[Weekly Compilation of Presidential Documents Volume 43, Number 5 (Monday, February 5, 2007)]
[Pages 94-99]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on the National Economy in East Peoria, Illinois

January 30, 2007

    Thank you all. Thanks for letting me come by. Please be seated. 
Thanks for the warm welcome. It's good to be in the heartland of 
America. Thanks for coming to let me visit with you a little bit about 
our economy. I really want to thank the good folks at Caterpillar for 
letting me come by. I like it when they say, ``Team Caterpillar.'' 
That's a good sign. It means people are working together for the common 
good.
    You know, people from Texas like to say, things are better in Texas. 
Well, when you tour the Cat plant here, it's--I'm having second thoughts 
about if things are better in Texas. [Laughter] I'm impressed by the 
machinery I have seen. More importantly, I'm impressed by the workers I 
have met who are putting the machines together. I thank them for--
[applause]. And I'm impressed by a culture of excellence and 
accomplishment that is the spirit of Caterpillar. I also appreciated the 
chance to drive a D-10. If you've never driven a D-10--[laughter]--it's 
a cool experience. [Laughter]
    I'm going to go to New York City tomorrow to deliver a speech on the 
state of the economy, but I really want to spend a little time here in 
Peoria to see how things are going. I was at Sterling Brothers--Sterling 
Family Restaurant today--Sterling Brothers?--Sterling Family, yes, run 
by two brothers--and met with some small-business owners, social 
entrepreneurs, as well as business entrepreneurs. I wasn't surprised by 
what I heard. It reminded me about the greatness of America. I heard 
about people willing to work hard to achieve dreams and people realizing 
that when they achieve dreams, they have an obligation to help others. 
It seems like to me the community spirit here in Peoria, Illinois, is 
strong.
    And that's the way our economy is as well. It's a strong economy. 
And the fundamental question is, what are we going to do to keep it 
strong? It's one thing to say, today's economy is strong--I say it 
because inflation is down; interest rates are down; wages are on the 
increase; unemployment rate nationally is low; people are working and 
putting more money in their pocket. And the question facing the country 
is, what are we going to do to make sure it's strong tomorrow? As I said 
to Congress, we don't need more Government; we need more enterprise. And 
so I want to spend a little time talking with you today, talking about 
the economy.
    Before I do, I want to thank Congressman Ray LaHood. He's been 
bugging me ever since I got elected President. Well, I didn't tell you 
what he's bugging me about. He's bugging me to come to Peoria. He said, 
``When are you going to show up?'' [Laughter] I kept saying, ``As soon 
as possible.'' The moment has finally arrived, and I'm glad I came. 
Thank you for the invitation.
    I appreciate Jim Owens, the chairman and CEO of Caterpillar. I thank 
Bob Williams for helping me with the tour. I thank Gerry Shaheen, who is 
the group president of Caterpillar. I want to thank the workers I met 
with today. I spent some time with people on the line, talking about the 
education programs here at this fine company. I thank the leaders of the 
UAW who have welcomed me here. I thank the folks up and down the line

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who put up with me and all the cameras. I just don't travel alone these 
days, in case you've noticed. [Laughter]
    I want to thank Mayor Jim Ardis, mayor of Peoria, Illinois. I met 
him at the airport. It was about minus 10. [Laughter] I said, ``Do you 
want to get in the limousine?'' He said, ``As fast as possible.'' 
[Laughter] So we drove over to the Sterling Family Restaurant together. 
I was impressed by your young mayor. I want to thank the local and state 
officials who've joined us. I appreciate you serving. I appreciate you 
doing what you think is right for the community that you represent. But 
most of all, thanks for letting me come.
    See, people say, ``Why would you want to go to Peoria,'' and I just 
told you--I want to get out of Washington and sit down with folks that 
are really the backbone of this country. And I wanted to come to one of 
America's great companies, and that's Caterpillar.
    The good folks here show others that in the manufacturing world, we 
can compete. And that's really what Americans wonder, can you compete in 
a global economy? And my answer is, darn right you can, with good 
policy. And in this company, you've shown how to compete. And I want to 
spend some time explaining that to the American people, why competition 
is important, and why America can compete with anybody, anytime, 
anywhere, and why it's in our interest to do so.
    First of all, it's important for people to know that Caterpillar 
employs 48,000 workers across America. Secondly, more than half those 
workers are here in Illinois, 17,000 of them right here in Peoria. 
Caterpillar has great workers because it has got good training programs. 
Caterpillar can employ new people because it makes good product that 
people want.
    I appreciate very much the notion that you all are in this deal 
together. That's what ``team'' means, that everybody works together for 
the common good, and if it benefits one, it benefits all. And that's the 
spirit I have found here. And our job in Government is not to get in 
your way; our job in Government is to put progrowth economic policies in 
place that mean companies like Caterpillar, which do the right things, 
can succeed. And let me talk about--some of what that means.
    First, it means keeping taxes low. Oh, there's a debate in 
Washington that says, we need more taxes. We don't need more taxes. It's 
important for you to keep your own money. You work hard for your money, 
and I understand workers are saying, ``Am I going to have more money in 
my pocket?'' That's what we want. And one way to make sure you don't 
have more money in your pocket is for the Government to raise your 
taxes.
    And so we cut taxes. Listen, we've been through a tough economic 
period in this country. You remember it--right after the--we headed into 
a recession in early 2001, then the terrorists attacked us. And the 
question was, could we recover? And I worked with Congress to cut taxes 
before the terrorist attack and after the terrorist attack. And I 
believe one reason why the recession we went through was one of the 
shallowest in American history is because we cut the taxes. See, when 
you have more money in your pocket to spend or save and invest, the 
economy benefits, as far as I'm concerned. And so one of the challenges 
we face is making sure that we keep the taxes low.
    We cut the taxes on everybody who paid taxes. We increased the child 
tax credit. Look, if you've got a child, we want to help you. We reduced 
the marriage penalty. I didn't like a Tax Code that penalizes marriage. 
I thought we ought to be encouraging marriage, not penalizing marriage 
in our society. We cut taxes on capital gains and dividends, cut the 
taxes on small businesses.
    And all those tax cuts affected the performance of Caterpillar. You 
see, the tax cuts helped your workers have more money in their pocket. I 
happen to believe that if the workers have got more money in their 
pocket, they're going to be a more satisfied worker. I know it sounds 
not very sophisticated to say that, but I suspect it's true. If you got 
a safe workplace, a workplace where people are working together--you're 
a better satisfied worker if you're keeping more of what you earn. And 
that's what the tax cuts have helped provide.
    We helped small businesses with expensing provisions. That's an 
accounting term that

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says, if you buy new equipment, you get a tax benefit for buying new 
equipment. That helps people in Caterpillar, because it encourages small 
businesses to use your products. It also helps make sure the small-
business sector remain vital. Seventy percent of new jobs in America are 
created by small businesses. And if you're interested in coming out of a 
recession and interested in people working, it makes sense to provide 
tax incentives to help the small-business owner in America. And that's 
what we did.
    Capital gains and dividend tax cuts benefit people who invest in 
your company. One of the things--reasons this company is strong is, 
you're able to attract capital. People say, ``Well, I like what the 
workers are doing; I like the product that's being put together. We want 
to invest; we want to work alongside of the good people here in 
Caterpillar.'' And the tax incentives that we provided by cutting 
capital gains and dividends encouraged that kind of investment.
    We extended the research and development tax credit. I mean, one 
reason why Caterpillar is a modern, competitive company is because 
you're always investigating new methodologies; you're investing in 
research. And therefore, in the Tax Code, we tried to encourage research 
and development. And so the tax cuts have worked. And I hope you don't 
fall prey to people in Washington saying, we need more of your money in 
order to balance the budget. I don't think so.
    I think what we need to do is to set priorities like you set 
priorities with your money and make sure we focus on that which is 
necessary to do. And the most important priority we have is to defend 
this homeland from attack. And we better make sure that when we have a 
man or woman in our uniform in harm's way, they get all the equipment, 
all the support they need to defend the United States here in the 21st 
century.
    I have an obligation to submit a budget. It's one thing to stand up 
here and say, ``We don't need to increase your taxes; we can set 
priorities and balance the budget''--so next Tuesday, I'm going to do 
just that. I'm going to submit a budget for Congress to look at that 
shows how we can balance the budget in 5 years and keep your taxes low.
    I want to talk a little bit about trade. Trade is an important 
subject here at Caterpillar, and the reason why is because a lot of the 
product you make here, you sell to somebody else, sell overseas to 
another country. That's trade. And yet it's a topic of hot debate. The 
temptation is to say, ``Well, trade may not be worth it. Let's isolate 
ourselves. Let's protect ourselves.'' I think it would be a--I know it 
would be a mistake for Caterpillar workers to do that. I think it would 
be a--I know it's a bad mistake for the country to lose our confidence 
and not compete.
    Let me give you some interesting statistics. First of all, we're the 
largest exporter in the world. Last year, we exported a record $1.4 
trillion worth of goods and services. Now, in order to export something, 
somebody has to make it. In other words, when I talk about numbers, 
behind the numbers is people who are providing the service and/or making 
the product. So the more one exports, the more likely it is people are 
going to be working.
    Exports account for about 11 percent of our economy. One in six 
manufacturing jobs in the United States depends on manufacturing 
exports. We also benefit when people invest here. There are people who 
have good-paying jobs as a result of somebody saying, ``I want to invest 
in the United States.'' And so when I'm talking about opening markets, 
I'm making sure that not only is our market open, but somebody else's 
market is open. And we expect people to treat us just the way we treat 
them. All we ask for is, be fair with the American people.
    We've got free trade agreements. That's how you make sure that we're 
treated fairly. Our market is open, and we want their market open. We 
got--these free trade agreements really represent only a small fraction 
of the GDP. In other words, they're not necessarily with significant 
economies, and yet they account for 42 percent of American exports.
    One way to look at trade is this: We're 5 percent of the people of 
the world; that means 95 percent live outside of America, and shouldn't 
we try to put ourselves in a position where we can sell goods and 
services to those 95 percent? I think it makes sense to do so.

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    We've pursued trade agreements. The way it works is, you have 
bilateral trade agreements, in other words, with the United States and, 
say, Chile. And then we have regional trade agreements and world trade 
agreements. One world trade agreement is called the Doha round of the 
WTO. It's basically attempting to make sure that everybody gets treated 
the same way, in the same fashion, so that the world markets are open.
    Again, I repeat to you: I strongly believe that if we can compete 
with people on a level playing field, nobody can compete with us. And so 
the key is to make sure the rules are fair. We had bilateral agreements 
with three countries when I first became President; they're now up to 
13, and we've got 3 more in the mill.
    Let me talk to you about Caterpillar. Half the products you make in 
America are exported. It's an interesting statistic, isn't it? You walk 
by one of these things; it's sold right here in the United States; but 
the other one right here is sold overseas. Cat sells more than 300 
products in foreign markets. It's just not the D-10 I drove that gets 
sold overseas; there's 299 other products manufactured by this company, 
by American workers, that are sold overseas.
    Free trade agreements are helping. We did a free trade agreement 
with Chile. Chile has become Caterpillar's fifth largest export market 
since that free trade agreement. In other words, because we lowered 
trade barriers, and said, ``You treat us the way we treat you,'' it has 
enabled this company to sell more product than ever before, which means 
people are working, when you have to make the product.
    The free trade agreement completed with Australia took effect in 
2005. Caterpillar exports to Australia have grown by 26 percent. In 
other words, opening markets benefits people who produce goods that 
people want. And people want Caterpillar product. Why? Because they 
work. They generally don't break down; the master craftsmanship is 
great; and there's a demand for them.
    Opening China's market--I understand trade with China is considered 
controversial. I know that. But I want to tell you something, if you're 
a Caterpillar worker or a Caterpillar shareholder, what that has meant--
it meant that Caterpillar exports to China have increased by 40 percent 
since the market was opened. That's helped to create more than 5,000 new 
jobs right here in America.
    We're going to continue to negotiate free trade agreements. And by 
that I mean, we just want people to treat us fairly. I'm confident in 
our ability to sell American product and services overseas if the 
playing field is level.
    A little bit on health care--you've got a good health care plan 
here, thanks to Caterpillar employees. A lot of small businesses don't. 
The cost of health care is on the rise; you know it. Some things we can 
do to make the health care system better is to make sure that customers, 
the patients, are more in charge of their lives and their plans. I'm 
worried about frivolous lawsuits that are running up the cost of health 
care. Do you know that there's about 1,500 counties in America where the 
ob-gyn has left because of frivolous lawsuits, and when somebody gets 
sued all the time, they practice more medicine than is necessary, and it 
runs up your cost?
    Health care needs to have new information technologies. I met some 
people on the floor that are running some pretty sophisticated computer 
ware, and we need information technology in health care. The old system 
of carrying handwritten files is not efficient, runs up the cost of 
medicine for you, and leads to errors. Most doctors can't write very 
well to begin with. [Laughter] It's hard to read their writing. We need 
to change the Tax Code in a fair way that treats everybody fairly. In 
other words, I've got a plan I'm going to spend a little more time with 
in New York tomorrow.
    I want to talk about energy tomorrow in New York. I'll give you the 
summary here. Dependency on oil puts us in a position that--where 
terrorists can harm our economy. When you're dependent on a product, and 
you import that product, if somebody were to inflict damage on a energy 
infrastructure, it could cause the price of your energy to go up. Or if 
you're dependent upon product from a hostile regime, it means you're in 
a position of vulnerability.
    And so I'm going to work with the Congress to spend some of your 
money on technologies that will change the way we live.

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One of the interesting things that's happening is, is that there's some 
new battery research taking place. And I believe within relatively short 
order, Americans will be able to drive the first 20 miles, and 
eventually 40 miles, on a new battery. And you can imagine, particularly 
in the big cities, if people are using electricity to drive their car--
and by the way, the car is not going to look like a golf cart. 
[Laughter] Not exactly looking like one of these things, but 
nevertheless--[laughter]--it will be normal size, something you actually 
want to use. But you can imagine how this battery technology can change 
our dependence on oil, because if we reduce the use of gasoline, you 
reduce your use of oil. And if most of your oil coming from overseas, 
you're reducing your dependency upon oil from overseas.
    I'm a big believer in ethanol. You've got a lot of farmers around 
here who--[applause]. Fifteen years ago, or 20 years ago, if people 
stood up here and said a lot of people would be using a corn product to 
drive their cars, they'd have said, ``Man, what--the guy has kind of 
lost it, hasn't he?'' But it's happening. We're up to about 6 or 7--I 
think it's 6 or 7 billion gallons of ethanol per year now.
    We're going to run into a constraint pretty soon, though. It turns 
out, corn is needed for more than just ethanol. You got to feed your 
cows and feed your hogs. And that's why we're spending some of your 
money on what's called cellulosic ethanol research, so we can use wood 
chips or other agricultural wastes to make ethanol, to power our 
automobiles.
    I believe we can reduce our consumption of gasoline by 20 percent 
over the next 10 years, in order to be able to meet a goal of becoming 
less dependent on oil. And it's coming. These are new eras, and it's 
exciting times.
    This is a global issue, obviously. It's an issue--for example, when 
demand for oil goes up in a place like India or China, it affects the 
price that you pay at the pump. And therefore, it makes sense for us to 
help these developing countries with new technologies that will not only 
make them less dependent on hydrocarbons but better stewards of the 
environment.
    And so I appreciate what Caterpillar has done. They're involved with 
what--we set up what's called the Asia-Pacific Partnership on Clean 
Development and Climate. I don't know if you know this, but you've sold 
more than $50 million worth of equipment to a large coal mine in China 
to help capture methane gas and turn that into energy. In other words, 
you're not only making Cats, you're making interesting product that will 
enable us to be better stewards of the environment. And I thank you for 
that.
    And my only point to you is, is that in order for us to be 
competitive, in order for us to remain the economic leader of the world, 
we're going to have to promote new technologies that make us less 
dependent on oil. And it's coming. These are exciting times. I'm very 
optimistic about meeting the future because of new technologies.
    I do want to say one thing about education. I really appreciate the 
worker program--the education program for the workers here. I think Cat 
spends about $900 a worker to help make sure our workers have the skills 
necessary to be competitive in the 21st century. But good education 
starts early. And we need to make sure our public schools, particularly 
in the early grades, get it right.
    There's a piece of law I signed that I'm very proud of called the No 
Child Left Behind Act. The spirit says, we're going to raise standards. 
If you have low standards, you get lousy results. I used to call it the 
soft bigotry of low expectations. If you don't believe a kid can learn, 
guess what's going to happen--he's not going to learn. And so inherent 
in--the No Child Left Behind Act says there is a role for the Federal 
Government. After all, we're spending a fair amount of money, and we 
ought to expect good results for that money.
    So we said, ``In return for Federal money, we expect you, the local 
districts, to set high standards and to measure.'' I've heard every 
excuse for not measuring: You're teaching the test; you're testing too 
much. How can you solve a problem unless you measure? And what we need 
to do is figure out who can read or write early, and have extra money to 
help those who can't read or write.
    We have an achievement gap in America that we better do something 
about if we're

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going to be competitive. And by that I mean, when you put out the test 
scores, the minority students test below white students. And that's not 
good enough. And we'd better make sure all our children can read early, 
not just a handful. And therefore, I like the idea of holding people 
accountable. And we say, we'll measure as a diagnostic tool to correct 
problems early. And at some point in time, if schools refuse to change, 
there needs to be a consequence. There needs to be accountability. This 
isn't anti-teacher; this is pro-teacher. And it's pro-parent, and 
equally importantly, it's pro-child.
    And Congress needs to reauthorize this bill. It's working. The 
achievement gap is closing. How do I know? Because we're measuring; we 
can measure success in schools. It's in our interest as a country to 
make sure every child gets a good education, and it's important to start 
early.
    Oh, I'm sure you've heard about all the reading debates, what works 
and what doesn't. Well, you're able to determine what works or what 
doesn't by measuring. And a measurement system says to a school, ``We 
appreciate your hard work. Thanks for being in the classroom. But you 
might think about changing your curriculum since you're not meeting 
standards.''
    And then what this country needs to do is to recognize that we need 
to help poor students go to college. That's why we're expanding and 
increasing Pell grants. And then what this country needs to do is 
understand the importance of community colleges and support community 
colleges, to help older workers gain new skills necessary to fill the 
jobs of the 21st century.
    In order to compete, we got to have an education system that makes 
sure all children from all walks of life have skills necessary to fill 
the jobs of the 21st century. We got to be confident and open up markets 
so that our companies that produce products, goods, and services that 
people want are able to sell them overseas; we got to have a Tax Code 
that keeps taxes low on the people who are working for a living. We got 
to have a health care system that is patient-centered, not government-
centered; and we got to make sure that we don't lose our confidence. And 
if you really knew America like I'm able to see it, which is to see the 
compassion and the decency and the courage and the strength of the 
people, you'd share the same confidence I have about the future of this 
country.
    I'm honored to be with you. Thanks for letting me come to the 
heartland of the United States. God bless.

Note: The President spoke at 11:52 a.m. at Caterpillar, Inc. In his 
remarks, he referred to Robert T. Williams, vice president, Caterpillar, 
Inc. The Office of the Press Secretary also released a Spanish language 
transcript of these remarks.