[Weekly Compilation of Presidential Documents Volume 44, Number 1 (Monday, January 14, 2008)]
[Pages 30-35]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on the National Economy in Chicago

January 7, 2008

    Thank you all. Thank you all very much. Thanks for coming. I'm glad 
to be here with the members of the Illinois Chamber. Mr. Mayor, thank 
you very much. You've given me a lot to do today. [Laughter]
    First thing is, the mayor runs the school system. And I went by 
Horace Greeley Elementary, and the reason I did is because Horace 
Greeley is a blue ribbon school. I remember awhile back, everybody was a 
blue ribbon school. But that's not the way it is these days because 
we're judicious in who gets awarded a blue ribbon school. A blue ribbon 
school is one which sets high standards and measures and achieves 
results.

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    Mr. Mayor, you're a reformer when it comes to education because you 
understand when we find mediocrity, when we find schools that aren't 
teaching, we're going to have to do something about it if the United 
States wants to remain competitive in the 21st century.
    Then the mayor had me briefed by the 2016 Olympic committee bid 
team, and you got a good bid. I'm absolutely convinced that Chicago will 
represent the entire country the right way if the Olympics are here in 
2016. Mr. Mayor, you've put together an outstanding team, and I just 
want to--[applause]--I just want the judges to understand that the 
United States of America stands squarely behind Chicago's bid.
    I am really pleased to be here at the Union League Club. I did a 
little research into the history, and it turns out, Winston Churchill 
came here in 1932, right before I was born. [Laughter] When people think 
of Churchill, of course, they marvel at what he managed to do with the 
English language. When people think of me--[laughter]--never mind, 
Congressman Emanuel. [Laughter] I appreciate the Congressman for joining 
us. He'd been with me all day long.
    You know, there's a lot of partisanship in our Nation's Capital. I 
bet both of us would say, ``too much.'' But it--I appreciate the fact 
that when the President of the United States came to his district, he 
showed up. It shows a lot about the man. I'm honored you're here. Thanks 
for coming.
    I do want to talk about keeping our economy growing and creating 
jobs for our citizens. I had a New Year's resolution, and it was to make 
sure that Congress keeps the taxes low and to make sure that when we 
spend your money, we do it wisely or not at all. And it's a resolution I 
intend to keep.
    Before I talk a little bit about the economy, I do want to thank Joe 
Dively, who's the chairman of the Illinois Chamber who's hosting this 
event. I want to thank the chamber members who are here. I'm honored 
that you'd take time out of your day to give me a chance to come and 
visit. I'm sure you know what I know, that many Americans are anxious 
about our economy. And this, frankly, is not unprecedented.
    Over the last 7 years, over the span of my Presidency, we've had 
other challenges. There have been other times when people have been 
anxious about the economy. After all, we've been through a recession, 
terrorist attacks, corporate scandals, wars in Afghanistan and Iraq, as 
well as devastating natural disasters. It's 7 years we've had experience 
in dealing with anxiety. Every time, our economy absorbed those shocks; 
we dealt with them and managed to grow and prosper.
    In other words, this is a resilient economy because we rely on the 
free enterprise system. Our economy is flexible; it is--motivates people 
to take risk. We are the most prosperous nation in the world. There's a 
sense where we can be optimistic. We have seen anxiety--dealt with 
anxiety before; this isn't the first time.
    We have a strong foundation in our economy, but we cannot take 
economic growth for granted. That's what I want to share with you. I 
understand that while there is a foundation that would be the envy of a 
lot of other nations, we cannot take growth for granted. We confront 
economic challenges, from the downturn of the housing sector to high 
energy prices to painful adjustments in some of the financial markets.
    Recent economic indicators have become increasingly mixed. Last 
Friday, we learned that our economy has now had 52 months of 
uninterrupted job growth. That's a record. That's the longest period of 
job creation on record. Our entrepreneurs are taking risks. Our small 
businesses are expanding. Yet we also learned that our jobs are growing 
at a slower pace and that the unemployment rate ticked up to 5 percent. 
So in other words, on the one hand, we're continuing to set a record; on 
the other hand, there's mixed news. Same when it comes to pricing. Core 
inflation is low--except when you're going to the gas pump, it doesn't 
seem that low, or when you're buying food, it doesn't seem that low. So 
core inflation is low, but energy and food prices are on the rise--have 
risen. Consumer spending is strong, yet housing values are declining. 
The mixed report only reinforces the need for sound policies in 
Washington, DC, policies which do not create more regulation and create 
more lawsuits.

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    Policies include opening new markets for U.S. goods and services. 
One of the interesting adjustments that has happened in our economic 
horizon has been that trade has been a significant part of growth. In 
other words, when you open up markets where our goods and services are 
treated fairly, we can compete with anybody anytime.
    It's in our interests that we open up markets. It's in our interests 
that we demand people treat us the way we treat them in the marketplace. 
And we got some trade votes that will be coming up this year: Colombia, 
Panama, and South Korea. It's in the interest of economic vitality and 
growth that we provide opportunities for businesses, large and small, to 
be able to sell goods and services.
    Secondly, energy prices--there is no quick fix. As a matter of fact, 
I signed good legislation, passed by Republicans and Democrats, that 
enable us to begin to diversify away from oil and gas, and that's good. 
But the diversification isn't going to happen overnight. We ought to be 
exploring for more oil and gas in the United States of America, and I'm 
convinced we can do so in environmentally friendly ways. And the truth 
of the matter is, if we're deeply concerned about the environment and 
want to make sure we're wealthy enough to deal with environmental 
challenges, we ought to be using nuclear power.
    We're working on policies to reform our mortgage markets. But most 
importantly, the smartest thing we can do is to keep taxes low. In a 
time of economic uncertainty, we don't need to be taking money out of 
your pocket. In a time of economic uncertainty, we ought to be sending a 
clear signal that taxes will remain low. Now, I've worked with Congress 
to cut taxes, and progrowth economic policies work. When you cut taxes, 
it means that people have more money to save, spend, or invest, more 
money in your pocket, more money where you can do--you can support your 
family, or if you're a small-business owner, you can reinvest to create 
more job opportunity in the community in which you live.
    It turns out, tax cuts have helped our economy overcome 
uncertainties. Economic growth yielded more revenues for our Federal 
Treasury. And when you combine that with spending discipline, then that 
deficit is beginning to shrink, particularly as a percentage of GDP. Our 
deficit percent of GDP is low relative to historic averages. It's 
possible to keep taxes low, grow your economy, and deal with your 
deficit, is what I'm trying to explain to you.
    In times of uncertainty, it's very important to make sure that the 
people on the frontlines of job growth--that would be the entrepreneur--
knows taxes are going to remain low. And so one of the first basic 
principles that I'll be talking to Congress about is, this 
administration will use its authorities to keep taxes low.
    I don't think there are many folks who believe that Washington 
really needs more of your money; I certainly don't. Unfortunately, 
Americans could be facing higher taxes unless Congress takes action to 
stop it. You see, in less than 3 years, the tax cuts that we passed are 
set to expire. That creates uncertainty. If you're an entrepreneur 
thinking about investing, and all of a sudden, you're looking at a 
horizon where your taxes may be going up, it creates uncertainty. We 
don't need more uncertainty in an uncertain market. If Congress allows 
this to happen, we'll see an end to the measures that have helped our 
economy grow, including the 10 percent individual income tax bracket, 
the reductions in the marriage tax penalty, and reduced rates on regular 
income, capital gains, and dividends.
    And one of the interesting things that happens if taxes go up--
people say, ``Well, we're just going to tax the rich.'' The problem is, 
many small businesses pay taxes at the individual income tax rate 
because they're subchapter S's or limited partnerships. We don't need to 
be running up taxes on small-business owners. After all, 70 percent of 
new jobs are created by small businesses in America. Increasing the tax 
burden on small businesses will make it less likely people will be 
willing to create new jobs.
    And so I will strongly urge that the Congress keep taxes low. One 
way to do it is to make sure that all the tax cuts we passed are made 
permanent. If you're interested in taking uncertainty--[applause]. One 
of the other taxes that's going to return will be the death tax, which 
is being phased out. And

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in 2011, it kicks back in, which means it's going to be hard on estate 
planning, let me put it to you that way. I hope a lot of people don't 
decide to move on just because of the tax cut. [Laughter] I'm absolutely 
convinced we can do a better job of having the estate tax put on the 
road to extinction and then let it pop back up. It makes no sense.
    Listen, the estate tax is a lousy deal, particularly for farmers and 
small-business owners. I mean, you get taxed twice. You tax it when you 
build your business, and then they tax you when you die. And I'm 
absolutely convinced that there is a deal to be done in getting rid of 
the estate tax once and for all for the sake of economic vitality and 
growth and fairness.
    I want to tell you what it means if these taxes go up. If you're a 
single mom with two children and 30,000 in earnings, her taxes will go 
up by 67 percent, or about $1,600. If the taxes aren't made permanent, 
this is going to affect a lot of Americans in very negative ways. If 
you're an elderly couple with $40,000 in income, they would see their 
taxes go up by about 155 percent, or $900. Now, that may not sound like 
a lot to some of us in Washington, where they throw around numbers in 
billions; it means a lot to an elderly couple making $40,000 a year.
    Twenty-six million small-business owners would see their taxes go up 
by nearly 17 percent, or $4,000 on average. For somebody struggling with 
health care costs and 4,000 more dollars goes over to the Federal 
Government, it's going to make it harder for you to stay in business. It 
just doesn't make any sense, in times of uncertainty, to be sending 
uncertain messages about the Tax Code. And so I'm looking forward to 
working with the Congress to get these Tax Codes--cuts made permanent.
    Secondly, the Federal Government can play a positive role. We can 
play a negative role if we get too aggressive. If we overregulate, it's 
a negative role. If we pass law that--and opens up businesses and firms 
and small businesses to lawsuits, that's a negative role. We got too 
many lawsuits in America to begin with, in my judgment. But there are 
some things we can do to help.
    For example, the housing market--what's interesting about the 
housing market is that, you know, in the old days, you'd sit down with 
your lender and work out a deal. And then if you came on a hard time and 
you're still creditworthy, then he would help you refinance the loan. 
Well, those mortgages that have been made in recent times have been 
bundled up into financial instruments and sold. So it's hard to get the 
borrower and the lender face-to-face to help the borrower stay in the 
home. That's the challenge.
    Now, Hank Paulson and Alphonso Jackson, that would be the Secretary 
of the Treasury and the Secretary of Housing and Urban Development, have 
come together with an innovative plan called HOPE NOW. It doesn't cost 
one dime of your money, but it's the use of Federal influence to bring 
investors and counselors and lenders and servicers of loans together to 
help find those who have creditworthy--to help them stay in their homes. 
In times of uncertainty in the housing market, it makes sense to help 
people refinance loans.
    And Congress can help as well. By the way, they passed good law. You 
know, I don't know if you know this or not, but if you refinance your 
home, it's a tax liability for you. The value of the--the computed value 
of the difference between what was viewed as your value of your home and 
the new one after refinancing--new value after refinancing was a tax 
liability. It made no sense. Somebody is trying to stay in their home, 
and they get refinanced, and then there's an additional tax liability. 
It makes it harder to stay in the home. And we passed good law to make 
that easier.
    But there's some other things we can do together. In other words, 
there's a constructive role for the Federal Government that I believe 
will help us during these times of uncertainty, and one of them is to 
expand the reach of the Federal Housing Administration. In other words, 
this is a program all aimed at helping creditworthy people refinance 
their home so they can stay in it during this times of uncertainty.
    Now, look, there are some people that probably shouldn't have bought 
a home in the first place. There are speculators that don't deserve 
help, in my judgment. But there are good, solid, hard-working Americans 
that we can help stay in their home by

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providing a--by helping them on refinancing.
    Another place where Congress and the administration can work 
together is dealing with tax-exempt bonds. Tax-exempt bonds, some of 
them for the housing purposes, can be used to help people buy a new 
house. I believe, in this time of uncertainty, we ought to have the 
authority for tax-exempt bonds to be used to help somebody stay in their 
current house. In other words, these are constructive ways to deal with 
the problem we face. Congress needs to pass a reform bill to strengthen 
the regulation of Fannie Mae and Freddie Mac so they can stay focused on 
their core mission, which is housing. And I'm looking forward to working 
with the Congress to help us through this period of correction in the 
housing market.
    Now, secondly, we can help people deal with health care. There's a 
fundamental debate taking place in Washington. I'm on the side of, let's 
strengthen private medicine rather than weaken private medicine. I'm on 
the side that says, the more consumerism, the more choices people have 
in health care, the better off the health care system will be. I'm on 
the side of saying to small businesses, health savings accounts are a 
smart way for you to be able to insure your people. I'm on the side of 
small businesses by saying, I believe businesses ought to pool--be 
allowed to pool risk across jurisdictional boundaries. That's fancy 
words for, if you're a restaurant in Chicago, you ought to be able to 
put your employees in the same risk pool as a restaurant in Texas so you 
can get discounts on your insurance, just like big companies can get 
discounts on their insurance.
    And I'm for changing the Tax Code. The current Tax Code penalizes 
people who go shopping for health care in the individual market. If 
you're a small-business owner, you know what I'm talking about. It's 
hard to go find insurance in the individual market because the Tax Code, 
frankly, discriminates against the individual relative to the person who 
gets tax--health insurance through corporate America. And I think all 
families ought to get a $15,000 deduction for health care or individuals 
a $7,500 deduction for health care, regardless of where they work.
    And all of a sudden, the playing field gets level, and it's more 
likely an individual market begins to grow. And when you couple that 
with transparency of pricing and information technology, you can begin 
to see the emergence of a health care system that's patient-reliant, 
that focuses more on the doctor-patient relationship and less on 
instruction from Washington, DC. And there's a fundamental debate, and I 
strongly believe the Government, by passing good policies, can help us 
deal--help small businesses deal with health care--is a key issue.
    And so those are some of the things I'm looking forward to working 
with Congress about to deal with these times. As I say, we've been 
through this before. People said, ``Are you optimistic?'' I said, 
absolutely, absolutely optimistic. Do I recognize the reality of the 
situation? You bet I do. During my 7 years as President have I seen the 
great American economy bounce back? I have. People say, ``Why do you 
think?'' I say, because our people are optimistic, hard-working, decent 
people. That's why. I mean, this economy rests in the hands of the 
American people, not in the halls of our Government.
    Winston Churchill, when he came here, by the way--I dug out a quote 
that I'd like to read to you. He said, ``Some . . . regard private 
enterprise as a predatory tiger to be shot, while others look at it as a 
cow that they can milk. Only a handful see it for what it really is: the 
strong and willing horse that pulls the whole cart along.'' I don't know 
if he said it right here in this very hall, but that's what he said. 
Government policy ought to recognize who's pulling this economy, and 
that would be the entrepreneurs and workers of America.
    So I want to thank you for giving me a chance to share some thoughts 
with you. Thank you for taking risk. Thank you for helping Chicago and 
the area around Chicago. You're one of the really great locations in the 
United States of America. Mr. Mayor, I'm honored to be with you again. 
Appreciate your time. God bless you. May God bless America.

Note: The President spoke at 1:18 p.m. at the Union League Club of 
Chicago. In his remarks, he referred to Mayor Richard M. Daley of 
Chicago, IL.

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