American kids who are doing all the things they're supposed to 
do in high school and don't come close to having the skills and 
knowledge they need to succeed.''
    We started to change the system here in Washington with the No Child 
Left Behind Act. I understand that it's created some consternation. And 
it's created consternation because, in return for increased Federal 
spending, we finally started asking the question,

[[Page 2983]]

``Can you read and write and add and subtract?'' It's never seemed to 
me--for some, that's called an unfunded mandate. To me, that's called a 
necessary mandate, to make sure our children can learn.
    All people who understand the importance of accountability are 
people who need to meet a bottom line, are people who are held 
accountable for signing up more accounts. Accountability is, in my 
judgment, crucial to making sure no child is left behind. How can you 
determine whether or not the curriculum--the reading curriculum you are 
using is working if you don't measure? How do you know whether or not 
the teacher training is working if you cannot measure to determine 
whether or not the pupils of a particular teacher are able to meet 
certain standards? How do you know how your school is doing relative to 
the school next door to you? How do you know how your State is doing 
relative to the State next door to you? How do you know how your 
children are doing relative to the world? You don't, unless you measure.
    Secondly, measuring allows you to correct problems early. And so 
what we have done here in Washington, DC, is we have said, ``In return 
for extra Federal money, we are going to insist that you measure.'' 
Notice I didn't say there would be a Federal test. That removes 
accountability away from those who are responsible for educating. It 
says, ``You develop a test. You develop accountability standards. We'll 
norm it around the country in a reasonable way without undermining local 
authority, but we want to know. We want to know. And where there's 
success, we'll help you heap praise upon those who deserve success. But 
where there's failure, we will collectively blow the whistle so that we 
start getting it right.''
    There is nothing worse than a school system--and I--you know, I was 
a Governor at one time, and I remember excuse-laden school systems. And 
I remember people going, ``Oh, my goodness, all of a sudden we're 
graduating children who can't read.'' And so we decided to do something 
about it, and that is get it done early, before it's too late. The No 
Child Left Behind Act is going to make a significant difference so long 
as Congress doesn't try to water it down.
    And now we need to bring high standards and accountability to our 
high schools. And we've got to make sure our job training programs are 
working, that the job training programs actually train people for the 
jobs that exist, which means consolidation and flexibility.
    I'm a big believer in the community college system in America. I 
think community colleges can help us address the needs and fill the 
achievement gap. I know community colleges are market-oriented places of 
higher education. They're affordable. They're accessible, and they're 
able to adjust to the demands of the local economy.
    Some of the most hopeful moments I've had as President have gone 
into communities and have seen the curriculum of a community college 
that has been adjusted to the demands of the local employer base, so 
that if jobs were lost, for example, in the North Carolina textile 
industry, there was an active, viable, vibrant community college system 
able to train workers to become nurses in the health care industry that 
was creating enormous amounts of jobs. The community college system and 
higher education, itself, must become--every young person must access 
our community college system and be prepared to do so--or higher 
education, in order for our economy to remain competitive as we head 
into the 21st century.
    Social Security reform, entitlement reform is an important topic we 
discussed today. You know, there's a--we talk about the deficit, and 
there is a short-term deficit here in Washington, which we're going to 
close in half over a 5-year period of time. But there is a long-term 
deficit as well. And that long-term deficit really is the unfunded 
liabilities of the entitlement programs which make up roughly two-thirds 
of the United States budget.
    One of the things that we heard today from experts was that the 
Social Security system is safe today but is in serious danger as we head 
down the road of the 21st century. And this problem has got to be 
confronted now. And we heard from people that know what they're talking 
about on this stage this morning, saying that it is a far easier problem 
to manage today than it will be if we continue postponing solutions.

[[Page 2984]]

    In 1950, there were 16 workers paying for every beneficiary. Today, 
there are about three, and when the younger workers retire, there will 
be only two workers per beneficiary. That should be a warning signal for 
those of us who are charged with having to confront problems and not 
pass them on to future Congresses or future generations. The system 
becomes untenable within a relatively quick period of time. The Social 
Security system is in the black today but in the long term has $10.4 
trillion in unfunded liability. That's trillion with a ``T.'' That means 
that a 20-year-old worker today is being promised retirement benefits 
that are 30 percent higher than the system can pay. By the year 2018, 
Social Security will pay out more in benefits than the Government 
collects in payroll taxes. And once that line into red has been crossed, 
the shortfalls will grow larger with each passing year. We have a 
problem.
    Now, some will say, ``Well, that's 2018. I'm not going to be 
around.'' But I don't think that's what a good public servant thinks--
should think. I think somebody who is charged with responsibly 
representing the people must look at the data that I just described and 
say, ``Now is the time to work together to confront the problem.'' I 
understand how Government works. Congressman Penny was talking about the 
last time we dealt with the Social Security issue in a real earnest way 
was when there was a crisis.
    A lot of Government, if the truth be known, is crisis-oriented 
management. You know, we wait and wait and wait, and then the crisis is 
upon us and everybody demands a solution. The problem with that when it 
comes to a modernization of Social Security is, is that the longer we 
wait, the more expensive the solution becomes. And so one of my jobs, 
one of my charges is to explain to Congress as clearly as I can, the 
crisis is now. You may not feel it. Your constituents may not be 
overwhelming you with letters demanding a fix now, but the crisis is 
now. And so why don't we work together to do so. I will also assure 
Members of Congress that this is an issue on which I campaigned, and I'm 
still standing. In other words, it's a--[applause].
    If anybody is interested in the politics of Social Security, here's 
my view. First of all, what has made Social Security a difficult issue 
to discuss is that many times when you discuss it, a flier would follow 
your discussion telling certain people in our society, generally those 
who have been on Social Security, that they're not going to get their 
check. I mean, that is fairly typical politics in the past. It really 
has been. And so people were afraid to address the issue, and I can 
understand why. If you talk about reforming Social Security, modernizing 
Social Security, you would get clobbered politically for it.
    But that dynamic began to shift recently--recently being, I think 
the 2000 election. President Clinton, after the '96 election, had a lot 
of very important panels on the subject. He began to lay the groundwork 
for substantive, real change. He felt comfortable discussing it. I felt 
comfortable campaigning on it in two elections. I'll tell you why: 
Because once you assure the seniors that nothing will change, you're 
really speaking to people that don't believe they're going to get a 
check at all, and that is the younger generation coming up. And 
therefore, the dynamic has shifted. And therefore, there's millions of 
people wondering whether or not the Government has the courage to do 
something to make sure a younger generation will have a viable 
retirement system available when they retire. And that's how I see the 
issue.
    I did talk about some principles during the course of the campaign: 
One was, nothing will change if you're retired or near retirement; two, 
I do not believe we should raise payroll taxes to try to fix the system; 
three, I do believe younger workers ought to be allowed to take some of 
their own money, some of their own payroll taxes, and, on a voluntary 
basis, set up a personal savings account, an account that will earn, an 
account that they manage, an account that earns a better rate of return 
than the current--that their money earns inside the current Social 
Security trust, an account that they can pass on from one generation to 
the next--in other words, it's your asset--and an account the Government 
can't take away.
    I am--one of my strong beliefs is that all public policy, to the 
extent possible, ought to encourage ownership in America. I believe in 
owning things. I think it will be healthy for our system for people to 
own and manage

[[Page 2985]]

their own retirement account. It will cause them to have a vital stake 
in public policy. People will ask more questions about fiscal 
responsibility than ever before. People will want to watch carefully 
decisions made by Government at all levels if they have a vital stake in 
watching their portfolio grow.
    I will also say again, like we said this morning, that people are 
not going to be allowed to take their own money for their retirement 
account and take it to Vegas to shoot dice. [Laughter] This is going to 
be a managed account, similar to the Thrift Savings Plans that we 
Federal employees have available to us now.
    These challenges I've just discussed are important challenges. They 
are big agenda items, but they should be. I mean, why think little when 
it comes to making sure America is still the center of excellence in the 
world? Great economies do not get weak all at once. They're kind of 
eaten away, you know, year by year, by challenges that people just 
refuse to meet. Slowly but surely, an economy, a great economy, can be 
eroded to the point of mediocrity. This Nation must never settle for 
mediocrity. This Nation must always, always strive for the best and 
leave behind a better America for our children and our grandchildren.
    And so we've got to confront the problems I just talked about, and I 
want to thank you all for coming to highlight the problems. I assure you 
that I understand that success in dealing with these problems will 
require strong cooperation in Washington, that I have a responsibility 
to reach out to members of both political parties, and I will meet that 
responsibility. I look forward to working with you all to help make 
clear that not only are the problems existing but there's reasonable 
solutions to solve them.
    In all we do, we've got to make sure that the American economy is 
flexible. One of the reasons why we're a great place in the world for 
people to do business and realize their dreams is because we have a 
flexible economy. We've got to make sure that we're always a competitive 
economy, we're willing to accept competition and take competition on. I 
happen to believe competition makes this a better world rather than a 
worse world. We've always got to stay on the leading edge of innovation. 
There's always got to be a proper role between Government and the 
economy. The role of Government is not to create wealth. The role of 
Government is to create an environment in which the entrepreneurial 
spirit is strong and vibrant.
    And as I said this morning, when we meet these challenges, we can 
say to ourselves and perhaps other generations will eventually say about 
us, ``Well done. You did the job you're supposed to do.''
    Thank you for helping us do our job. God bless. Thank you all.

Note: The President spoke at 1:27 p.m. at the Ronald Reagan Building and 
International Trade Center. In his remarks, he referred to Kati Haycock, 
director, Education Trust, Washington, DC; and former U.S. 
Representative Timothy J. Penny, senior fellow, Hubert H. Humphrey 
Institute of Public Affairs, University of Minnesota. The Office of the 
Press Secretary also released a Spanish language transcript of these 
remarks.