For Immediate Release
Office of the Vice President
June 7, 2004
Vice President's Remarks at the Money Magazine Summit
New York, New York
(6:37 P.M. EDT)
THE VICE PRESIDENT: Thank you. Thank you very much. Thank you. Thank you very much, and thank you, Dick, for those kind remarks. That was a long time ago when we served together in the Ford White House and you worked for one of my predecessors. And I often think about the job of the vice president, as Dick pointed out, your only real job is to preside over the Senate. When they wrote the Constitution, they got down to the end of the Constitutional Convention, they decided they hadn't given the vice president anything to do, so they made him the presiding officer in the Senate and cast the tie-breaking vote and so forth. And they also gave my predecessor, John Adams, our first vice president, had floor privileges. He could actually go down into the well of the Senate and engage in the debate of the day. And then he did a couple of times and they withdrew his floor privileges. (Laughter.) And they've never been restored. But that's probably a blessing as well, given who some of our vice presidents have been in years past.
But it's a pleasure to be here and I bring greetings to all of you from President Bush, who's just returned from Europe and is now hosting the G8 Summit down in Sea Island, Georgia. Of course, our thoughts this evening are primarily of the loss that came to the nation over the weekend, with the death of former President Ronald Reagan. This is a difficult period, especially for Mrs. Reagan, and the whole nation is feeling great sympathy for Nancy as she takes her husband to his final rest.
The passing of Ronald Reagan makes all of us feel the passing of time, as we recall both the man and the period in which he led us. We remember the president who lifted up the nation, restored our confidence, enhanced our security, and unleashed the greatness of American enterprise. For my part, I remember working with him as a Congressman during the 1980s. Then, during the 1990s as Secretary of Defense, I was honored to take charge of the superb military forces that Ronald Reagan had helped to build for the nation during his time in office. In fact, right after our victory in the Persian Gulf War, I placed a phone call to the former president and thanked him for the foresight and the commitment that had helped make our victory possible in 1991.
I also remember, as we all do, the President's terrific sense of humor, always ready with a great story or a perfect joke. Among my favorites is the one he told at the Al Smith Dinner here in New York just before the 1980 election. He said his opponent, President Carter, was wondering why Reagan always managed to look so good. "Ronnie," Carter said, "how come you look younger every day I see a new picture of you riding on horseback?" Reagan replied, "Jimmy, that's easy. I just keep riding older horses." (Laughter.) Worked for Ron.
Behind that sense of humor was a good heart, and great wisdom about the world. And it's a very fortunate country that has men like that come along when we need them, and we will always miss Ronald Reagan.
I've been looking forward to joining you tonight at this annual gathering of economic leaders. We meet at a time of growing confidence in America's economy. From Wall Street to Washington to my home state of Wyoming, we are seeing the signs of healthy, vigorous growth, and that's an achievement in which we can all take pride. As investors and entrepreneurs, you've supplied the ideas and taken the risks that have helped bring about our present economic expansion. And as we learned last Friday, there is mounting evidence that this expansion is solid and durable. Thanks to the effort and the enterprise of the American people, and sound policies in Washington, our economy added 248,000 jobs in the month of May, our ninth consecutive month of an increase in employment. With the upward revision to the April and the March employment totals, American employers have now hired more than 1.4 million new workers since last August.
With data like that coming in, it might be easy to forget the tremendous challenges our nation had to overcome to reach this point. Before the President and I took office, we understood that the economy was in trouble. The stock market had fallen for much of 2000, and businesses reported drops in confidence and lower rates of investment growth. The economy contracted in the third quarter of 2000, and by early 2001 we were in recession. Just as it appeared the recession was ending, the economy took another blow on 9/11, a day that brought terrible grief to New York and to the rest of the country and cost our economy nearly a million jobs in three months.
We encountered further obstacles after 9/11. There was the natural uncertainty that comes in a time of war, the reluctance on the part of many to invest or make new hires. Taken together, this series of economic challenges is without precedent. As one economist recently put it, imagine that we had known in the summer of 2000 what we know today. Who would have dared think that a five percent growth rate and an unemployment rate less than six percent were achievable as early as 2004? Most economies would not have thought such a rebound possible.
As we've seen, that rebound was not impossible, but it did demand leadership and a clear understanding of the actions required to turn the economy around. President Bush acted decisively to confront these challenges to our economy, with an economic program that focused on significant, broad-based tax relief measures passed in 2001, 2002, and 2003.
Now, a little over a year after the President signed the Jobs and Growth Act of 2003, we're seeing the effects of those tax policies. The national unemployment rate has dropped from a peak of 6.3 percent last June to 5.6 percent last month. Forty-seven of 50 states have seen their unemployment rates fall over the past year. Over the past four quarters, the economy has grown at a rate of five percent, the fastest pace in nearly two decades, and the fastest pace of any major industrialized nation in the world. By comparison, over the past year, the economy of France has grown by less than two percent, and Germany's rate of growth, less than one percent. And in both those nations, the unemployment rate is above 9 percent.
It's pretty clear that the President's tax relief has done exactly what it was designed to do, add momentum to America's economy and help generate jobs. Now, I recognize some may see the story differently. And as an avid reader of history, I know that even the best of outcomes will leave some searching for the downside. Sixty years ago today, the morning after D-Day, as Allied forces poured into Normandy at one of the pivotal points of history, one newspaper in this city ran a story under the following headline: "Invasion's Impact; Marks Beginning of End of War Economy; New Problems for Industry." Some folks just won't settle for good news. (Laughter.)
Yet for America's families, workers, inventors, and entrepreneurs, the economic progress of the past year, and the reduced burden of federal taxes have brought sustained good news.
Our administration's policies have cut taxes for every American who pays income taxes, 111 million individuals in all. Because of our actions, nearly five million low-income Americans no longer pay any federal income tax at all. Forty-nine million married couples bear a lighter burden, because we decreased the marriage penalty, and 43 million families are better off because we doubled the child tax credit. The average savings from the President's across-the-board tax cuts topped $1,500.
In the past twelve months, Americans have seen their real disposable personal income, the best measure of the money people actually have in their wallets, increase 4.3 percent, far higher than the 2.4 percent in the year before we took office. And household wealth, another good indicator of overall prosperity, now stands at $44 trillion, the highest level in American history.
Our tax relief was also designed to strengthen the more than 80 million Americans in the diverse ranks of the investor class, from small business owners and entrepreneurs, to senior citizens living on dividend incomes, to families taking out a mortgage on a home. Encouraging investment is critical to sustaining long-term economic vitality, so we reduced the unfair double taxation on dividends, cut taxes on capital gains, phased out the federal death tax, and encouraged small business investment by quadrupling the expense deduction for equipment. We also worked with Congress to pass strict corporate governance laws and pension reform to build the confidence of Americans saving for retirement.
In response, we've seen remarkable economic advances among investors, and we've built a foundation for further gains in the future. Over the past year, the stock market is up almost 20 percent, increasing America's capital base by more than $2 trillion. Business investment has grown by close to 10 percent. Corporate profits are up by over a third, and confidence among both consumers and CEOs is on the rise. And after a 25-year corporate trend away from paying dividends to shareholders, S&P 500 companies are making higher dividend payments.
Meanwhile, inflation and interest rates have remained low while worker productivity has reached an all-time high. The home ownership rate is the highest in history, and construction spending is on the rise. The turnaround in the manufacturing sector has been particularly encouraging. More manufacturers have been reporting increased activity and new orders in the past year than at any time in the last 20 years. Friday's Labor Department report confirmed a fourth straight growth of manufacturing job growth. And more manufacturers are now reporting increased employment than at any time in the last 31 years.
Our economy is strong, yet we still have more work to do. Given the economic challenges of the past three years, as well as the requirement of substantial new resources for Homeland Security and our ongoing operations in Iraq and Afghanistan, it is doubly important that we enforce spending discipline in Washington, D.C. The President has proposed a tight budget for 2005, with an increase of less than four percent in discretionary spending -- that includes the Defense budget -- an increase of one-half of one percent in spending outside of Defense and Homeland Security. With spending discipline, we can cut the deficit in half over the next five years.
That goal also depends on continuing a pro-growth, pro-jobs economic agenda. There are specific steps we can take to keep the economy growing, to add jobs, and to increase opportunities for investors.
We need to help small businesses meet the health care needs of their workers. The President is a strong proponent of association health plans that allow small business owners to pool risk so they can better afford health care plans for their employees. Independent estimates show that AHPs would provide health care coverage for at least 600,000 workers. This is a common sense approach to help small businesses solve a serious problem, and we will keep working with Congress to pass it into law. We've established health savings accounts, which will allow employees to save tax-free for routine medical expenses. This measure would strengthen our private system of care, because we know that more government is not the medicine that our health care system needs. We also need to update our health care system to take advantage of 21st century information technology. By assuring that most Americans have electronic health records, we can avoid dangerous medical mistakes, reduce costs, and improve care.
To further reduce the cost of health care, we need to confront the destructive growth of frivolous medical malpractice suits. Around the country, many good doctors are resorting to defensive medicine to avoid ending up in court. At the same time, the rising cost of medical liability insurance has caused many good physicians simply to leave the practice of medicine. We should protect every injured patient's right to compensation, including full compensation for economic damages. But we should put common-sense limits on the excessive awards that drive up costs for everyone, that increase the costs of Medicare and other government programs to make health care affordable, that chase away doctors, and that feed more and more needless litigation. No one has ever been healed by a frivolous lawsuit. So we'll continue working with Congress to pass medical liability reform for the President to sign into law.
The burden on our economy from the lawsuit industry does not only affect doctors. And so our economy needs broader legal reform as well. Junk and frivolous lawsuits can ruin an honest business. They put people out of work. They clog the courts, delaying justice for people with real legal grievances. It's a lot easier for America's entrepreneurs to hire new workers if they don't have to keep hiring lawyers.
We also understand that a healthy, growing economy depends on affordable, reliable supplies of energy. From our first months in office, the President and I have stressed the need for sound energy legislation that promotes energy efficiency, conservation, alternative fuel sources for the long term, and more domestic production here at home. Had we started the environmentally safe development of ANWR years ago when it was first proposed, that oil would be arriving by pipeline right now today, at the rate of up to a million barrels per day. For the sake of economic security and national security, we'll continue working with Congress to pass legislation to make America less dependent on foreign sources of energy.
We also need to continue stripping away the needless mandates and regulations that burden small businesses. The Small Business Administration estimates that regulations cost small businesses some $7,000 per worker per year. That discourages hiring, stifles innovation, and often without any benefit to the public interest. So we streamlined tax reporting requirements for small businesses, saving them more than 50 million hours of unproductive work. We must continue those efforts. America's entrepreneurs should spend their time building businesses and creating jobs, not filling out a lot of useless government paperwork.
On the vital matter of trade, we will continue working to break down barriers so that high-quality American products can find markets around the world. America has five percent of the world's population. That means that 95 percent of our potential customers are in other countries. And we cannot expect to sell our goods and services and create jobs if America and our trading partners erect tariffs and other trade barriers to close off markets. Millions of American jobs are supported by exports. One in five factory jobs in this country depends directly on trade. Ninety-seven percent of the firms exporting today are small or medium-sized businesses, the kinds of businesses that create most of the new jobs in our economy. The surest way to threaten those jobs is a policy of economic isolation, and we will not give in to that temptation.
This country has incredible advantages in the creative energies of our free economy, the strength of our capital markets, the flexibility in our job markets, and the quality of our work force. For example, since the passage of NAFTA a decade ago, America's exports to Canada and Mexico have nearly doubled. We're selling computer chips to Japan. We're producing BMWs in South Carolina for export to Germany. We're even exporting Wisconsin cheese to France. It's good cheese. (Laughter.) America is making what the world wants to buy. And under President Bush, the United States will continue to be a successful, confident trading nation.
Finally, to generate more jobs and maintain economic growth, we need to create certainty in the tax code. Business leaders looking to the future should be able to rely on consistent tax rates so they can plan with confidence and hire more workers. Families making their budgets shouldn't have to worry about tax bills suddenly growing in size. But under current law, the tax relief that has proven so successful is going to expire. Businesses will lose incentives to invest in new equipment. The income tax burden for a family of four earning $40,000 will increase by almost $1,000. And investors, farmers, and entrepreneurs will see the death tax rise from the dead. Higher taxes now would choke economic growth and discourage the strong job creation that we're now beginning to see. We will continue working with Congress to make tax relief permanent.
The policies I've described this evening, those in place, and those we're working with Congress to pass, all reflect a very clear economic philosophy. The President understands that America's $11 trillion economy is sustained by the free enterprise system. Government does not create wealth, and it does not create jobs. But government policies can and should create the environment in which firms and entrepreneurs will take risks, invest, and hire more people. We have confidence that the energy and the wisdom of our business leaders, workers, entrepreneurs and investors will drive the economy forward far better than government spending ever would. We also believe America is stronger when more citizens have the personal satisfaction and stake in the future that comes with investment and ownership. So we will keep working to increase the size of the investor class by giving people more personal control over their own finances and their own lives. If we do our job in Washington, pursuing pro-growth, pro-entrepreneur, pro-investor policies, then we can count on the smartest, hardest-working, most productive people in the world to take care of the rest. That approach has been tested by time, and proven by the resurgence of our economy over the past year. And that is just the economic agenda you will continue to see in the presidency of George W. Bush.
Thank you very much. (Applause.)
END 6:58 P.M. EDT