    [Weekly Compilation of Presidential Documents Volume 42, Number 6 (Monday, February 13, 2006)]
    [Pages 213-215]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Remarks on Signing the Deficit Reduction Act of 2005

    February 8, 2006

        Please be seated. Thanks for coming. Welcome to the White House. In
    a few moments, I will sign the Deficit Reduction Act of 2005. This
    important piece of legislation restrains Federal spending, and it will
    leave more money in the pockets of those who know how to use it best,
    the American people.
        I appreciate the Vice President being here. Mr. Speaker, welcome,
    Leader Frist--thank you all for coming. Senator McConnell; Senator
    Santorum; Senator Judd Gregg, chairman of the Senate Budget Committee;
    Congressman John Boehner, the House Majority Leader; Roy Blunt, the
    House Majority Whip; Congressman Nussle, chairman of the House Budget
    Committee; I want to thank you all for coming. I appreciate the members
    of the Cabinet who are here, as well as all the Members of the United
    States Congress and the Senate who have come for this important bill
    signing.
        Our economy is strong, and it's getting stronger. We're now entering
    our fifth year of uninterrupted economic growth, and last year our
    economy grew at a healthy 3.5 percent. Real after-tax income is up
    nearly 8 percent per American since 2001. Productivity growth is high.
    Small businesses are thriving. America has added 4.7 million new jobs
    over the last 2\1/2\ years. The unemployment rate is down to 4.7
    percent--the lowest level since July 2001.
        Our economy leads the world, yet we cannot be complacent. To keep
    our economic momentum, we need to look at the challenges down the road
    and respond with wise policies now. And one of the most important
    policies we need to pursue is spending restraint in Washington, DC.
        Earlier this week, I sent Congress a disciplined Federal budget for
    2007, and this morning I traveled to New Hampshire with Chairman Gregg,
    Senator Sununu, Congressman Bass, and Congressman Bradley to discuss the
    new budget proposal in detail. The budget strategy begins with keeping
    taxes low so that Americans can spend, save, and invest more of their
    own money--and that will help keep our economy growing and creating
    jobs. My budget funds our priorities, starting with funding the United
    States military, promoting alternative sources of energy, investing in
    math and science education and basic research, and helping to care for
    the poor and the elderly.
        At the same time, my budget tightens the belt on Government
    spending. Every American family has to set priorities and live within a
    budget, and the American people expect us to do the same right here in
    Washington, DC.
        The Federal budget has two types of spending, discretionary spending
    and mandatory spending. Discretionary spending is the kind of spending
    Congress votes on every year. Last year, Congress met my request and
    passed bills that cut discretionary spending not related to defense or
    homeland security. And this year, my budget again proposes to cut this
    spending. My budget also proposes again to keep the growth in overall
    discretionary spending below the rate of inflation,

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    so we can stay on track to cut the deficit in half by 2009.
        In the long run, the biggest challenge to our budget is mandatory
    spending--or entitlement programs like Medicare and Medicaid and Social
    Security. Entitlement spending is determined by a specific formula, and
    it rises automatically, year after year, unless the Congress intervenes.
    Together, Medicare, Medicaid, and Social Security are now growing faster
    than the economy, faster than the population, and nearly three times the
    rate of inflation. And the retirement of baby boom generation will put
    even more strains on these programs. By 2030, spending for Medicare,
    Medicaid, and Social Security alone will be almost 60 percent of the
    entire Federal budget. And that will leave future generations with
    impossible choices: staggering tax increases, immense deficits, or deep
    cuts in every category of spending.
        Bringing entitlement spending under control is a critical priority
    of our Government. We need to slow the annual growth of entitlement
    programs to levels that we can afford--we do not need to cut these
    programs. There is an important distinction; it is the difference
    between slowing your car down to the speed limit or putting your car
    into reverse. By making wise reforms that will reduce the annual growth
    of mandatory spending, the Deficit Reduction Act will save taxpayers
    nearly $40 billion over the next 5 years; that's about $300 per
    taxpayer.
        The Deficit Reduction Act is estimated to slow the pace of spending
    growth in both Medicare and Medicaid. Medicare is a Federal program that
    provides health care for older Americans. Medicaid is a program
    administered in conjunction with the States that provides health care
    for low-income Americans, family with children, and some seniors. These
    programs are providing vital services to millions of Americans in need,
    yet the costs of Medicare and Medicaid are straining budgets at both the
    State and Federal level. The bill I sign today restrains spending for
    entitlement programs, while ensuring that Americans who rely on Medicare
    and Medicaid continue to get the care they need.
        The Deficit Reduction Act is estimated to reduce the growth in
    Medicare spending by more than $6 billion over the next 5 years. The
    bill, together with the Medicare act of 2003, requires wealthier
    citizens to pay higher premiums for their Medicare coverage. The savings
    created by this reform and others will make it possible to increase
    Federal funding for important areas like kidney dialysis and rural
    hospitals. With this bill, we're showing that we can keep the promise of
    Medicare and be good stewards of the taxpayers' money at the same time.
        The Deficit Reduction Act will also reduce the growth in Medicaid
    spending by nearly $5 billion over the next 5 years. This bill helps
    restrain Medicaid spending by reducing Federal overpayment for
    prescription drugs. Taxpayers should not have to pay inflated markups
    for the medicine that the people on Medicaid depend. The bill gives
    Governors more flexibility to design Medicaid benefits that meet the
    needs of their States efficiently and affordably. The bill tightens the
    loopholes that allowed people to game the system by transferring assets
    to their children so they can qualify for Medicaid benefits. Along with
    Governors of both parties, we are sending a clear message: Medicaid will
    always provide help for those in need, but we will never tolerate waste,
    fraud, or abuse.
        The Deficit Reduction Act's reforms in Medicare and Medicaid are a
    step on the road to long-term stability for these important programs.
    Now we need to continue finding ways to make Medicare and Medicaid more
    efficient. My budget next year proposes another $36 billion in savings
    on Medicare and more than a billion in savings on Medicaid. Budget
    proposals will slow the annual growth in Medicare over the next 5 years
    from 8.1 percent to 7.7 percent. That seems reasonable. And together
    with the bill I sign today, my budget will slow the average annual
    growth of Medicaid over the next 5 years from 6.9 percent a year to 6.6
    percent a year. This is progress in the right direction, but these
    growth rates are still unsustainable.
        In the long run, ensuring the stability of Medicare and Medicaid
    requires structural reform. So I have proposed a bipartisan commission
    to examine the full impact of baby

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    boomer retirements on Medicare and Medicaid as well as Social Security.
    The commission will include Members of Congress from both political
    parties. It will recommend long-term solutions that will keep the
    promise of these vital programs while addressing their growing costs. I
    look forward to working with Congress to get this problem solved for
    generations to come.
        As the Deficit Reduction Act delivers savings in mandatory spending,
    it also shows the compassion of America. This bill provides new
    resources for programs that serve some of our citizens with the greatest
    needs--including hurricane victims, children, and low-income families
    struggling to pay their heating bills.
        The Deficit Reduction Act makes important improvements to Federal
    student loan programs. The bill cuts excess Government subsidies to
    lenders and makes other reforms that will help us reduce overall student
    loan costs by about $22 billion. With that money, we will save the
    taxpayers $12 billion--because we intend to increase student aid by 10
    additional billion dollars. What I'm telling you is, the students are
    getting the money, and we're making the program a lot more efficient for
    the taxpayers.
        The Deficit Reduction Act also reauthorizes welfare reform for
    another 5 years. Welfare reform has proved a tremendous success over the
    past decade. By insisting on programs that require work and self-
    sufficiency in return for Federal aid, we've helped cut welfare cases by
    more than half since 1996. Now we're building on that progress by
    renewing welfare reform with a billion-dollar increase in child care
    funding and new grants to support healthy marriage and responsible
    fatherhood programs.
        One of the reasons for the success of welfare reform is a policy
    called charitable choice which allows faith-based groups that provide
    social services to receive Federal funding without changing the way they
    hire. Ten years ago, Congress made welfare the first Federal program to
    include charitable choice. The bill I sign today will extend charitable
    choice for another 5 years and expand it to the new healthy marriage and
    responsible fatherhood programs. Appreciate the hard work of all who
    supported the extension of charitable choice--including the good-hearted
    men and women of the faith-based community who are here today. By
    reauthorizing welfare reform with charitable choice, we will help
    millions more Americans move from welfare to work and find independence
    and dignity and hope.
        The message of the bill I sign today is straightforward: By setting
    priorities and making sure tax dollars are spent wisely, America can be
    compassionate and responsible at the same time. Spending restraint
    demands difficult choices, yet making those choices is what the American
    people sent us to Washington to do. One of our most important
    responsibilities is to keep this economy strong and vibrant and secure
    for our children and our grandchildren. We can be proud that we're
    helping to meet that responsibility today.
        Now I ask the Members of the Congress to join me as I sign the
    Deficit Reduction Act of 2005.

    Note: The President spoke at 3:31 p.m. in the East Room at the White
    House. S. 1932, approved February 8, was assigned Public Law No. 109-
    171.