[Weekly Compilation of Presidential Documents Volume 43, Number 28 (Monday, July 16, 2007)]
[Pages 939-943]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on the Office of Management and Budget
Mid-Session Review

July 11, 2007

    Thanks for coming. Please be seated. Good afternoon. Welcome to the 
White House. I'm glad you're here. There are certain traditions that all 
Americans look forward to: picnics with the family, Fourth of July 
celebrations, and the Mid-Session Review. [Laughter] It's the time for 
us to take a look at the Federal budget.
    Maybe not all Americans look forward to it, but I'm looking forward 
to talking to the American people about the progress we have

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made when it comes to growing our economy and keeping their taxes low 
and being wise about how we spend the money. The Mid-Session Review is 
important. It lets the American people know how we're doing in meeting 
what we call ``fiscal goals''. And this year the message is 
unmistakable: America's economy keeps growing; Government revenues keep 
going up; the budget deficit keeps going down. And we've done it all 
without raising your taxes.
    And the person in charge with watching the money here in the White 
House is Rob Portman, Office of the Management and Budget. Thank you for 
being here; appreciate your service. I'm proud to be here with Senator 
Thad Cochran from the great State of Mississippi. Senator, thank you for 
joining us. Two Members from Congress, Jo Bonner and Gresham Barrett; I 
thank you for taking time to listen to this good news. I appreciate all 
the business leaders and guests who have joined us today.
    The release of the Mid-Session Review is a good opportunity to take 
stock of the debate over taxes and spending in Washington. At its core, 
the debate is between two very different economic philosophies and 
fiscal philosophies. One philosophy says that politicians in Washington 
know best, so taxes should be high and Government should decide where to 
spend the money. The other philosophy says that the American people know 
how to spend their own money better than the Government does, so 
Government should spend less and the taxpayer should keep more. And 
that's the fundamental debate here in the Nation's Capital.
    For the past 6 years, my administration and our allies in Congress 
have pursued the second philosophy. We believe the American people can 
spend their money better than the Government can spend it. We believe 
workers and families can spend their money better than the Government, 
and that's why we doubled the child tax credit and reduced the marriage 
penalty and cut tax rates for everybody who pays income taxes.
    We believe that entrepreneurs can put their money to better use than 
the Government can. That's what we believe, and we acted on that belief. 
So we reduced taxes on dividends and capital gains and created 
incentives for small businesses to invest and expand.
    We believe ranchers and farmers and family-business owners can make 
better decisions about the future than the Government can. That's why we 
put the death tax on the road to extinction.
    We also believe taxpayers' dollars should be treated with respect 
because Americans have worked hard to earn them. And we believe that 
taxpayers' dollars should be spent with restraint because Government 
programs are not the solution to every problem. So we've spent the money 
necessary to meet the highest priorities of Government, including 
protecting the homeland and supporting our men and women in uniform. 
Meanwhile, we've tightened spending in other areas. Over the past 3 
years, we've held the growth of annual domestic spending close to one 
percent--well below the rate of inflation.
    Some in Congress disagree with this approach. That's what you expect 
in a democracy. Not everybody agrees with what I have just described. 
They said it would not be possible to cut the deficit and deliver tax 
relief at the same time. They argued for increasing taxes. Well, events 
have proven them wrong. The critics can keep arguing with us, but they 
can't argue with the facts.
    We began cutting the taxes in 2001, and America's economic growth--
and America's economy has grown for more than 5 years without 
interruption. Real after-tax income has increased nearly by 10 percent. 
That's an average of about $3,000 per person. Our economy has expanded 
by more than $1.9 trillion. During the time when we cut taxes to today, 
our economy has grown by more than $1.9 trillion--this amount is larger 
than the entire economy of Canada.
    Since the tax cuts took full effect in 2003, our economy has added 
more than 8.2 million new jobs. The unemployment rate has fallen to 4.5 
percent; exports are up; the service sector is strong; and more 
Americans are working today than ever before in our Nation's history.
    Behind these statistics are stories of hard-working Americans who 
are finding more opportunity and feeling more secure about their future. 
And I've asked some of them

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to join me today, and I thank you all for being here.
    First, I want to talk about Luther Russell. Luther is here; he owns 
a small family fencing business. He is like millions of our fellow 
citizens who are small-business owners, and they're working hard. 
They're working hard not only to provide security for their family; 
they're providing employment for others. The truth of the matter is, 70 
percent of new jobs in America are created by small-business owners, and 
it's important to have fiscal policy that supports our small-business 
owners. We've got one right here with us: Luther Russell, fence man.
    Thanks to our tax relief, last year he filed an income tax, he saved 
$27,000. That's what tax relief has done for the small business, because 
his business pays taxes at the individual income tax rates. See, when 
you cut individual income tax rates for everybody who pays taxes and 
your business is set up so that you pay taxes like an individual does, 
you're cutting taxes on this small-business owner. I like the idea of us 
being able to meet our spending priorities in Washington and Luther 
having 27,000 more dollars in his pocket to expand his business. That's 
good for America.
    Gary and Elizabeth Comparetto are here. They've got 8 children, and 
they saved $8,000 a year because of tax relief. Now, having 8 kids is an 
interesting challenge--[laughter]--made easier by the fact that because 
of our tax relief, this good family has got 8,000 additional dollars so 
they can do their duty as a mother and father.
    Sharon Hawks is with us, serves in the National Guard. Her family is 
saving $3,600 annually on their taxes. I like the idea of our families 
having more money to be able to set aside for education or set aside for 
savings or to be able to expand their home. When I say I'd rather these 
people be spending their money than the Government spending their money, 
I mean it. It's good for this country that this tax relief is 
substantial and real for working people.
    Jennifer Zatkowski is with us. She saved more than $2,000 a year on 
her taxes, and she's reinvesting the money to expand her pet shop. Tax 
relief makes a significant difference. Oh, I know, probably here some in 
Washington don't think $27,000 is a lot for a small business or $2,000 
doesn't amount to much. Just ask these folks. It means a lot to them. 
And it means a lot to working people all across the United States that 
we cut the taxes, because men and women like these here on this stage 
are powering our economic resurgence. That's how the economy works. When 
you've got more money in your pockets to save, spend, or invest, this 
causes the economy to grow. And we need to keep the Government out of 
their wallets and out of their way in order to keep this economic 
recovery strong.
    Our economic resurgence has also had a positive impact on the 
Federal budget. A growing economy has led to growing tax revenues. 
Because people are making more money, they're also paying more taxes. 
That pie is growing. The tax rates remain the same, but the pie is 
growing, which has yielded more Federal revenues. Today's Mid-Session 
Review shows that this year's Federal tax receipts are expected to be 
$167 billion higher than last year's. That's an increase of nearly 7 
percent. And over the last 3 years, tax revenues have grown 37 percent. 
That's one of the highest jumps in revenues on record.
    These growing tax revenues, combined with spending restraint, are 
driving down the Federal deficit. The Mid-Session Review estimates that 
this year's deficit will drop to $205 billion. That's down more than 
$200 billion from 2004. It's down more than $43 billion from last year. 
And it's even down from last February's projections. More importantly, 
the size of the deficit is down to only 1.5 percent of America's 
economy. One way to be able to measure how we're doing with the deficit 
relative to other years is to measure it as a percentage of GDP. We're 
estimated to be at 1.5 percent of GDP. That's well below the average of 
the last 40 years. We've achieved all this deficit reduction without 
once raising the taxes on the American people.
    It's good news, but there's more work to be done. A shrinking 
deficit is good; no deficit is better. So earlier this year, I proposed 
a balanced budget that will eliminate the Federal deficit by 2012. The 
deficit is not

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caused by undertaxing; it's caused by overspending. So the budget we 
proposed keeps us on the path to low taxes and spending restraint. And 
according to the Mid-Session Review, that path will lead to a surplus of 
$33 billion in 2012. In other words, despite the unprecedented 
challenges we face, the United States is going to be back in the black.
    The policies of low taxes and spending restraint have produced a 
clear and measurable record of success. You can't argue with what I'm 
telling you. These are the facts. Yet, in the face of all the evidence, 
Democrats in Congress still want to take us down a different path. We've 
shown what works. They must not believe us, because they passed a budget 
framework that calls for $205 billion in additional domestic spending 
over the next 5 years. The budget framework they passed calls for 205 
billion additional dollars of Federal spending in a 5-year period. That 
works out to nearly $680 per person. It's no surprise that their budget 
framework also includes the largest tax increase in American history.
    Some of this might sound familiar to some of you older hands around 
here--it's the same old tax-and-spend policy that the Democrats have 
tried before. It would have the same bad result. Tax-and-spend would add 
to the burden of families and businesses. It would affect these good 
folks right here on the stage. Tax-and-spend would put our economic 
growth in jeopardy. Tax-and-spend would turn our back on the progress 
we've made on reducing the deficit. Tax-and-spend policies are policies 
of the past, and I'm going to use my veto to keep it that way.
    The Democrats are also delaying the 12 basic spending bills that are 
needed to keep the Federal Government running. At their current pace, I 
am not likely to see a single one of these must-pass spending bills 
before Congress leaves Washington for a 4-week recess. And by the time 
they return, they will have less than a month before the fiscal year 
ends on September 30th to pass the appropriations bills.
    It's important that they honor the pledges they made when they took 
control of the Congress, and that is they pledged a policy of 
transparent government and fiscal responsibility. Well, now is the time 
to show that they're serious. And one way they can do so is they can 
pass spending bills on time, instead of creating a massive bill at the 
end of the process that will be so large that no one can possibly read 
it and anyone can hide wasteful spending in it. The Democrats should 
honor their commitment to fiscal discipline by passing these bills in a 
way that sustains our growing economy and balances the Federal budget.
    I'm going to work with members of both parties to achieve these 
goals, and as we do, there are other budget challenges we need to take 
on.
    First, there's the matter of earmarks. Earmarks are spending 
provisions that are slipped into bills by individual Members of Congress 
for projects in their own district or State. They're just slipped in the 
bill. Often, the earmarks occur at the last hour and without debate. 
This violates the trust of the public and often leads to unnecessary 
spending. The problem is growing, and over the last decade, the number 
of earmarks has more than tripled.
    So earlier this year, I proposed reforms that would make the earmark 
process more transparent, end the practice of concealing earmarks in so-
called report language, would eliminate wasteful earmarks, and cut the 
overall number and cost by at least half. Democrats and Republicans have 
taken a good step by agreeing to list all earmarks before bills are 
passed so the public can see them and lawmakers have a chance to strike 
them down, get rid of them. Now Congress needs to uphold the commitment, 
and the Senate needs to make this transparency part of its formal rules. 
The American people deserve to know what they're getting for the money 
they're sending to the Nation's Capital. There ought to be full 
disclosure and full transparency in the appropriations process.
    The matter we need to confront as well, is the unsustainable growth 
of entitlement programs like Medicare, Medicaid, and Social Security. As 
the Mid-Session Review makes clear, rising entitlement spending is by 
far the greatest long-term threat to America's fiscal health. These 
programs are vital to the daily life of millions of Americans. They are 
growing faster than the economy,

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faster than inflation, and faster than our ability to pay for them. This 
isn't going to be a Republican challenge or Democrat challenge; this is 
really a generational challenge. And the fundamental question facing 
those of us in Washington today is whether or not we have the capacity 
and the will to confront the challenge now.
    I believe we have a moral obligation to deal with this problem, and 
that's why I've submitted proposals that will help deal with these 
programs. Matter of fact, I remember going to Congress and speaking very 
specifically about how to address the underlying issues of Social 
Security so that older guys like me could look to young Americans like 
some of you here, and say, ``We've done our duty to fix this program 
once and for all.'' And I call upon the Democrats in Congress to come 
forth with their ideas as how to fix it, to step forward with some 
concrete, specific proposals. I'll be glad to listen to them, and I 
expect them to listen to mine. That's why we're in Washington. We're 
here to confront problems today and not pass them on so somebody else 
has to deal with them.
    The Federal budget can be complicated, and making decisions about it 
can be quite contentious. Yet we know what it takes for our economy to 
succeed. During these budget debates, it's important to keep in mind the 
lessons of the past. As today's Mid-Session Review makes clear, keeping 
taxes low and restraining spending leads to a vibrant economy; it leads 
to new jobs; it leads to better opportunities; and it leads to a 
shrinking deficit.
    Progrowth policies work, and now is not the time to turn our back on 
them. I'm going to work with Republicans and Democrats alike to continue 
these policies so we can keep our economy competitive, so we can keep 
our economy growing, and so we can remain the world leader for 
generations to come.
    I'm honored you guys are here. Thank you all for coming. God bless.

Note: The President spoke at 1:03 p.m. in Room 450 of the Dwight D. 
Eisenhower Executive Office Building.