Excerpts from the President's Remarks in Santa Clara, California May 2, 2003 (Full Transcript)
I'm also here for another reason. I'm here to talk about the state of our economy. Today we saw some new statistics on employment. The unemployment number is now at 6 percent, which should serve as a clear signal to the United States Congress we need a bold economic recovery package so people can find work. (Applause.) That 6-percent number should say loud and clear to members of both political parties in the United States Congress, we need robust tax relief so our fellow citizens can find a job. (Applause.)
Now, here at home, we've got other -- we've got challenges to face. I talked about a statistic, but behind every statistic is somebody's life, when it comes employment statistics. The goal of this country is to have an economy vibrant enough, strong enough, so that somebody who's looking for work can find a job. We're making progress. You've just got to know that. We're a growing economy. Matter of fact, we're -- of all the industrialized economies, we're one of the strongest. That's not good enough for me, and I know it's not good enough for you.
We've come through some hard times. Remember, we've overcome a recession; we've overcome an attack on our soil. We have been in two major battles in the war against terror, one in Afghanistan, one in Iraq. We had some of our fellow citizens forget what it means to be a responsible citizen, some CEOs of corporations in America who felt it would be okay to fudge the numbers, to not tell the truth. Their irresponsible behavior affected the psychology of the country. We'll take care of them. Corporate America -- (applause.)
It would be helpful if many CEOs in corporate America took care of business before we had to take care of them. I call upon the CEOs of this company to treat their employees and shareholders with the utmost of respect. (Applause.)
Despite these obstacles, we're growing. But there is untapped potential in this economy. You know it better than anybody, right here in this part of the world. The foundations for growth are good. We got low inflation, which is positive; low interest rates, which are really good for people who either own a home or want to buy a home, or refinancing a home in order to remodel a home. The greatest strength -- well, let me -- gas prices are coming down, which, by the way, is positive for the American consumer, American people.
The greatest strength we have is the productivity of the American worker. That's our greatest strength. Last year productivity growth in America was 4.8 percent. That's the best annual increase since 1950.
Let me tell you what that means here at United Defense -- incredibly productive work force that you have here. It took four years for United Defense's engineers to develop a working prototype of the Bradley. It took only eight months to do the same for the Future Combat System Vehicle. (Applause.) Productivity increases like that means that we're more competitive, that people are likely to find better jobs, that consumers will benefit.
No, a productivity increase is an incredibly important part of the future of this country. And I want to thank the workers here, and the engineers here, for being on the leading edge of the productivity increases in our country.
But the economy is not growing fast enough. And you know it as well as anybody here. So I've been working with the Congress on a jobs package, a pro-growth jobs package. See, in order to help people looking for work, we need to figure out how best to encourage economic growth. That ought to be the cornerstone of any good jobs package. You see, if the economy grows, somebody is more likely to find work. Therefore, we ought to be asking the question: How do we create economic growth?
In my judgment, and the judgment of a lot of economists -- and the truth of the matter is, it's now become kind of the common wisdom in Washington, D.C. -- the best way to create growth is to let people keep more of their own money. (Applause.) The more money you have in your pocket, the more likely it is you're going to demand a good or a service. The more goods and services demanded, the more likely it is somebody is going to find work in America.
And therefore, I proposed a robust tax package to the United States Congress of at least $550 billion. The reason I did so is because economists have taken a look at that package and say that when it passes, one million new jobs will be created by the year 2004. If you're interested in job creation, if you want to make sure that your neighbor can find work, support a job package that is robust and strong, and is hopeful for the American worker. (Applause.)
We're making good progress. I mean, it makes sense that we should make progress. After all, most of the tax relief package I proposed has already been passed by the Congress. You see, I said we ought to reduce all rates. They've already agreed to that. We ought to reduce the effect of the marriage penalty. They agreed to that. We ought to raise the child credit from $600 to $1,000 per child. They agreed to that.
The problem is that they weren't going to let you keep your own money for three, five, or seven years from now. Well, listen, our economy needs a shot in the arm now, not three, five, or seven years from now. If you're somebody that's looking for work -- if you're somebody that's looking for work, you're not interested in what's going to take place three, five, or seven years from now. (Applause.) If you're somebody looking for work, you want your government to act now. For the sake of job creation, the United States Congress must enact all the tax reforms they passed in 2001.
When I get back to Washington, D.C., I want to see a bill on my desk that recognizes -- well, that may be a little fast. How about in a couple of weeks after I get back to Washington? (Laughter.) For the sake of job growth, let's put those tax cuts we've already got in place, in place today so people can find work. (Applause.)
You hear all kinds of talk in Washington about this plan is not fair; this plan is going to reward only certain people. Let me tell you the effects of this plan on a family of four making $40,000 a year. Their tax bite will go from $1,178 a year to $45 a year. Now, perhaps for some in Washington, D.C., that $1,000 a year for every year doesn't sound like a lot. But for a family of four making $40,000 a year, it means a lot. It means a lot not only to the family, for their capacity to save or invest in their children, it means a lot for our economy, to have people with an additional $1,000 in their pocket. Congress needs to get this passed, and get it passed soon. (Applause.)
Any good economic jobs package has got to understand the role of small business in our society. Most new jobs are created by small businesses. When small businesses are strong, when small business flourishes, people are more likely to find work.
Cutting the tax rates and accelerating the tax rates cuts is important for small business growth for this reason: Most small businesses pay tax at the individual income tax rates. Most small businesses are either a sole proprietorship, or a limited partnership, or a subchapter S, and therefore, pay tax like an individual does.
So that when you hear us talk about cutting individual tax rates and accelerating the tax rate cuts, you've got to understand the impact it is going to have on the American entrepreneur. It will mean more capital in the coffers of the small business company. More capital in the coffers of the small business company means more investment. More investment means more work for the American people. (Applause.) Twenty-three small business owners will see their taxes cut -- 23 million -- small business owners will be more likely candidates to hire somebody.
As well, there is a limit on what a small business can deduct on capital purchases, at $2,500. Congress ought to raise that limit to $75,000 per year for small business, to allow small business to exempt capital purchases of that amount. It ought to index it to inflation.
Listen, when somebody goes out and buys a new computer or a new program, it not only benefits the small business because the small business becomes more productive, it benefits the computer programmer who has designed the program, or the computer manufacturer who made the computer. The best way to encourage economic growth is to encourage investment, is to stimulate supply and demand. The Congress needs to be bold, and the Congress needs to act, and the Congress needs to recognize the importance of small business in our society. (Applause.)
I also believe we ought to end the double taxation on dividends. (Applause.) It makes sense to tax a company's profits. What doesn't make sense is to tax the company's profits and then tax the owners of the company after they pay tax. It's not fair to tax something twice in our society. Who are the owners of the companies? The owners of the companies are the shareholders. Millions of Americans own stock either directly or through pension plans, 401Ks.
Listen, if you're an owner of a company, small or large, you ought to be worried about your company -- your investment being taxed twice by the federal government. The double taxation of dividends is not fair. It is not fair to seniors, who oftentimes rely upon dividend income. It's not fair to the workers whose pension plans rely upon dividend income. It is not fair for the federal government to tax something twice. And we need to get rid of the double taxation of dividends in America. (Applause.)
Getting rid of the double taxation of dividends will make it easier for businesses to raise capital. It will reduce the cost of capital. The more capital there is in circulation, the more jobs there will be for American workers. Getting rid of the double taxation of dividends will encourage companies to pay dividends.
We have just gone through a period in American economic history where people invested based upon what I would call, maybe, pie-in-the-sky projections -- that, don't worry, we don't have any cash-flow, but nevertheless, we've got a nice story. (Laughter.) The problem is that story kind of ran out of steam because there wasn't any cash-flow. To me, it's a great reform to encourage people to pay dividends on stocks, because you can't put out a pie-in-the-sky projection if you're a dividend-paying company. If you say you're going to pay a dividend, you better pay the dividend. And the only way you can pay a dividend is to have actual cash- flow available for the investors.
Getting rid of the double taxation of dividends will be good for job creation. It will be good for capital formation. It will be good for the pension-holders of America. And it will be good corporate reform in a system that needed reform. (Applause.)
I know there's people hurting here in Silicon Valley. I know there are people who are worried about their future. I know this incredibly vibrant part of the American economy over the past year is not meeting its full potential. The plan I just outlined is one that will boost the economy in the Silicon Valley. It's a plan that is bold -- because we need a bold plan. It's a plan that is thoughtful -- because we need a thoughtful plan. Most importantly, it's a plan that will invigorate the entrepreneurial spirit, which has been so strong here, and make it more likely somebody who's looking for a job will be able to find one.
I urge the United States Congress to look at the unemployment numbers that came out today, and pass a tax relief plan that will matter; a tax relief plan robust enough so that the people of this country who are looking for work can find a job. (Applause.)
I know you hear talk about the deficit. And we've got a deficit because we went through a recession. A recession means the economy has slowed down to the extent where we're losing revenues to the federal Treasury. We got a recession because we went to war. And I said to our troops, if we're going to commit you into harm's way, you deserve the best equipment, the best training, the best possible pay. It doesn't matter what it costs, we're going to pay what it costs in order to win the war.
We had an emergency. These all cost our government money. So with the combination of the loss of revenue as a result of the recession -- which was official in January of 2001 -- and the expenditures in order to win a war and deal with an emergency and deal with the new issues of homeland security, we've got a deficit.
And there's two ways to deal with that. One is you control the expense side of the ledger. You make sure the federal government spends your money on that which is absolutely necessary. You focus them on doing certain things and doing them well. You must have fiscal discipline in Washington, D.C. in order to deal with the deficit. (Applause.)
And the other way to deal with the deficit is to put policies in place that increase the revenues coming into the Treasury. And the best way to encourage revenues coming into the Treasury is to promote policy which encourages economic growth and vitality. A growing economy is going to produce more revenues for the federal Treasury. The way to deal with the deficit is not to be timid on the growth package; the way to deal with the deficit is to have a robust enough growth package so we get more revenues coming into the federal Treasury, and then follow my lead and make sure we don't overspend the people's money in Washington, D.C. (Applause.)
I'm incredibly proud of this country. And I know you are, as well. We have been through a lot as a nation. Our resolve has been tested. You know -- but we have shown the world our greatest resources and our greatest strength, which is our national character -- that we hold certain values to be true, that we've got tremendous compassion as a nation, that we're an optimistic people and we're resolved people. We are resolved to defend the peace of the world; that we are resolved to bring freedom to corners of the world that haven't seen freedom in generations; that we're determined to build the prosperity of our own country.
This is a unique moment in our country's history -- it truly is -- and the American people are rising to meet it.
I want to thank each of you for what you've done to make this country more secure, and the world more peaceful and the world more free. I want to thank you for coming out today. It's such an honor to be here. May God bless you and your families and may God continue to bless America. (Applause.)
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