[Weekly Compilation of Presidential Documents Volume 42, Number 30 (Monday, July 31, 2006)]
[Pages 1396-1403]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to the National Association of Manufacturers

July 27, 2006

    The President. John, thanks. Thanks for the good, short 
introduction. [Laughter] Thanks for having me here. I want to thank you 
all for doing what you do for the country. I appreciate your leadership. 
I appreciate the entrepreneurial spirit which is represented in this 
room. Our manufacturers make products

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that enrich our life, that drive and sustain our economy, that create 
jobs and opportunity. When America's manufacturing sector is healthy, 
this country is healthy. And that's what I want to come to talk about, 
how to make sure that this Nation has a healthy economy and how to make 
sure the manufacturing sector remains one of the most important parts of 
our economic vitality.
    I want to thank John Luke for his chairmanship of the National 
Association of Manufactures. I appreciate you hiring my buddy, the 
former Governor of Michigan, John Engler--[laughter]--who is doing a 
fine job, I might add. I'm proud to be joined today by a member of my 
Cabinet, Ambassador Susan Schwab, who is the U.S. Trade Representative. 
Thanks for coming. I'm going to talk a little bit about--[applause]--and 
I appreciate the members of the National Association of Manufacturers. 
Thanks for coming to Washington; thanks for giving me a chance to visit 
with you.
    I understand the importance of manufacturing to our Nation's 
economic leadership and prosperity. Our economic growth is powered by 
manufacturing. Catch this fact: By itself, U.S. manufacturing output is 
greater in size than the eighth largest economy in the world. Our 
manufacturers pioneer the innovations, technology, and methods that 
maintain this Nation's economic leadership. And it's important that we 
remain the economic leader in the world, for the good of our people. 
Manufacturers are responsible for nearly three-fifths of all private-
sector research and development. In other words, if you want to be the 
economic leader, you must have research and development to constantly 
stay ahead of the competition. And the manufacturing sector of the 
United States spends a lot of money making sure this country is 
innovative.
    Our Nation's standard of living depends on our manufacturers. 
America's manufacturers provide our people with rewarding careers and 
high-paying jobs. Manufacturing jobs pay over 20 percent more than the 
national average. If you're working for a manufacturing company, you're 
likely to be getting paid more than your neighbor. Your standard of 
living is higher.
    For decades, our manufacturers have faced the pressures of increased 
competition and globalization, but you've handled that competition well. 
Not only have you handled it well, you've excelled.
    Manufacturing today represents roughly the same share of the real 
economy as it did 20 years ago. Every day, American manufacturers 
confront the competitive challenges of the global marketplace. I know 
that. You especially know that. But every day you stay innovative and 
creative and work on productivity, you continue to lead this Nation. And 
so I'm here to thank you, to thank you and your workers.
    You know, we've overcome a lot together. Sometimes it's easy to 
forget short-term history. I'm sure you still remember the days of 
recession; stock market adjustment; corporate scandals; the terrorist 
attack of September the 11th, 2001, that still drives my foreign policy; 
the response of our Government to defend ourselves; natural disaster; 
high energy prices. We've faced a lot. But as John mentioned, I'm the 
kind of fellow that sees a problem and likes to address it head-on.
    And working with the Congress, we cut the taxes on you to get this 
economy back. I believe that when you have more of your own money in 
your pocket to save, spend, or invest, this economy is going to grow. I 
would rather have the American people spending their own money to drive 
this economy forward than Government trying to drive the economy 
forward. And so we cut the taxes. We didn't cut the taxes on a few; we 
cut the taxes on everybody who pays taxes. We doubled the child tax 
credit. We reduced the marriage penalty. We created new incentives for 
small businesses to invest.
    We cut the taxes on dividends and capital gains, and we did so 
because we thought it was important to lower the cost of capital. If 
you're counting on the private sector to help recover from the tough 
situations we've been through, what you want to do is make capital less 
expensive so you can borrow easier or raise money faster, to invest. 
Investment means jobs and expansion.
    We put the death tax to the road--on the road to extinction. I 
believe it's unfair to say to somebody who's built up some assets--

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a farmer or businessowner--that the Government is going to tax you 
twice, once when you make your money and then once when you move on and 
try to pass it on to your relatives. That's called ``taxation without 
respiration.'' [Laughter]
    This Congress passed--repealed the death tax, and the Senate is 
working on it. I strongly urge the United States Senate to come together 
with the House and put an end to the death tax for the sake of economic 
expansion.
    Our policies have worked. Let me rephrase that: Our policies to 
enable you to work better have worked. After all, the economy grew at an 
annual rate of 5.6 percent in the first quarter of 2006. In 2005, the 
American economy turned in a performance that's the envy of the 
industrialized world. Our economy grew at 3.5 percent. That's faster 
than any other major industrialized nation.
    Since August 2003, this economy of ours has created 5.4 million new 
jobs. That's more than Japan and the 25 nations of the European Union 
combined. For 34 straight months, the American economy has added jobs. 
Our unemployment rate is 4.6 percent. That's below the average of each 
of the past four decades. Manufacturing employment has increased by 
18,000 over the past year--it's the largest 12-month gain since the 
period ending September of 1998.
    Across the United States, real after-tax income is up more than 7 
percent per American. Since January 2001, productivity is on the rise. 
Our productivity has been growing at 3.5 percent for the past 5 years. 
That's the fastest rate in nearly four decades. American workers are 
more than 18 percent more productive than they were in early 2001.
    Let me talk about productivity for a minute--it's kind of a concept 
that some may not relate to. From 1973 until 1995, productivity grew at 
1.4 percent per year. At that rate, it would take 50 years to double the 
standard of living for Americans. Our economists now project that 
productivity will grow by 2.7 percent over the long term, and at that 
rate, we can double the standard of living of Americans nearly twice as 
fast. In other words, the more productive a society it is, the better 
lifestyle our citizens will have.
    Manufacturing activity is growing. For 37 straight months, the 
Institute of Supply Management's manufacturing index has indicated that 
the manufacturing sector is expanding. Over the past 12 months, 
industrial production has increased 4.5 percent. And this morning, the 
Commerce Department reported that new orders for durable manufacturing 
goods were up 3.1 percent in the month of June. What I'm telling you is, 
the economic policies we have pursued are working.
    And the fundamental question facing this country is: What do we need 
to do to ensure the economy remains strong? What is it that Congress and 
the administration can do to help the manufacturing sector continue to 
grow? What is it we must do to make sure the entrepreneurial spirit 
remains strong? What actions must we take to make sure America is the 
economic leader in the world?
    Well, here are some ideas. One is, we've got to be wise about how we 
spend your money. We've got to be wise when we appropriate money here in 
Washington. Deficits can hurt economic vitality. And I understand that. 
So the first thing you've got to do here in Washington is set priorities 
when it comes to spending the people's money.
    And I'll tell you my priority. My priority is this: So long as we 
have a man or woman wearing our uniform who is in harm's way they will 
get all they need to secure the victory. And we'll spend resources to 
protect this homeland. September the 11th reminded us that we're no 
longer an island, that we can't assume problems overseas won't come home 
to hurt us. Our most solemn duty in Washington, DC, is to protect the 
American people, and we take that duty seriously.
    And that priority is reflected in the budgets. And so we've got to 
show spending restraint elsewhere in the budget if we're going to be 
wise about how we spend your money. We've reduced the rate of growth of 
nonsecurity discretionary spending since 2001, and my last two budgets 
have cut this kind of spending. We said to Congress, ``Here's our 
priorities; you need to make tough choices.'' And they've come along 
with us. And I hope the appropriations bills coming

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out this fall match this same fiscal responsibility that we've shown in 
the past.
    I also addressed mandatory spending earlier this year when I signed 
the Deficit Reduction Act, which saves taxpayers nearly $40 billion over 
the next 5 years. In other words, we're working with Congress to be wise 
about spending your money.
    I set a goal for this country that we cut the deficit in half by 
2009--just had an interesting statistic come out in the Mid-Session 
Review recently. That's the time we take a look and see how things are 
going. When Rob Portman, who is the Director of OMB, analyzed revenues 
and spending, he projected that tax revenues will grow by $246 billion 
during this year. In other words, when you cut the taxes and you grow 
your economy, more revenues come into the Treasury. And it looks like 
we're on track to balance our budget by 2008 [cut the deficit in half by 
2008] *. The current deficit is now--projected to be 2.3 percent of GDP. 
We're fulfilling our responsibilities. We're meeting the goal of 
reducing this deficit. The best way to reduce the deficit is to keep 
progrowth economic policies in place by keeping this Tax Code--making 
these tax cuts permanent and being wise about how we spend your money.
    * White House correction.
    If Congress really does want to work with the administration to make 
sure that there's fiscal sanity in Washington, they need to give me the 
line-item veto. And I appreciate your hard work on this issue. Thank you 
for supporting our attempt to work with Congress to make it easier for 
both parts of Government, both branches of Government, to be smart about 
how we spend the people's money.
    Forty-three Governors have got the line-item veto. It's a useful 
tool. It works. It's time to bring the important tool to Washington. The 
line-item veto will allow a President to target unnecessary spending. 
See, sometimes they get these big spending bills and put a little 
something in there for their district. [Laughter] Sometimes they're able 
to do it without a hearing. Just kind of ends up in there, in the bill, 
without much scrutiny. They're able to put earmarks on large bills.
    What the line-item veto would enable a President to do is take a 
look at the big bills and kind of call out some of the programs that 
might not fit into the national priorities, and then send it back up to 
the Hill for an up-or-down vote. That's one way to make sure there's 
fiscal sanity in the budget. But the line-item veto would do something 
else. It would make lawmakers hesitant to try to tack something into the 
bills in the first place if they knew that their programs would see the 
light of day. In other words, sometimes sunshine is the best way to heal 
a problem.
    I want to thank you for helping get the bill out of the House of 
Representatives. A bipartisan majority supported this concept of a line-
item veto, a concept where the executive branch and the legislative 
branch would work closely together. And the United States Senate needs 
to take up this important legislation.
    I was pleased the other day when my opponent in the 2004 campaign, 
John Kerry, came down to visit with me in the Cabinet Room to endorse 
the line-item veto. He's one of the bill sponsors of the line-item veto. 
The Senate needs to get the bill passed and to my desk.
    I understand what you understand, that one of the biggest drags on 
our economic growth is going to be Social Security and Medicare, unless 
we do something about it. See, we've got a lot of guys like me who are 
fixing to retire. [Laughter] I'll be 62 in 2008--which is a convenient 
time to turn 62. [Laughter] And there's a lot of baby boomers that are 
living longer and that are getting ready for the benefits that we have 
been promised--by the way, benefits that are larger than the previous 
generation's benefits.
    And there are fewer people paying into the system to make sure that 
the promises that have been made to my generation are kept, which means 
these big programs are becoming insolvent very quickly. There's an 
overhang. There's unfunded liabilities that we've got to address. One of 
the reasons why Hank Paulson came to Washington is because he wants to 
address big problems--he's the new Secretary of the Treasury. He's a 
can-do kind of person, John; he can get things done. And I'm looking 
forward to working with Hank and working with the

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United States Congress to once and for all put Social Security and 
Medicare on the road to solvency. We owe it to a new generation of 
Americans coming up, and we owe it to our entrepreneurs and risk-takers 
to solve this problem now.
    It's so easy in Washington to say, ``Well, it's not necessarily a 
crisis; let's just shove it down the road.'' That's not why I ran for 
office. I believe a President and a Congress must confront problems now 
and not pass them on to future generations, which is what I intend to 
do.
    Here's some other ideas to make sure we're an economic leader. We've 
got to remain competitive. We've got to make the R&D tax credit 
permanent. I talked about--if you're somebody trying to figure out how 
much to spend on R&D, and you're not sure whether or not the tax credit 
will be around in the out years, you're less likely to take risk, less 
likely to spend the money, less likely to invest in the future, so the 
R&D tax credit--the permanency of the R&D tax credit makes sense if you 
want to remain a competitive nation.
    And here at the Federal level, I have proposed doubling the Federal 
commitment to the most basic critical--the most critical basic research 
in physical sciences over the next 10 years. I'll tell you why I have. I 
think that the Federal Government can help leverage ideas. I know it's 
in our national interest to spend taxpayers' money on research. The 
research that we conduct today will enable future generations to remain 
competitive tomorrow. I don't know if you know this or not, but the iPod 
came about because of a lot of Federal research--or probably the most 
known one is the Internet. In other words, it makes sense to invest 
taxpayers' money, because there's a greater good to be gained when it 
comes to investing in basic research.
    You know what I know, that we better have an educated workforce if 
we're going to be able to compete in the 21st century. We've made great 
strides in early grade education. I don't know if you followed the 
debate on No Child Left Behind, but it's a really important piece of 
legislation. I'll tell you why it's important--is because for too long 
we had a system that just shuffled kids through the schools. You know, I 
spoke to the NAACP the other day, and I recounted a story of when I was 
a Governor. I remember going to a high school in a pretty tough 
neighborhood in Texas. I'll never forget, the ninth grade teacher 
looking me in the eye and saying, ``I'm having trouble teaching.'' And I 
said, ``Why is that?'' He said, ``Because my kids can't read.'' In other 
words, they'd just been moved through.
    We can't compete in the 21st century if we have a system that does 
not hold people accountable. And so we said, ``In return for additional 
Federal money from Washington, DC, we expect you, the State, to 
measure.'' Why do you measure? Because you want to know early in a 
child's career whether they can read or write and add and subtract. And 
if a child is falling behind, there's extra money in No Child Left 
Behind. The whole purpose is to have an accountability system that is 
able to detect problems early, before it's too late. And guess what. 
Because we measure, we can now see that an achievement gap is closing.
    But there's more to be done, particularly in math and science. We 
need to apply the same rigor of No Child Left Behind that we use in 
reading--in No Child Left Behind--in math in the middle grade. We're 
doing fine early in math. The problem is, is that the measurement shows 
us that we're falling behind in math in the middle grades. We need to 
measure and solve problems earlier for our children than high school 
when it comes to math and science.
    I'm a big believer in Advanced Placement. These are programs that 
believe in high standards and high accountability. And so we're going to 
train 70,000 high school teachers over the next 5 years to head AP 
courses in math and science.
    I'll never forget going into Dallas recently to see an AP class 
there. And presumably, this little school graduates more AP students 
than any school in the country, at least that's what the Texas teacher 
told me. But you know how we Texans are, we tend to--yes, we--
[laughter]. Let's just say this: They graduate a lot. [Laughter] And 
there were Latinos and African Americans. These bright young kids will 
become--will be the scientists and engineers. But they need that

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rigor; they need to be challenged; they need to have high standards; and 
they need a teacher group that is capable of teaching Advanced 
Placement.
    We need to have an adjunct teacher corps to bring 30,000 math and 
science professionals into the classroom. Sometimes science isn't viewed 
as cool. But we need to make sure that students understand that it is 
good to take science and engineering and math. As a matter of fact, we 
need to be able to connect the fact that the jobs of the 21st century, 
the high-paying, high-quality jobs will depend on a person's ability to 
be able to be an engineer or a mathematician or a scientist.
    And I want to thank John and your crowd for helping us with this 
American Competitiveness Initiative. It's vital for our country that we 
take action now to make sure that we remain the leader in the world when 
it comes to the economy.
    We've got to do something about health care to make sure we're 
competitive. One thing we will do is we'll take care of the poor and the 
elderly. This Medicare bill I signed is a really good piece of 
legislation that now says to poor seniors, you no longer have to choose 
between your medicine and food and electricity. They've been talking 
about modernizing Medicare for a long period of time, and my 
administration, working with the United States Congress, finally got it 
done.
    I'm a big believer in health savings accounts, because it puts 
customers in charge of the health decisions. I would hope that as you 
analyze your health care plans, look at health savings accounts as ways 
to save money, but equally importantly, ways to empower your employees 
to make rational choices about their health care.
    In order to make sure customers have got more choice in their health 
care, you've got to have transparency. You know, health care is one of 
the few industries where you really don't know pricing. How many of you 
ever actually asked a doctor, ``What are you going to charge me, Doc?'' 
Generally, you don't ask that because a third party pays the bill. If 
you're worried about rising health care costs, it seems like it makes 
sense to have transparency in pricing and quality and to give consumers 
more choices to make in the marketplace, to empower people to ask the 
questions necessary to make sure there is some rational pricing in 
health care.
    And along those lines, we're strongly supporting health IT. Many of 
you are very productive because you've been able to employ information 
technology. In the health care field, you can find places of medicine 
where people are walking around with handwritten files, and sometimes 
it's hard to read a doctor's handwriting. And sometimes the files get 
misplaced, and a lot of times there are medical errors as a result of 
that and cost inefficiencies in the system. And so health information 
technology will help modernize our health care system.
    And if you're truly interested in making sure that you have health 
care that's available and affordable for your employees, you need to 
join us in making sure we end these frivolous and junk lawsuits that are 
running good doctors out of practice.
    A couple more ideas to make sure that we're strong economically. And 
I repeat, a strong economy is good for our people. That's why I want 
the--America to be the leader, economic leader in the world. It's 
because I want the American people to benefit. I want people's 
lifestyles to go up. I want people to be able to realize their dreams.
    We got to make sure that our energy policy is diverse and balanced 
and sound if we expect to be competitive. This is an interesting moment 
where we're able to advance new technologies that will make us less 
dependent on foreign sources of oil and enable us to be good stewards of 
the environment. And we're investing a lot of money to be able to 
achieve energy--economic independence, national security independence, 
and being good environmental stewards when it comes to energy.
    Here's some ideas. One, we must--we must expand our nuclear power 
industry if we want to be competitive in the 21st century. We have got 
to be wise--[applause]. We have got to push hard to build new plants. 
And the energy bill I signed last year is--it's a good step forward. 
This Government is going to spend a lot of money on fast breeder reactor 
technology. We're going to join with other countries to work on fast 
breeder reactor technology so that we can

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burn reprocessed fuel which will reduce the waste on civilian nuclear 
energy. In other words, there's technological gains to be made that will 
enable us to even advance nuclear power even faster.
    And by the way, it's not only in our interest to develop nuclear 
power, it's in the interest of our country that India and China develop 
nuclear power. In the global energy market, when demand for hydrocarbons 
goes up in energy in China, it affects your gasoline prices. And 
therefore, the more we can help these countries develop technology, the 
more we can help them develop a civilian nuclear industry that is safe, 
the better off it is for American consumers.
    And yesterday--I want to applaud the House of Representatives for 
passing an important piece of legislation when it comes to America's 
relationship with India. We're spending a lot of money to make sure that 
we can have coal-fired electricity plants that reduce the amount of 
pollution they put out. We're spending money to make sure that liquefied 
natural gas terminals are more quickly permitted. We need to get more 
gas into the United States. The House of Representatives has passed a 
bill to open up more areas for offshore exploration in the Gulf of 
Mexico. I strongly pass that--support that piece of legislation. I urge 
the Senate to do so as well.
    We're also working hard to promote alternative forms of energy. I 
mean, we want--look, I like the idea of people using ethanol to power 
their automobiles. So do our farmers. [Laughter] It makes sense, doesn't 
it, if you can grow a product that you can power your cars with, to do 
so. Every bushel of corn grown in the Midwest makes us less dependent on 
oil from overseas.
    We're working on battery technologies. They say we're pretty close 
to a breakthrough in a battery--where you can drive the first 40 miles 
on a battery, and your car doesn't look like a golf cart. [Laughter] One 
of these days our children will be driving cars powered by hydrogen. In 
other words, in order to make sure this country is competitive, we've 
got to be spending money on technology now, on research and development 
now, to change our habits and to make sure we're good stewards of our 
environment.
    I'm excited about the energy future for this country; I really am. I 
think there's going to be some fantastic opportunities for people. And 
I'm going to look back on this period, and I know you will, that we made 
the right decisions for a new generation of Americans.
    I'm also a big believer in trade. That's why Susan's here; so is 
she. But I'm--what I'm for is trade that opens up people's markets just 
like we open up ours, that's what I'm for. I believe good trade policy--
[applause]. Here's my definition of good trade policy: It's fair. That's 
all we ask. See, we open up our markets; you open up yours. You treat us 
the way we treat you.
    There's a lot of talk about the WTO and the Doha development round. 
We're very much in favor of it moving forward. We think it makes a lot 
of sense. We think it makes a lot of sense for American workers that we 
open up markets. We think it makes sense for people who are locked in 
impoverished nations that we open up markets. We think trade helps lift 
people out of poverty, that's what we believe. So we're strongly 
supportive of the WTO round.
    I told Susan that she needed to be flexible; she needed to go in the 
meetings with flexibility, particularly when it comes to our 
agricultural subsidies. Look, I said to the world last September, we'll 
reduce them, just so long as our folks have got access to markets; 
that's all we ask. Just give us a chance to compete fairly.
    And so we'll continue to work on this agreement. Susan is committed 
to getting a deal done, if we can. Secretary of Agriculture Mike 
Johanns, as well, will continue to reach out to other nations to achieve 
our objectives. I want to thank you for your support on this. My 
attitude is, we want to be treated fairly, and the American people and 
the American manufacturer and the American farmer can compete with 
anybody, anytime, anywhere--so long as the rules are fair.
    So there are some ideas for Congress to consider and the 
administrative branch to promote, ways to make sure this country is 
competitive. One of my big fears is that we lose our nerve, is that we 
kind of say, ``Well, there's some new emerging economies and therefore, 
we can't compete, let's just retreat; why don't we become protective. 
Why don't

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we throw up walls and barriers around the United States of America; why 
don't we just try to isolate ourselves from competition.''
    That's not the America I know. The America I know is a country that 
is confident--confident in our capacity to compete, entrepreneurial by 
nature. There are some smart things we can do, and will do, to make sure 
we remain competitive. But one thing we must never do is to not be 
willing to do the right policies so we can remain the economic leader of 
the world. We owe it to our people to put good policies in place. We owe 
it to future generations of Americans to keep the entrepreneurial spirit 
strong, and here are some ideas as part of a strategy to do just that.
    I want to appreciate what you're doing for the country. I thank you 
for the risks you take. I thank you for the folks you employ. Government 
is not going to stand in your way; we want to stand side by side with 
you to make sure the entrepreneurial spirit remains strong here in the 
country.
    God bless.

Note: The President spoke at 1:47 p.m. at the Grand Hyatt Washington. In 
his remarks, he referred to John Engler, president and chief executive 
officer, National Association of Manufacturers.