[Weekly Compilation of Presidential Documents Volume 41, Number 43 (Monday, October 31, 2005)]
[Pages 1600-1606]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
 Remarks to the Economic Club of Washington, DC

 October 26, 2005

     Thank you, all. It's about time you invited a President. [Laughter] 
Thanks for having me. As you know, there was an important Presidential 
election last year. There was a lot of debate, and the stakes were high. 
Fortunately for all of us here, it came out the right way. Vernon Jordan 
was elected president. [Laughter] My only regret is Vernon didn't tell 
me this was lunch. [Laughter] I was looking for some warm food.
     But it's good to be here; thanks for inviting. I appreciate all of 
you taking a lead in the economic vitality of this in--city. It's--as a 
part-time resident, I'm pulling for a good economy and job creation. 
Most of all, I appreciate the fact that you provide scholarships for 
graduate students. I think it's a noble cause to do that. It's 
impressive that you understand that we have a duty to pay back to 
society. And the idea of providing scholarships for graduate students 
who want to study economics and business is a good idea, and I hope you 
keep doing it.
     You know, one of the important things about America is that in a 
capitalist system people who benefit from the system understand there's 
an obligation to put something back into the system, an obligation to 
help people in need. And I want to thank you for leading the way.
     I appreciate the board of directors having me here. I appreciate 
the DC government officials who are here.
     I'm going to talk a little bit about the economy. My most important 
duty as regards the economy is to foster an economic environment that 
encourages entrepreneurship. Government does not create wealth. The role 
of Government is to create an environment in which people can feel 
comfortable risking capital and realizing dreams. That's how I view my 
role.
     I took a step toward that--I took an important step last Monday 
when I nominated a distinguished economist named Ben

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Bernanke. Perhaps some of you know him. He's a decent man. He brings 
impeccable credentials and sound policy judgment and sound character to 
this vital post. And he will continue the superb leadership that Alan 
Greenspan has provided at the Fed.
     We have got a resilient and strong economy. If you think about what 
this economy has been through, I think you'll agree with me it's been 
resilient and strong. In the past 5 years--that happens to be the amount 
of time I've been here--this economy has been through a stock market 
bubble. We've been through a recession. We had the attacks of September 
the 11th. We had corporate scandals. We've had the rising price of 
energy, and we've had natural disasters. And these were shocks to our 
system. It required action to make sure America was a good place to risk 
capital. They forced us to make choices here in Washington. We could 
have tried to solve problems by raising taxes and dictating solutions 
from the Nation's Capital. That's not the route I decided to go.
     We gave Americans an opportunity to keep more of what they earn and 
let them decide the best way to save and spend and invest their money. 
To get our economy moving again, this administration has followed a 
clear principle: We put our trust in the hard work and good sense of the 
American people.
     And so that's why we cut the taxes. We cut taxes on families by 
lowering the rates. We cut taxes on the child credit. We reduced the 
marriage penalty. We cut taxes on dividends and capital gains to 
encourage investment. We cut taxes on small-business owners who often 
pay their business taxes at the individual income-tax rate. We created 
incentives for small businesses to invest in new equipment, expand, and 
create jobs. And to help our families and our farmers and entrepreneurs 
pass on the results of a lifetime of hard work to their loved ones, we 
put the death tax on the road to extinction.
     These progrowth policies have worked. Real disposable personal 
income has grown by nearly $1,900 per capita. Homeownership has reached 
an alltime high. More minorities own a home today in America than ever 
before in our Nation's history. Productivity is growing at the fastest 
rate in nearly 40 years.
     Over the past 28 months, America's entrepreneurs and--have created 
more than 4.2 million new jobs. The unemployment rate is 5.1 percent. 
That's lower than the average rate of the 1970s, 1980s, and 1990s. These 
policies have helped us achieve a growth rate of 3.6 percent over the 
past year, more than 3 times that of Europe and nearly twice that of 
Japan. The unemployment rate is roughly half of the unemployment rates 
in Germany and France--I might remind you, countries where workers and 
businesses face higher taxes, a lot of regulation, and big Government. 
When people in these countries look for a place to invest their savings, 
by the way, they look right here to the United States of America.
     Our economic policies have helped create jobs, growth, and 
opportunity, yet every day brings new and stiff competition for our 
Nation's workers and businesses. In the coming decades, there's going to 
be a time of great opportunity if we make the right decisions, if 
Government doesn't foul it up. So we're moving forward with an agenda to 
ensure that America is entrepreneurial heaven, the place where people 
can realize their dreams.
     The agenda starts with keeping taxes low and restraining the 
spending appetite of the Federal Government. Tax relief left more money 
in the pockets of the people, and that's been a vital part of the growth 
of our economy. Yet, tax relief is set to expire in the years ahead. We 
need certainty in the Tax Code. We need to say to our risktakers, 
``Here's the way the Tax Code is going to look in the years ahead.'' 
Therefore, I think it's important that we make the tax relief permanent.
     As we provide more incentives for people to work and invest, tax 
relief has led to faster economic growth, which is translated into 
faster revenue for the Federal Treasury. This year, thanks to rising 
revenues and wise fiscal policy, the deficit was $108 billion less than 
expected. To continue reducing the deficit, we need to keep the taxes 
low, and we've got to redouble our efforts to be wise about how we spend 
your money.
     Earlier this year, I submitted the most disciplined proposal for 
nonsecurity discretionary spending since Ronald Reagan was in the White 
House. My budget proposed

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an actual cut in spending on nonsecurity discretionary spending. 
Congress needs to make that cut real. And I'm open to a further across-
the-board spending cut as well. My budget has proposed vital reforms in 
mandatory spending that will save the taxpayers $187 billion over the 
next decade, part of our plan to cut our deficit in half by 2009.
     Some have said that the unprecedented destruction caused by the 
recent hurricanes means that we've put--got to put our plans to cut the 
deficit on hold. I disagree. We don't have to do that. We can help the 
people of the gulf coast region recover and rebuild, and we can be good 
stewards of the taxpayers' dollars at the same time, which means we're 
going to have to reduce unnecessary spending elsewhere in the budget. My 
administration is working with Congress to identify offsets and spending 
rescissions so we can provide for emergency relief in a fiscally 
responsible way.
     I met with the leader of the House and the Senate today, and we're 
working on a plan for pushing significant reductions in mandatory and 
discretionary spending. Both Houses are on progress--making progress 
toward cuts that'll show the American people we're capable of being wise 
about the money and at the same time, meet our priorities. I encourage 
Congress to push the envelope when it comes to cutting spending.
     See, believe it or not, up here in Washington, there's a lot of 
programs that simply don't deliver results. [Laughter] And if it doesn't 
deliver results, we ought to get rid of them. That will help us meet our 
priorities, winning the war on terror and helping the people down there 
in Katrina, making sure our kids get educated.
     If we keep taxes low and restrain spending, we also have got some 
other long-term challenges to the economy. This economy of ours, as I 
mentioned, has shown resilience because it's flexible and responsive. 
But there are three broad challenges we've got to confront. First is, we 
all must be concerned about our growing dependence on foreign sources of 
energy. Our families and businesses are hurting because of higher 
gasoline prices. It's like a hidden tax on the American people. Gasoline 
prices drain the budgets of our families. They run up the cost on the 
small-business owners.
     And the damage inflicted by Hurricanes Katrina and Rita pushed the 
prices even higher, disrupting oil and natural gas and gasoline 
production along the gulf coast. These natural disasters have 
highlighted a problem that Congress needs to pay attention to. It's a 
problem I've been talking about since I first came to Washington: Our 
energy supplies are not keeping up with consumption, and that's why 
people's prices are going up.
     Now, I appreciate the work of Congress. I signed a good energy bill 
this summer. The bill makes an unprecedented commitment to energy 
conservation and efficiency by promoting new technologies and giving 
consumers incentives to use energy-saving products. And that was an 
important title, the energy bill, the conservation title. The bill helps 
America make cleaner and more productive use of our existing energy 
resources, like coal and oil and natural gas. And for the sake of energy 
independence, I know that we can build safe and efficient nuclear 
powerplants, and this country needs to get after it.
     This bill helps diversify our supply by promoting alternative and 
renewable energy sources such as ethanol and biodiesel. And we're making 
progress in developing the technologies that'll be able to use corn or 
soybeans to be the feedstock for energy. I mean, it makes sense, doesn't 
it? We grow a lot of corn, and we grow a lot of soybeans. I hope one 
day, the President is sitting in the Oval Office and somebody walks in 
and says, ``Hey, the crops are strong this year. It means we're less 
dependent on foreign sources of energy.''
     The bill also helps promote needed investment in our energy 
infrastructure. It's a good piece of legislation. But it's only a first 
step. Congress needs to take more steps. We've got to allow 
environmentally responsible oil exploration in the Arctic National 
Wildlife Refuge, if we want to become less dependent on foreign sources 
of energy. We need to build and expand our refineries. Do you realize we 
have not built a new refinery since the early 1970s in America? People 
wonder why the gasoline price goes up. It's because we don't have enough 
supply. People are conserving more, and that's good. But we

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need more supply of gasoline, for the sake of our consumers and for the 
sake of our economy. And so I'm going to work with Congress to pass a 
bill that makes it easier for current refineries to expand, that 
encourages the construction of new refineries so that we've got more 
affordable fuel for the American people.
     In the long term, reducing our dependence on foreign oil requires 
looking beyond fossil fuels. So we're making investments necessary to 
move from a hydrocarbon economy to a hydrogen economy. In other words, 
what I'm telling you is, is that investments in technologies are going 
to allow us to diversify away from the era of oil and gas. In 2003, we 
launched an aggressive program called the Hydrogen Fuel Initiative. When 
hydrogen is used in a fuel cell, it can power consumer products from 
computers to cell phones to cars that emit pure water instead of exhaust 
fumes. And I appreciate the Congress in dedicating $1.2 billion into 
hydrogen fuel research. Here's the dream--and I think it's going to 
happen--that your children--your grandchildren, for some of you--
[laughter]--children, for the younger--will be able to take their 
driver's test in an automobile powered by hydrogen.
     Secondly, we've got to ensure that we have an education system that 
prepares a new generation of American workers to fill the jobs of the 
21st century. And that starts with making sure we get it right at the 
elementary schools. I want to thank Members of Congress for working with 
me on the No Child Left Behind Act. Let me tell you the philosophy 
behind that. I don't believe you can solve problems unless you measure. 
If you're running a business, it's hard to solve problems if you don't 
measure. And so inherent in the No Child Left Behind Act is the 
following philosophy: One, every child can learn, and we want to know if 
they are learning. You see, a system that doesn't hold people to account 
basically assumes certain children can't learn, and it's okay just to 
shuffle them through the school. That's unacceptable in America, as far 
as I'm concerned.
     The No Child Left Behind Act challenges what I've called the soft 
bigotry of low expectations by raising standards and raising 
accountability and says to the school districts, ``We'll get you money 
for--particularly your Title I students--but you measure; you measure in 
the early grades to show us whether or not a child can read and write 
and add and subtract. And if not, do something about it; change.'' And 
we're beginning to see results.
     On this year's NAEP test, fourth grade reading scores were six 
points higher than in the year 2000. That's progress. Fourth grade math 
scores were the highest in the history of the test. Minority students 
made progress toward achieving--closing an achievement gap in America, a 
gap which, by the way, is unacceptable in this country. And there's more 
work to be done.
     I think we ought to extend the same high standards and 
accountability to our high schools so that when somebody graduates from 
high school, the diploma means something. Most of the jobs in the 21st 
century will demand advanced training and technical expertise, as well 
as retraining over the course of a lifetime. That's why I'm such a 
strong believer in the community college system.
     We've got programs out of the Labor Department that simplifies the 
job training programs, that diversifies them and that streamlines them 
from their inadequate bureaucracies. It's unbelievable what--the strings 
attached to job training money here in Washington, DC, so we're trying 
to eliminate those strings so the money goes to places that are actually 
providing a result. I've traveled this country, and I've been to 
community colleges all over that are doing a fantastic job by giving the 
people the skills for the jobs which actually exist. And so we're going 
to continue pursuing a strong job training program in institutions that 
work and that are capable, that have got curriculum that are flexible 
and schools that are affordable, and people that are trained--being 
trained for jobs which are actually existing.
     And finally, we've got to make sure more Americans can go to 4-year 
colleges, and so we've provided more assistance in the form of Pell 
grants. To make sure that the economic environment in this country is 
conducive to growth, we've got to make sure our workforce is educated.

[[Page 1604]]

     Thirdly, we must have a health care system that puts patients in 
charge of decisions, that offers greater choice, and allows workers to 
own their own health care. Listen, I understand the rising cost of 
health care has imposed large costs on your businesses and on our 
families. But we've begun to make changes here in Washington. I was 
pleased to sign a bill that confronts costs and creates choice by giving 
Americans the option of health savings accounts. It's a really 
innovative product that gives you affordable coverage for major 
illnesses and allows the worker to save money tax-free for routine 
medical expenses. It puts the consumer in charge of making health care 
decisions.
     Once you have your HSA, by the way, you can roll over money on a 
tax-free basis year to year, and you can take it with you from job to 
job. I strongly urge you to look into HSAs if you're running a business 
here. Many Americans are already benefiting from the security and--of 
HSAs. I proposed tax relief for individuals and employers and low-income 
families to use HSAs, and I hope the Congress responds.
     As we make health care more accessible and affordable, we're 
strengthening the safety net. When I came to office, I pledged to open 
or expand 1,200 community health centers to serve an additional 6.1 
million people in need of health care. So far, we've opened or expanded 
more than 800 community health centers. These are cost-effective, smart 
facilities. It helps the poor and the indigent get much needed primary 
care. The budget for 2006 provides funding to open or expand more than 
500 more community health centers.
     We also renewed the promise of Medicare. Medicare is a really 
important program, obviously. It needed to be reformed. If you're going 
to have a health care system for the elderly, it seemed like to me the 
health care system ought to be modern. Do you realize, prior to the 
reforms that the Congress passed and I proudly signed, Medicare would 
pay $100,000 for a heart surgery but not a dime for the prescription 
drugs that would prevent the heart surgery from being needed in the 
first place? The system was outdated, and it didn't make sense.
     And so I worked with Congress for the most significant reform since 
Medicare was established. Inherent in that bill is not only modernizing 
the medicine that people get, but it also gives seniors choices. I 
believe if consumers have more choices, it helps to control cost and 
enhances the quality of a product someone is able to get.
     I also believe that we ought to have what's called association 
health plans, which will allow small businesses to pool across 
jurisdictional boundaries, to be able to afford insurance at the same 
discounts that big businesses get. It's a commonsense way to help small 
businesses insure people. The bill got out of the House; it's stuck in 
the Senate. The Senate, if they are concerned about the cost of health 
care for our small businesses, needs to pass association health plans.
     And finally, we're working to expand information technology in the 
field of medicine. If you've ever looked at the IT part of medicine, 
you'll be amazed at how backwards it is. I mean, it's easier to get 
information on buying a car than it is on health care items. And that 
doesn't make any sense. So we've got a goal to computerize medical 
records that will help make America's health care more transparent and 
more efficient, which will help patients make rational choices and help 
doctors save lives.
     To reduce the cost of health care, we've got to do something about 
medical liability. We've got a problem in America. I've been to States 
where they have trouble finding an ob-gyn because they're getting--these 
good docs are getting sued out of business. It just doesn't make any 
sense to have a medical liability system that's out of control.
     When I first came up here--these former Governors will be pleased 
to hear--I thought that medical liability was mainly a State issue, 
until I realized that there's tremendous cost to the--to Federal 
medicine. And after all, we're paying for Medicaid and Medicare and 
veterans benefits. And when the docs who are getting reimbursed by the 
Federal Government practice defensive medicine, it runs up the cost to 
the taxpayers. And when the premiums on their policies go up as a result 
of these junk lawsuits, it runs up the cost to the taxpayers. I've come 
to the conclusion that medical liability is a national issue that

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requires a national response. I got a good bill out of the House. The 
Senate needs to pass medical liability reform so medicine is available 
and affordable for the American citizens.
     And speaking about tort reform, a part of making sure America is 
competitive in the world and this is a good place to risk capital, we 
need more tort reform out of the Congress. We took an important step 
when we passed class-action reform and bankruptcy reform. I signed a 
bill today that said if you manufacture a legal product, you shouldn't 
get sued for it. Now the House and the Senate need meaningful asbestos 
reform, and they need to get it to my desk as soon as possible.
     We also need to confront the long-term problems confronting our 
entitlements. If this country wants to stay competitive throughout the 
21st century, we have got to do something about Social Security and 
Medicare. And, as you know, I have brought up the--they told me not to 
talk about it when I first got up here. [Laughter] But I've been talking 
about it ever since I've been running and--for President and since I've 
been the President, because I believe the job of a President is to 
confront problems and not pass them on to future Presidents and future 
Congresses.
     And we've got a problem. It starts with the fact that baby boomers 
like me are getting ready to retire. It just so happens I turn 62 in the 
year 2008, which is quite convenient. [Laughter] And there's a lot of 
me. I'm getting--[laughter]--a lot of people like me. [Laughter] I mean, 
there are millions and millions of baby boomers relative to the folks 
that are going to be paying for my retirement and your retirement. The 
system is going broke. You know, I give a lot of speeches and look out 
in the audience and see people working hard to pay their payroll taxes, 
and they're paying payroll taxes into a system that's just not going to 
be around unless we do something about it.
     And so I've made some proposals to the Congress, proposals that 
work with how fast benefits will go up, proposals that said, ``If you're 
in the--a poor American, nothing is going to change for you. If you're a 
wealthy American, your benefits will grow, but at a slower rate.''
     We also have a fantastic opportunity as we strengthen and modernize 
Social Security to allow younger workers, if they so choose, to put a 
part--some of their own money in a personal savings account so they can 
take advantage of the compound rate of interest, a personal savings 
account they get to call their own, asset base the Government can't take 
away, an asset base that somebody can pass on to whomever he or she 
chooses.
     Part of our mission has got to be to encourage ownership in 
America. And one way to spread ownership throughout our society into 
neighborhoods where some may not own anything, is to allow them to save 
some of their own money--their choice--in a personal savings account as 
part of Social Security reform.
     I'm going to continue to talk to the American people on this issue 
and insist that Congress do the right thing and work together to save 
Social Security.
     And finally, we've all got to remember we live in a global economy. 
This country is home to about 5 percent of the world's population, which 
means 95 percent of potential customers live abroad. Millions of 
Americans--at least their jobs--depend on exports. And so to keep this 
economy growing and creating jobs, we've got to continue to open up 
markets for American products.
     When I came to Congress--when I came to office, I asked Congress to 
grant trade promotion authority. My administration has put that 
authority to good use. We've completed free trade agreements with 12 
nations on 5 continents. We've opened a combined market of 124 million 
consumers for American products. Earlier this year, we completed a free 
trade agreement with Central American nations that gives our goods and 
services the same access in Central America that their goods already get 
here. In other words, we leveled the playing field. My attitude is, is 
that our producers and farmers and workers can compete with anybody, 
anytime, anywhere, so long as the playing field is level.
     To continue to open up new markets for goods and services and farm 
products, we have got to work for a free and fair global trading system. 
The United States has taken

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a leadership role in working toward a successful conclusion to the Doha 
trade negotiations at the World Trade Organization. A successful Doha 
round will reduce and then eliminate tariffs and other barriers on farm 
and industrial goods, will phase out unfair agricultural subsidies and 
open up global markets for services and products and leave all nations 
better off. The Doha negotiations are now at a critical point.
     Recently, the United States has come forward with a bold proposal 
in the critical area of agriculture to reenergize the talks. Now other 
nations must come forward with similarly ambitious proposals. Together 
we have an historic opportunity to knock down trade barriers and create 
economic growth and reduce poverty throughout the world. As Presidents 
from John Kennedy to Ronald Reagan to Bill Clinton have recognized, 
trade is the most certain path to lasting prosperity for people not only 
here but around the world. So I'm going to continue to pursue trade 
agreements on a bilateral, regional, and global level, to open up 
markets and to maintain our position as a strong economy in the world.
     It's important that people in Washington not use trade as a 
political issue. The objective is to have strong support from 
Republicans and independents and discerning Democrats, like Vernon 
Jordan. [Laughter] I've been disappointed with how the trade debates 
have gone in Washington. In the 1990s, many Democrats supported 
important trade agreements such as NAFTA. Fewer and fewer Democrats 
today are willing to stand by that position and support trade bills that 
are good for American workers. It's time to get politics out of trade 
policy and focus on what's best for the United States of America.
     I appreciate you giving me a chance to come by and visit with you 
about the economy. We'll keep making the decisions necessary to ensure 
that the entrepreneurial spirit is strong, that the small-business 
sector can grow, and that people have got a chance to realize their 
dreams.
     We've got a remarkable country, when you think about it. I mean, 
think about a land where a person can come here from anywhere or grow up 
in a neighborhood, maybe, where there's no hope, and they have a dream 
of starting their own business and creating wealth and raising a family 
and owning a home. It's possible in this country. It's not only 
possible; it's likely, if you work hard. That's the greatest thing about 
our country. You know, it's such an honor to travel the world, and it 
always strikes me about how bright the American future is for people.
     And our job in Washington is to keep it bright and to keep it 
hopeful and keep making decisions that end up encouraging people to work 
hard and realize their dreams. This economy is strong. It's going to 
stay strong. And I appreciate you're working to keep it that way.
     Thanks for having me. Mr. President, I appreciate the invitation. 
May God bless you all.

  Note:  The President spoke at 1:02 p.m. at the J.W. Marriott Hotel. In 
his remarks, he referred to Vernon E. Jordan Jr., president, Economic 
Club of Washington, DC. The President also referred to Title I of the 
Improving America's Schools Act of 1994 (Public Law No. 103-382), which 
amended Title I of the Elementary and Secondary Education Act of 1965 
(Public Law No. 89-10).