[Weekly Compilation of Presidential Documents Volume 42, Number 26 (Monday, July 3, 2006)]
[Pages 1228-1233]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to the Manhattan Institute for Policy Research

June 27, 2006

    Thank you very much. Thanks for letting me come by to say a few 
words. Larry, thanks for the introduction. I do want to congratulate the 
Manhattan Institute for being a think tank for new ideas and better ways 
for our Nation to handle some of the problems we face. I appreciate your 
thought; I appreciate your works. For those of you who support the 
Manhattan Institute, I thank you for supporting them. For those of you 
who serve on the Board of Trustees, thanks for helping. And thanks for 
inviting me here today.
    I want to talk about our economy. I want to talk about ways that we 
can--the executive branch can work with the Congress to convince the 
American people we're being wise about how we spend our money. One of 
the things I want to assure you is that I believe that this country 
ought not to fear the future; I believe we ought to put good policy in 
place to shape the future. And by that I mean we shouldn't fear global 
competition. We shouldn't fear a world that is more interacted. We 
should resist temptations to protect ourselves from trade policies 
around the world. We should resist the temptation to isolate ourselves. 
We have too much to offer for the stability and peace and welfare of the 
world than to shirk our duties and to not accept an international 
community.
    I know some in our country are fearful about our capacities to 
compete. I'm not. I believe that we can put policies in place that will 
make sure we remain the most entrepreneurial country in the world, that 
we're capable of competing in the world. And one way to do so is to keep 
progrowth economic policies in place and be wise about how we spend the 
people's money. And that's what I want to talk about.

[[Page 1229]]

    I do want to thank my Director of Office of Management and Budget, 
Rob Portman, who has joined us today. He has done a spectacular job as 
the person partially responsible for tearing down trade barriers and to 
making sure our Nation was treated fairly in the trade arena when he was 
head of USTR. And now I've asked him to come over and manage OMB. It's a 
powerful position. The person who knows how the money is being spent is 
generally the person who's got a lot of influence in government. So I 
put a good friend in there to make sure we're able to work with the 
Congress to bring some fiscal austerity to the budget.
    I want to thank Senator Thad Cochran, who is the chairman of the 
Senate Appropriations Committee. It's awfully generous of the Senator to 
be here today. He's a good fellow and a fine United States Senator, and 
we're proud to have him in our midst.
    I want to thank Senator Judd Gregg, who's the chairman of the Senate 
Budget Committee. I've known Judd a long time. I've had to--when I was 
running for President, I was asked to debate my opponent a couple of 
times, and one of the things you do prior to debating your opponent is 
you have somebody serve as the opponent, and that happened to be Judd 
Gregg in both elections. [Laughter] And I had to kind of reconcile 
myself with the fact that he whipped me in--every time we debated. 
[Laughter] He's a good man who's just introduced some interesting ideas 
onto the floor of the United States Senate about how to deal with some 
of the fiscal problems and financial problems this Nation faces.
    I'm proud to be here with John McCain--speaking about debates--
[laughter]--we had a few. But one thing we agree upon is that this 
country needs to have a line-item veto. And I'm proud the Senator is 
here, and I appreciate you coming. I might add, one of the many things 
we agree upon.
    I'm proud to be here with Congressman Paul Ryan, who's the House 
bill sponsor of the line-item veto, as well as Congressman Mark Udall. 
Thank you both for being here. Congratulations on getting that bill out 
of the United States House of Representatives. I'm also honored that 
Congressman Mike Castle, Congresswoman Marilyn Musgrave, and Congressman 
Henry Cuellar from the great State of Texas, has joined us. Thank you 
all for coming.
    For those of you who are working the Halls of Congress to get a 
line-item veto out, thanks for doing what you're doing. One of the 
reasons I've come to give you a speech on the line-item veto is to 
encourage you to continue working hard with members of both political 
parties to get the job done.
    We're growing. This economy of ours is strong. And that's good news. 
It's amazing where we've come from, if you really think about it. We've 
been through a recession; we've been through a stock market correction; 
we've been through corporate scandals; we've been through an attack on 
our country; we've been through two major operations to defend the 
United States of America; and we've been through amazing natural 
disasters and high energy prices. And yet we're growing. We're the envy 
of the industrialized world. The growth in the last year was 3.5 
percent; it was 5.3 percent in the first quarter of this year. That's 
good news. It means the entrepreneurial spirit is strong, that people 
are investing and people are making wise decisions with their money. And 
as a result of the growing economy, the national unemployment rate is 
4.6 percent. That's low. That means your fellow citizens are going to 
work. That means people are having a chance to put food on the table. 
And that's a positive indication of how strong our economy is.
    We're a productive nation. Productivity is on the increase. That's a 
result of investments that are being made in the private sector. A 
productive economy is one that will yield higher wages for the American 
people. The more productive you are, the more likely it is your wages 
will go up, which means a higher standard of living for the American 
people. And I want to thank the Manhattan Institute's support for 
progrowth economic policies, policies that really send a clear signal 
that we are still the land of dreamers and doers and risk-takers.
    The cornerstone of our policy has been to keep taxes low, see. We 
believe, and you believe, that the more money a person has in their 
pocket, the more likely it is this economy is going to grow. We trust 
people to make the right decisions on how to spend,

[[Page 1230]]

save, and invest. That's certainly not necessary--necessarily the common 
policy here in Washington. There's some good and decent folks who think 
they can spend your money better than you can. I just don't agree with 
them. And one of the reasons why this economy is strong is because we 
cut the taxes on everybody who pays taxes in the United States. If you 
have a child, you got extra money. If you're married, we did something 
about the marriage penalty. It doesn't make any sense, by the way, to 
penalize marriage. Society ought to be encouraging marriage.
    If you're an investor, you got tax relief because we cut the taxes 
on the dividends and capital gains. If you're a small business, it's 
likely that you pay taxes at the individual income tax rate because 
you're more likely than not to be a sole proprietorship or a subchapter 
S corporation. Seventy percent of new jobs in America are created by 
small business, and it made sense to let our small-business 
entrepreneurs keep more of their own money to save and invest and expand 
their businesses. The tax relief we passed is working, and the Congress 
needs to make the tax relief we passed permanent.
    One of the benefits of keeping taxes low and growing your economy is 
that you end up with more tax revenues in the Federal Treasury. I know 
that seems counterintuitive to some people. You'll hear people say, 
``Let's balance the budget by raising taxes.'' By the way, that's not 
the way Washington works. They'll raise your taxes and figure out new 
ways to spend your money.
    It turns out that when you encourage economic vitality and growth, 
the Treasury benefits from it. In 2005, tax revenues grew by almost $274 
billion, or 15 percent. That's the largest increase in 24 years. The 
economy is continuing to grow, and tax revenues are growing with it. So 
far this year, tax revenues are more than 11 percent higher than they 
were at the same point last year, which is significantly better than 
projected. These increased tax revenues are part of how we intend to cut 
the deficit in half by 2009. In other words, Rob Portman will be giving 
a report to the Nation about how we're doing on the tax revenues--I 
think you're going to find that progrowth economic policies means that 
more revenues are coming into the Treasury than anticipated, which makes 
it easier to deal with a current account budget deficit.
    But there's a second part of the equation to dealing with the 
current account budget deficit, and that is, how we spend your money. 
Now, I'm going to talk about discretionary spending in a minute, but I 
just want you to understand that a significant problem we face is in our 
mandatory programs. And I know you know that. Those would be programs 
called Medicare and Social Security and Medicaid.
    As you might recall, I addressed that issue last year, focusing on 
Social Security reform. I'm not through talking about the issue. I spent 
some time today in the Oval Office with the United States Senators, and 
they're not through talking about the issue either. It's important for 
this country. I know it's hard politically to address these issues. 
Sometimes it just seems easier for people to say, ``We'll deal with it 
later on.'' Now is the time for the Congress and the President to work 
together to reform Medicare and reform Social Security so we can leave 
behind a solvent balance sheet for our next generation of Americans.
    If we can't get it done this year, I'm going to try next year. And 
if we can't get it done next year, I'm going to try the year after that, 
because it is the right thing to do. It's just so easy to say, ``Let 
somebody else deal with it.'' Now is the time to solve the problems of 
Medicare and Social Security, and I want your help. I need the Manhattan 
Institute to continue to agitate for change and reform. You've got a big 
voice. You got creative thinkers, and if you don't mind, I'd like to put 
this on your agenda and let you know the White House and Members of the 
Senate and the House are anxious to deal with this issue and get it done 
once and for all.
    In the meantime, we've got to do everything we can to control the 
spending that Congress votes on and approves every year. That's called 
discretionary spending. My administration is doing its part on 
discretionary spending. Every year since I took office, we've reduced 
the growth of discretionary spending that is not related to the military 
or homeland security. And the reason why we haven't reduced the growth 
on spending

[[Page 1231]]

for the military is because so long as we've got troops in harm's way, 
they're going to have whatever it takes to win the war on terror.
    We will not shortchange the people who wear the uniform of the 
United States military. As the Commander in Chief of this fine group of 
men and women, I have got to be able to look in the eyes of their loved 
ones and say, one, ``The mission is worth it,'' and two, ``This 
Government and the people of the United States support your loved ones 
with all we got.'' And that's exactly how I'm going to continue to 
conduct this war on terror.
    But apart from defending our country, the last two budgets have cut 
nonsecurity discretionary spending--have cut the nonsecurity 
discretionary spending. And that's not easy. It's not easy to do that, 
but the Congress delivered, at least on last year's appropriations 
bills. And they're working on this year's appropriations bills. Our view 
is, taxpayers' dollars should be spent wisely or not at all. One of Rob 
Portman's jobs is to analyze programs that are working or not working. 
Look, every program sounds good, I know. But we're focusing on the 
results of the programs: Are they achieving the objectives that we 
expect?
    One of the first tests of this year on whether or not the 
administration can work with the Congress on fiscal restraint was on a 
supplemental spending bill. That's a bill that was passed to provide 
emergency spending for our troops overseas and for citizens that had 
been hit by Katrina and to prepare for the dangers of a pandemic flu. I 
felt those were important priorities that needed to be a part of the 
supplemental bill, and so we sent that bill up.
    Obviously, there was some noise coming out of the Congress at first; 
people had different opinions. And that's a good thing about democracy--
you'll find there's all kinds of different opinions here in Washington, 
DC. People had different views about what ought to be in that bill.
    Part of my job is to help bring some fiscal discipline to 
Washington. So I said that if the Congress exceeded a limit that I 
thought was wise, I would veto the bill. Congress acted responsibly. And 
it was hard work, and I applaud Senator Cochran for his hard work on 
this measure. He brought the House together with the Senate, and they 
took out $15 billion in spending that had been added to the bill. It 
came under the spending limit I had set. And it's a good example of 
fiscal restraint set by the Congress. I appreciate so very much your 
leadership on that issue, Mr. Chairman. Thanks for working with us.
    I believe another crucial test for the Congress is to whether or not 
the Congress will pass a line-item veto. And that's what I want to talk 
to you about today. A line-item veto would be a vital tool that a 
President could use to target spending that lawmakers tack on to the 
large spending bills. That's called earmarking, and that's become quite 
a controversial subject here in Washington, DC.
    I happen to believe that, a lot of times, earmarking results in 
unnecessary spending. See, part of the job of the President and the 
leaders in the Congress is to set priorities with the people's money. If 
you don't set priorities, the tendency is to overspend. And sometimes--a 
lot of times, the earmark doesn't fit into the priorities that have been 
set through the budgetary process. A lot of times earmarks are inserted 
into bills at the last minute, which leaves no time, or little time, for 
debate. Part of the process--a good process is one in which Members are 
able to debate whether or not spending meets a priority, whether it 
makes sense. Earmark sponsors are often not required to provide their 
colleagues with a reasoned justification for proposed spending. And not 
surprisingly, the process often results in spending that would not have 
survived had it not been subject--subjected to closer scrutiny. Part of 
a good legislative process is for Members to take a good look at whether 
or not a spending request meets a priority or not.
    And the process has changed. And according to the Congressional 
Research Service, the number of earmarks has increased from about 3,000 
to 13,000 over the last decade. In other words, this process is taking 
place more and more often. I don't think that's healthy for the process. 
Matter of fact, I think it's circumventing the process. Now, that's up--
obviously, up for the Legislature to determine whether I'm right or not. 
The President proposes, and the legislative body disposes, and I'm 
proposing a way to help deal

[[Page 1232]]

with this problem. And that way is to pass a line-item veto.
    Now, here's why it's necessary. First of all, part of the problem 
with the line-item veto is that it's oftentimes deemed to be 
unconstitutional. As a matter of fact, I know there are people in this 
room that helped pass the line-item veto in 1996. President Clinton was 
the President then, and the Congress--in my judgment--wisely gave him 
the line-item veto. And yet shortly thereafter, when he started using 
the line-item veto, the Supreme Court struck it down because they 
concluded that it unconstitutionally permitted the President to 
unilaterally change a law passed by the Congress. In other words, the 
bill didn't pass constitutional muster.
    And so we dealt with this issue. We figured out that, obviously, any 
line-item veto would again be challenged to our highest Court. And so we 
proposed the following type of legislation: When the President sees an 
earmark or spending provision that is wasteful or unnecessary, he can 
send it back to the Congress. And Congress is then required to hold a 
prompt up-or-down vote on whether to retain the targeted spending. In 
other words, the Congress is still in the process.
    The line-item veto submitted would meet the Court's constitutional 
requirements. And that's important. Members of Congress need to know 
that we've thought carefully about this, and we've worked with them to 
make sure that that which is passed is constitutional.
    The other thing the line-item veto needs to do is, it will shine the 
light of day on spending items that get passed in the dark of the night, 
and that will have--in my judgment--a healthy--it will send a healthy 
signal to the people that we're going to be wise about how we spend 
their money.
    The bill I submitted will be an effective tool for restraining 
Government spending because it will address a central dilemma created by 
unwarranted earmarks. And here's the dilemma: When Members of Congress 
are faced with an important bill that includes wasteful spending in the 
bill, they have two bad options. On the one hand, they can vote against 
the whole bill, including the worthwhile spending, or they can vote for 
the whole bill, including the wasteful spending. When such a bill comes 
to the President, it creates a dilemma. I've negotiated year after year 
on a top-line budget number. And Congress has met that top-line budget 
number, which means it's very difficult for the President, then, to veto 
the appropriations bills that have met the top-line budget number, 
because the next year's budget negotiations will be meaningless. You can 
imagine Members of the United States House or Senate walking into the 
President's office and saying, ``Wait a minute; we met your number last 
year, and you vetoed the bill, so forget negotiations.''
    I want to be a part of the budgetary process. It's an important part 
of the President's working with Congress, and I'm not going to deal 
myself out of the budgetary process. So my point is, they can meet the 
size of the pie, but I may not like some of the slices of the pie. And 
therefore, what do we do about it? And one way to deal with it is the 
line-item veto. The President could approve the spending that is 
necessary, could redline spending that is not, and then let the Congress 
decide whether or not the President is right. It's a fair process; I 
believe it's a necessary process.
    Many Members in Congress, I know, want to do the right thing. And so 
one of the interesting things about the line-item veto is, it will help 
deal with that dilemma I described, either all or nothing when it comes 
to voting for appropriations bills. You know, sometimes a Member of 
Congress gets a special project for the district, and they go back and 
tout the project. Then you have Members who don't agree with earmarking, 
and they don't have any special project to tout to the district. And yet 
the people in their district are voting for the special project for the 
other person's district. And I think the line-item veto--I know the 
line-item veto would help resolve this dilemma.
    You see, if there's an opportunity for the President to redline 
certain programs and hold them up to the light of day, it will probably 
mean Members of Congress are less likely to propose the earmarks in the 
first place. Rather than being able to move a special project into the 
bill without hearing, this--the President would have the opportunity to 
say, ``Wait a minute; this doesn't

[[Page 1233]]

make much sense; it doesn't seem to fit into the priorities; this 
special project, this unusual study''--[laughter]--``or this particular 
project, this doesn't make sense.''
    I believe that part of a budgetary reform program is the line-item 
veto, the opportunity to put the light on such programs. And that will 
help Members resolve the dilemma of either voting for an important bill 
with bad items in it or being a part of trying to put bad items in it in 
order to justify their existence in the Congress.
    The good thing about the line-item veto, it has bipartisan support. 
We've got a Democrat Member from the United States Congress who 
supported that bill strongly. Governors have had the line-item veto. I 
met with Senator Ben Nelson earlier this morning in the Oval Office--he 
talked about what an effective tool it was to have the line-item. Did 
you have it, Engler, when you were Governor? Engler had it. It's an 
important part of relating with the legislative process. And by the way, 
these aren't just Republican Governors with the line-item veto; they're 
Democrat and Republican Governors who are using that line-item veto 
effectively.
    The line-item veto has bipartisan support in the Congress. Thirty-
five Democrats joined more than 200 Republicans in the House to get the 
bill passed. That's a good sign. I was disappointed, frankly, though, 
that more Democrats didn't vote for the bill, especially those who are 
calling for fiscal discipline in Washington, DC. I mean, you can't call 
for fiscal discipline on the one hand and then not pass a tool to 
enhance fiscal discipline on the other hand. You can't have it both 
ways, it seems like to me.
    Now the Senate is going to take up the measure. And again, I want to 
thank the Senators who are here for strategizing on how we can get the 
bill moving. Senator Frist is committed to getting the bill moving. 
Senator McCain is one of the important cosponsors, as is Senator John 
Kerry. I remember campaigning against him in 2004, and I remember him 
talking about the line-item veto, and I appreciate the fact that he's 
living up to the political promises he made. It's a good sign, and I 
applaud Senator Kerry for taking the lead on the line-item veto. And I 
hope members of his party listen to his justifications for that 
important piece of legislation.
    What's really interesting is, we've had Senators on record for the 
line-item veto. After all, the Senate passed a line-item veto in 1996. 
And for those Senators who passed the line-item veto in 1996, I hope 
they still consider it an important vote in 2006. Ten years hasn't made 
that big a difference. It was good enough 10 years ago; it's good enough 
today, for those who voted for the line-item veto.
    Oh, I know this town is full of all kinds of politics, but we ought 
to set politics aside. We need to set politics aside when it comes to 
reforming Social Security and Medicare, and we need to set politics 
aside so that the President can work with the Congress to bring fiscal 
discipline to our budgets. That's what the taxpayers expect from those 
of us who are honored to serve.
    So that's my opinion on the line-item veto. I hope you can feel--
tell I feel strongly about it. I think it makes sense, no matter who the 
President may be. I think it makes sense for a Republican President to 
have a line-item veto, and I think it makes sense for a Democrat 
President to have a line-item veto. And I urge the United States Senate 
to pass this important legislation so we can reconcile whatever 
differences there are between the House and the Senate version and show 
the people that we are serious about being responsible with their money.
    Thanks for letting me come by and say hello.

Note: The President spoke at 10:58 a.m. at the JW Marriott Hotel. In his 
remarks, he referred to Lawrence J. Mone, president, Manhattan Institute 
for Policy Research; and former Gov. John Engler of Michigan.