For Immediate Release
Office of the Press Secretary
February 19, 2004
Remarks by the President on the Economy
Presidential Hall Eisenhower Executive Office Building
3:09 P.M. EST
THE PRESIDENT: Thanks for coming. I want to thank the folks who
have joined me here on the stage. We've just had a chat about their
personal circumstances, and I'll share some of their stories with you.
We were talking about our economy and the hopes of families, how to
keep the entrepreneurial spirit strong in America. I hope I conveyed
to them my sense of optimism about the future of the country. After
all, I've seen firsthand what we've been through, and we've been
through a lot. And in spite of that, our economy is strong, and it's
getting stronger. There's still room for improvement.
Let me walk you through, right quick, of what these families and
small business owners and large business and CEOs have dealt with, what
the country has dealt with in the last three years. First, the economy
began to slowdown in March of 2000. The stock market started to go
down. That affected people's savings. And if you watch your saving
accounts go down, it tends to have a negative effect on people's
attitudes.
Then the country got into -- went into a recession, early of 2001.
Recession means that people's incomes, at the employer level, are going
down, basically, relative to costs, people are getting laid off. It's
a slowdown. It's a time of -- it's a tough time for risk-takers. It's
a very tough time for workers. A lot of industries felt like they
needed to lay off people, which created uncertainty.
And then on September the 11th, the country got attacked; a vicious
attack by brutal killers that affected the nation's psychology. It
affected how I view the world, by the way. When we see gathering
threats, the country now must take them very seriously. We can't let
threats become imminent. We can't trust madmen with the security of
the American people.
September the 11th attacks hurt the economy. We began to recover
-- I mean, this is a strong nation. The entrepreneurial spirit is
really strong. You might remember the attitude after September the
11th -- no country is going to hold this country down or hold us back.
I saw that spirit first hand when I went to New York shortly after the
attacks. It was just such an uplifting experience in the midst of
tragedy of horror, to see the will of the American people.
Then the economy got affected because some of our citizens forgot
to tell the truth. They assumed positions of responsibility and
behaved irresponsibly. Corporate CEOs didn't tell the truth to
employees or shareholders. And that affected the economy. Capitalism
is based upon trust, open books, honest accounting. And a lot of
citizens were beginning to wonder what went on. Fortunately, we passed
tough laws and those who betrayed the trust are now paying the price
for having done so. There needs to be serious consequences for people
who are -- don't tell the truth.
And then, as you know, I made the very difficult decision to deal
with Saddam Hussein. It's the right decision. The country is more
secure; the Iraqi people are free from the clutches of tyranny.
The march to war affected our economy. When you turn on your TV
screen in the summer of 2002 and it says, "America's March To War,"
that's not very conducive for investment. Marching for war doesn't
instill a lot of confidence in the future. It creates uncertainty.
People who employ people don't like uncertainty. We need certainty in
order to have a -- to have risk-takers feel comfortable about taking
risk.
We've been through a lot. But we acted, here in Washington. I
led. I convinced the Congress to cut the taxes on the people, because
I felt like, during this time of uncertainty and economic slowdown, if
people had more of their own money, they would demand an additional
good or a service, and in our marketplace, when that happens, a
producer will produce that good or a service. And when that happens,
the economy gets moving; somebody is more likely to find work. And
that's what happened.
We cut the taxes on everybody who pays taxes. I don't think it
makes sense for tax-cutters to say, okay, you win, and you lose. My
attitude was, if you pay taxes, you ought to get relief. And we cut
all taxes, and one of the important things about cutting all income
taxes is we really affect the capacity of small businesses to grow,
because many small businesses pay tax at the individual income tax
level. A sole proprietor pays tax at the individual income tax. The
subchapter S pays tax at the individual income tax level. So when you
cut all rates, you're not only affecting the purchasing power of
families and individuals, you're affecting small business capital
formation. And it helped. And it worked. And at the same time, I
asked Congress to increase the limit for deductibility of $100,000 from
$25,000 to encourage capital investment in the small business sector.
And why did I focus on small businesses, or why did the Congress
focus with me on small business? And the answer is, most new jobs are
created by small businesses in America. (Applause.) Some estimates
say up to -- and if you're interested in job creation, why not focus on
the job creators? So the tax relief was passed, not only to help
individuals, but to help our small business sector. We also increased
the child credit to $1,000. We reduced the marriage penalty. I like
to remind people that the tax code ought to encourage marriage, not
discourage marriage. (Laughter.) Seems like we want people to stay
married, and the tax code ought to encourage that.
We helped on dividend and capital gains to encourage investment,
and particularly to help the elderly. We put the death tax on its way
to extinction. (Applause.) I'm going to talk a little bit about in
regards to one of our guests, but -- -- the death tax is a bad tax, bad
tax.
Think about all the people who are starting their own businesses,
who are working hard to realize the American Dream. They're preparing
their estates to leave something to their -- whoever they chose to, a
son or a daughter. And it becomes awfully difficult to do so because
the government is taxing assets twice. They tax you when you earn,
they tax you when you die. And it's a bad tax. It's bad for farmers.
It's bad for ranchers. It is particularly bad for small business
owners.
Fortunately, the Congress heard the call. We've still got a little
issue to make sure it stays gone forever that I'll talk about here in a
minute.
The tax relief we passed, 11 million* taxpayers this year will save
$1,086* off their taxes. That's a lot of money that will be in
circulation as a result of individual decision-making. See, there's a
fundamental debate here in Washington, it's who do you want spending
money? Look, we need money here. There's plenty of money in
Washington. We need money to fight the war and win the war on terror.
We need money to protect the homeland. We need money to meet
priorities, but I felt it was important to let people spend their own
money. I think the collective decision-making of the American people
with their own money is wiser than the decision-making of the federal
government. (Applause.)
(* 111 million taxpayers will save, on average, $1,586 off their
taxes.)
Twenty-five million small business owners will receive an average
cut of $3,000 this year. That's important. A lot of companies being
started up in garages -- it's kind of the American Dream, isn't it? I
remember when my friend Michael Dell started his computer company in a
garage. (Laughter.) Who knows where the next Michael Dell will be,
but perhaps this $3,000 will help that person achieve his or her dream
about building their own company.
Nearly 5 million taxpayers will be off the rolls as a result of the
tax relief this year. What's interesting is that the tax relief
lowered rates, but the amount withheld from the paycheck was not
adjusted until summertime last year. And so the Treasury Department
estimates Americans will receive an additional $50 billion in higher
refunds and lower tax payments when they file their taxes in April --
April 15th of this year. That's positive news, to help keep this
momentum, this economic momentum alive and well.
Tax relief is working. Factory orders are up; housing is strong;
unemployment rate is down, from 6.3 percent last June to 5.6 percent in
January. Things are positive. But there's more that Congress should
do to keep the momentum alive. One, we need an energy plan. If you're
a manufacturer, you need reliable sources of energy. I've talked to a
lot of small manufacturers who explained what it means to have their
power disrupted as a result of an antiquated electricity grid.
Unreliable supplies of energy creates uncertainty for price. There
needs to be certainty. We need an energy plan. Congress needs to get
me a bill. They need to stop talking; they need to get a bill to my
desk.
We need tort reform. (Applause.) Too many small businesses are --
like you, I'm concerned about the cost of providing decent medical care
to your employees and yourselves. Medical costs are up. Some
practical things we can do -- health savings accounts are a very
practical way for small business owners and employees to deal with
increasing costs. I urge you to look at those.
Associated health care plans are vital for small business owners
and small business plans. (Applause.) Medical liability reform at the
national level will help control health care costs. It's stuck in the
Senate, of course. There's some special interests here in Washington
that simply are not interested in seeing reasonable medical liability
law passed. There are very powerful interests here in Washington that
prevent the kinds of laws to pass that will help control costs. And
I'm going to continue working, and I think it's an important issue -- I
know it's an important issue for small business owners and employees.
We need to continue to open up markets. Our markets are relatively
open compared to the rest of the world. And if our markets are open,
let's open up other markets so people can sell. We're good at things.
We ought to be selling them to other people around the world. There
needs to be free trade and there needs to be a level playing field when
we trade. There needs to be less regulation in Washington, D.C.
But one thing's for certain, is we need to make the tax cuts
permanent. Interestingly enough -- I don't know if you're aware of
this, but all the tax cuts we passed are set to expire. But the
Congress giveth, the Congress taketh away. (Laughter.)
And these tax relief will be -- will expire on an irregular basis.
In other words, they don't all expire at the same time. For example,
this coming year, the child credit -- the tax relief we put in the
child credit goes away. The penalty in the marriage penalty gets
worse. And the expanded 10 percent bracket will go away. See, if
Congress doesn't do anything, there will be tax increases on the
American people. That's what that means. When you hear, "We're going
to repeal the Bush tax cuts," that means tax increases. That's what
that is. "I'm going to raise your taxes," is what they're saying.
There's a philosophical difference here: who would you rather
spending your money -- you or the federal government? And that's the
debate I look forward to taking across the country.
Raising taxes at this point will hurt our economy. When the
economy is coming out of recession, it's beginning to grow, it makes no
sense to raise the taxes on the people. If the Congress doesn't act,
the tax relief would be an increase of about $28 billion on the
American people for the year 2005. That's $28 billion going into the
U.S. Treasury out of your pockets -- be reducing demand by that amount,
be taking capital out of small business coffers if that happens.
That's part of the debate. Let's raise your taxes so we have more
money to spend on programs in Washington, D.C. -- that's the debate.
And I believe strongly that the tax relief needs to be permanent. You
see -- listen to this story, if you're a family of four, earning
$40,000, when those provisions expire in 2005, it'll be a $915 tax
increase for that family. That's a lot of money for a family making
$40,000. The small business deductions expire in '06. These have been
really effective. Congress needs to make them permanent.
And so I talked to some folks up here today about what tax relief
has meant to them. And maybe the best way I can make my point to the
tax-raisers and spenders here in Washington is to listen to the stories
of people like Amy Cofer. She is a mom of two, soon to be a mom of
three. Amy is right there. Joe is a police officer. Joe is out there
dedicating his life to the protection of our fellow citizens. They
saved $1,700 in taxes on '03.
That probably doesn't sound like a lot when you're up here, when
you're dealing with a lot of zeroes behind the numbers. It's a lot for
that family, though. She talked about paying her son's preschool
tuition with that. She made a choice to send her son to a school that
she thought was good. That's a whole other subject by the way.
Parents being -- (Laughter and applause.) But it helped pay for her
son's tuition. The money meant something to them. It made life easier
by being -- that money, to help pay for the preschool tuition, it took
pressure off of their bill paying. If Congress doesn't act, there will
be a $1,000 tax increase on this family. It's a new family, a new
child coming, doesn't make sense to have this family pay a thousand
dollars. See, Congress has got to make the tax cuts permanent. It
helps families like the Cofers.
Katie Powers is here, as well. Katie and -- there she is -- Katie
and David have two children, Nicholas and Allison. They had tax relief
of $3,500. The tax burden will go up by $2,000 if they doesn't make
the tax cuts permanent. When you hear people say, let's just let the
tax cuts expire, that's a tax increase. It's a code word for, I'm
raising your taxes to increase the amount of money we have to spend
here in Washington on new programs, on programs that meet a particular
political desire of the appropriators. That's what they're telling
you.
Shemetra Washington -- Shemetra is a -- started a new job this
month, by the way, at New Technology Management in Virginia.
(Laughter.)
AUDIENCE MEMBER: Yea! (Laughter.)
THE PRESIDENT: About time you hired her. (Laughter.) She's got
the toughest job in America. She's a single mom. She's raising Raegan
and Lauryn. She is going to grad school. A human resource person is
going to get a master's degree. She's been taking -- she's working,
raising her family, and going to grad school to upgrade her skills so
she can make more money. She got a tax cut of $1,700 in 2003. She
said it went to help pay for her education, helped her upgrade her
skills. She becomes a more productive person, which means she'll get
better pay as time goes on.
Again, if they don't make the tax cuts permanent, she has to pay
$1,000 more in taxes. I don't think we want Shemetra paying $1,000
more in taxes -- (laughter) -- when she's struggling with her family,
raising that family.
See, there's a human dimension to all the talk about numbers, and
it's important for the people here in Washington to think about the
people whose lives will be affected if they don't act, they don't act;
they don't act to make it easier for families to raise their children
and to realize their dreams.
Guy Donaldson is with us. He's got an interesting story. He is a
fruit orchard man out of Pennsylvania. Apples, cherries, and peaches.
(Laughter.) I was lobbying for some of them to be sent over here for
breakfast. (Laughter.) See, he is -- he, by the way, is a
partnership, so his entity is taxed at the individual income tax rate
level. But he's more concerned about the death tax. His dream is to
keep this farm in his family. It's been in his family now for the
fourth generation. That's part of his dream. That's what he has
decided that he would like to do with his assets. And he wants to
leave the orchard to his kids.
I said, "Are they here today?" He said, "No, they're pruning
trees." (Laughter.) But the problem is, is that when you're
asset-heavy in your small business or on your farm, it's really hard to
leave it to your -- the death tax makes it nearly impossible to leave
to a family without having to mortgage the future so heavily, or to
sell off parts of the farm in order to pay the government again.
The death tax is an unfair tax to farmers and ranchers and small
business people. The Congress put it on its way to extinction.
However, it comes back to life in 2011. It's hard to explain the rules
of the Senate that allow that to happen, but it does. It just doesn't
make sense. It doesn't make sense, as Guy was talking about, for him
to have such uncertainty about an asset he loves, and uncertainty about
his family. And yet, because Congress won't act, there is
uncertainty. And that's not right, and it's not fair. They need to
put the stake in the heart of the death tax forever, and get rid of
it. (Applause.)
Rex Hammock is with us. Last stander. From Nashville, Tennessee.
He started his own company. I love the entrepreneurial spirit. Don't
you love to be in a country where people feel comfortable about --
(applause) -- where people feel comfortable and free to start their own
business. And by the way, government's role is to create an
environment where the entrepreneurial spirit is strong, where people
feel free and comfortable doing that.
And he did, and he's got what is called a subchapter S
corporation. Many of you know what that means, but for those who
don't, it means that you get taxed at the individual income tax level.
So when we cut the rates on everybody, not just a few, it helped Rex,
made him a little more comfortable in his ability to plan. But more
importantly, by raising the level of deductibility for small businesses
to $100,000, it provided incentive for him to invest. And so this
year, he told me he's going to spend $100,000 on computers, scanners
and software to help his employees in his publishing business become
more productive. It means they're more competitive. When you're more
competitive, you've got a more productive work force, and when you're
competitive, it means you're more likely to stay in business. And it
means you're more likely -- your work force is more likely to have
steady work. And if you really get productive and can compete, it
means you add employees. And he added two last year, and he plans on
adding five this year.
Now, there's a lot of Rexes in the country, and you put two on here
and five on there, and all of a sudden, there's a lot of people
beginning to find jobs. And that's important. That's how jobs grow,
through the individual decision-making of thousands of entrepreneurs
and employers around the country.
He wants to invest in '05 and '06, same amounts. But as I told
you, this aspect of the tax relief package will expire unless Congress
acts. He said it's really hard -- and he's right, by the way -- really
hard to be a planner with -- in the face of tax uncertainty. How can
you plan if you're not certain about what the tax code looks like?
And there are entrepreneurs all over the country who are uncertain
about what the tax code will look like after '06 because the tax relief
plan has got uncertainties built into it. And an important aspect of
the tax relief plan is the deductibility for small businesses; then it
goes away. Congress needs to make all aspects of the tax code permanent
so people can plan their businesses and their lives. (Applause.)
And so it's time for them to step up on Capitol Hill. I'm ready to
continue to lead on tax relief. They need to follow. They need to
listen to the voices, not just of me, but of the people here on the
stage. It's a time for action. It's a time to make the tax relief
permanent. It's a time to listen to the voices of the hard-working
families in America. It's a time to listen to the entrepreneurs of
this country. It's a time to keep this recovery strong by doing what's
right with the tax code.
I want to thank you all for coming today to give me a chance to
spell out a practical way to make life a more hopeful place for America
and small business owners. Congress needs to act.
Thanks for coming. (Applause.)
END 3:33 P.M. EST
|