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For Immediate Release
Office of the Vice President
February 14, 2007

Vice President's Remarks at the National Association of Manufacturers Breakfast Meeting
J.W. Marriott
Washington, D.C.

8:30 A.M. EST

THE VICE PRESIDENT: Good morning. Thank you all very much. Thank you, John, and I appreciate the warm welcome and the chance to be here today with all of you. I especially want to welcome everybody from out of town. It's good to be here. The streets are kind of bad outside, but I guess you're all staying in the hotel, so that wasn't a worry for all of you. But the good news is, the federal government's shut down today. (Laughter.) So everybody's safe. (Laughter.) Just consider this your Valentine's Day present. (Laughter.)

I see many friends in the room this morning, starting, of course, with John Engler, who invited me here -- a great friend of mine for many, many years, a fine public servant, and obviously now a great leader for America's manufacturers.

As members of the NAM, you belong to a respected organization, and you lead a vital sector of the nation's economy. Our manufacturers have faced the unrelenting challenges of competition and globalization, and you've shown the best qualities of the free enterprise system. Manufacturing drives the growth of this economy; it accounts for the majority of America's exports; and it gets more productive each and every year. That productivity, in turn, has helped the export of manufactured goods reach their highest level in history. All by itself, America's manufacturing sector would be the eighth largest economy in the entire world. The members of the NAM know a thing or two about hard work and high quality. You're people of energy and commitment and creativity. And I might add, in this time of national challenge, you're also good citizens -- patriots, veterans, and civic leaders who proudly fly the flag and support the men and women of the United States military. (Applause.)

This week in Washington you've brought together leading manufacturers from across the country -- including, I'm told, at least one with facilities in the best place of all, my home state of Wyoming. Welcome to Washington.

It was my good fortune to serve Wyoming for more than a decade in the House of Representatives, and I was better equipped for the job every time I got advice and input from leaders in the private sector. Folks in Washington simply cannot know the real impact of the laws we make unless we hear from the people who live under those laws. And if the goal is economic growth and more jobs, Washington needs to listen to the ones who actually go out there and make the risk, invest the money, build the plants, hire the workers, and do everything else that makes this economy go.

That's why I'm glad you're here for meetings with members of the administration and members of Congress. There's a lot on the agenda. And with a new Congress and a divided government, more than a few people wonder if we can get anything done in the nation's capital. The fact is that we can, and the American people are expecting us to. We have bigger business here than any issue that may set us apart. Our job is to ensure the strength and the success of America in the world. And that work begins right here at home.

Our strength and success depend on a healthy, growing economy -- and by most any measure, that is what we have today. America has now seen five years of uninterrupted economic growth, in a recovery that has generated nearly seven-and-a-half million new jobs. When people across the world look at our economy they see low inflation, low unemployment, and the fastest growth of any major industrialized nation in the world. Wages are rising, too, allowing families to meet their budgets and to build a better future.

To continue this progress, I believe we need to operate by the philosophy of Ronald Reagan -- that government should "work with us, not over us; to stand by our side, not ride on our back. Government," Reagan said, "can and must provide opportunity, not smother it; foster productivity, not stifle it."

Those principles set an agenda for our country. Nobody can sit in an office in Washington, D.C. and decide to create prosperity. What we can do, and what we must do, is create an environment in which consumers have the confidence to spend, savers the confidence to save, and entrepreneurs the confidence to invest and to hire new employees. And one of the surest ways to create that climate is to leave as many resources as possible in the hands of the people themselves.

For that reason, at the start of this Administration in 2001, President Bush asked Congress to pass significant, broad-based tax relief. And the House and the Senate, with bipartisan support, responded with historic pro-growth legislation. We reduced taxes for every American who pays income taxes. We doubled the child tax credit and reduced the marriage penalty. In 2003, we created new incentives for small businesses to invest. And in order to lower the cost of capital, and to encourage firms to expand and to hire new workers, we reduced the tax rate on dividends and capital gains.

Now the results are clear for all to see: the Bush tax policy has been right for the country. If you think of all that has happened in these eventful years -- the recession we inherited, terrorist attacks, two wars, corporate scandals, natural disasters, and a tripling in the price of oil -- it's remarkable how tremendously resilient this economy has been. In fact, since 2001, our GDP has grown by 16 percent. Let me put that another way: In less than six years' time, the American economy has expanded by an amount greater than the entire economy of Canada.

Milton Friedman once said that "most economic fallacies derive from the tendency to assume that there is a fixed pie, that one can gain only at the expense of another." We've shown once again that the right policies can make the pie a lot bigger, and that gains can be widely shared. We've also disproven maybe the biggest, most persistent fallacy in Washington, and that's the idea that pro-growth tax cuts are incompatible with fiscal discipline.

The fact is that pro-growth tax cuts once again have helped to drive an economic expansion that has, in turn, generated higher-than-projected revenues. You might also recall that back in 2004, President Bush set a goal of cutting the deficit in half by 2009. This pledge was greeted with great skepticism, to put it mildly. Yet we met that target in 2006, three years ahead of schedule.

All told, federal tax receipts have gone up by more than $520 billion in the last two years. That's the largest two-year increase in our history. By now it's time for even the skeptics to admit that a lower federal tax burden is a powerful driver of investment, growth, and new jobs for American workers. And that increased economic activity, in turn, generates revenue for the federal government. (Applause.)

Despite the growth in revenues, we still have to hold the line on spending -- and on that score there's plenty to do. Last week the President submitted a budget that continues reducing the deficit each year, and balances the budget by 2012 without new taxes. To meet that goal, we need to set the right priorities. The first priority is to remember that we are a nation at war, and we cannot cut corners on homeland security or defense. Enemies are trying to hit us again and kill more Americans inside our own country. Overseas, we have troops in the field and reinforcements on the way. Job number one is to provide the resources necessary to protect the American people, and to meet all the needs of the United States Armed Forces.

Setting priorities for the budget also means dealing with the matter of Congressional earmarks -- those items that get slipped into spending bills at the last minute. There were more than 10,000 of them alone in 2005. And 90 percent of earmarks never make it to the floor of the House or Senate -- they're simply dropped into committee reports and aren't even part of the legislation. Congress didn't pass them into law. The President didn't sign them into law. Yet somehow they get treated as having the force of law. We're going to work with Congress to reform the budget process to get these earmarks under control. (Applause.)

Spending discipline, budget reform, and, yes, entitlement reform are vital to keeping our economy strong. And so is a low-tax policy that promotes growth, rewards enterprise, and keeps government within its proper limits. Under current law, many of the Bush tax cuts are still set to expire over the next few years. We feel strongly that Congress should make all of the tax cuts permanent -- and that includes ending the federal death tax. (Applause.)

We're also committed to ensuring that America remains the world's leading innovator. One way to do that is to extend the R&D tax credit, and to make permanent in federal law the R&D tax credit. A majority of industrial R&D occurs in manufacturing, and the benefits extend throughout our economy. It's critical to the competitive strength of our country, so it's plain common sense for the government to encourage private R&D in every way possible.

If America is to remain the world's leading innovator, and the world's largest economy, and the world's biggest exporter, we also have to make sure this country is always the world's best place to do business. A good place to start is health care. This nation's health care system is second to none. But many employers will tell you that health insurance is one of the fastest-growing costs they face. Every year they find it harder and harder to cover their workers, and those rising costs absorb resources that might otherwise go for pay raises for the work force.

The President has a comprehensive agenda to help Americans gain better access to private health insurance. In the last Congress we improved access to care with Health Savings Accounts, which allow a person to save money for medical expenses tax free, and to keep that money even if they move to a different job. We continue to press for Association Health Plans, so that small firms can join together to get health care at the same discount as big companies. And all Americans will be better off if Congress passes medical liability reform, so that health costs are not driven up any further by trial lawyers and predatory lawsuits. (Applause.)

The President is also asking Congress to pass tax reform to help make coverage more affordable and accessible. Part of the reason health care is so expensive today is that the tax code penalizes Americans who are not covered at work, and it subsidizes people who choose the most expensive plans. To fix that, we're proposing a standard deduction for every worker who has private health insurance, no matter where they get it from. We're not touching the corporate tax side; employers will still be able to expense the cost of compensation for their workers. What's new is that employers and workers will be better able to choose the right mix of wages and health insurance, without the tax code distorting those decisions.

Under the President's plan, more than 100 million Americans now covered by employer-provided insurance would actually have lower tax bills. This reform would also level the playing field, so the self-employed or small business worker would get the same tax advantage available to the big company. This would be a positive step toward covering the millions in our country who aren't covered at work and struggle to afford it on their own. We believe changing the tax code is absolutely necessary to getting coverage to more Americans, and to getting a handle on the rising costs of health care.

In this world, America's strength and success have long relied on stable, affordable supplies of energy. As the President told Congress last month, it's in the nation's vital interest to diversify the energy supply, and that the way forward is through technology. We've invested about $10 billion to develop cleaner, cheaper, more reliable energy sources. We're changing the way America generates electricity, by investing in clean coal technology, wind and solar power, and safe nuclear power. We're also seeing great promise in new battery technology that will allow automobiles to go 20 or more miles on stored power -- and we're talking here about real cars, not just little ones that look like golf carts.

We're determined to maintain America's leadership in economic growth, in technology development, and in environmental stewardship. The President has proposed much greater usage of renewable fuels, with higher vehicle fuel economy, and more domestic production -- all of which is intended to enhance our energy security. It's also very important to increase domestic oil and gas production in environmentally responsible ways, in places like the Alaska National Wildlife Refuge and off the shores of willing states. (Applause.) We took an important step last December, when the President signed a bill that opens up new areas of production of the Outer Continental Shelf. To further protect Americans against sudden disruptions in the oil supply, he's also directed the Department of Energy to refill the Strategic Petroleum Reserve and asked Congress to double its current capacity -- and the sooner we do that, the better.

America's strength and success also depends on a confident, forward-looking trade policy. The NAM has hosted President Bush, and you know our administration's basic outlook on global trade. We believe in fairness. The United States has opened up our market to other countries, and they need to do the same for us. Trade is worthwhile only if the buying and selling is fair and square on both sides, across the board.

When we took office, America had only a few free trade agreements in effect. Now we have more than a dozen. And even though those countries make up less than one-tenth of the global economy, they take in more than 40 percent of America's exports. That's good for your sector, because one in every six manufacturing jobs is tied directly to trade. It's in our national interest to have a world that trades in freedom. So we're asking Congress to extend Trade Promotion Authority, and we're committed to completing the Doha round of trade talks. (Applause.)

Manufacturers understand, better than most, that trade can be disruptive for some of our fellow citizens. Some economists say that's part of the price we pay to have such a dynamic, flexible economy. But we can help fellow citizens who take the hardest hit. To ease the transition for those Americans, we've provided more direct assistance for retraining, for relocation, and community college aid than any other administration. Government cannot prevent the transformation of the economy -- indeed, a dynamic economy is one of our great strengths -- but we can and will help these workers to get back in the game.

America has the finest labor force in the world, and part of that labor force is composed of men and women from other nations. All of us have roots in some other part of the world, and the United States is a better country for the striving spirit of immigrants. Yet borders and laws alike must be respected. We must know, at all times, who is in our country and why they are here. We must reform our policies on highly skilled immigrants so America continues to attract the best and the brightest in the world. And we can take pressure off the border with a temporary worker program here at home. The time has come for comprehensive, fair-minded immigration reform, and we're asking Congress to pass it into law this year.

America is also a country that takes very seriously the right of men and women to work, and to organize within the law. The American labor movement has a proud history and has long reflected a basic principle of our democracy: fair elections decided by secret ballots. This principle will be put to a test in Congress this year. It's important for everyone in the debate to remember that secret ballots protect workers from intimidation, and ensure the integrity of the process. (Applause.) Beyond that, if workers do decide to form a union, they and their employer should be able to negotiate without having terms forced on them. Our administration rejects any attempt to short-circuit the rights of workers. We will defend their right to vote yes or no by secret ballot, and their right to fair bargaining. H.R. 800 violates these principles, and if it is sent to the President, he will veto the bill. (Applause.)

Of these and many other priorities, ladies and gentlemen, the Congress has heard from the President. Now it's time for Congress to hear from the American people. Most of you come from outside Washington, and your voices are going to make a difference in the months ahead. With more than 10,000 member organizations -- responsible for some 14 million jobs -- you, as much as anybody, are affected by the outcome of the debates in this city. By the same token, as much as any other private group, you can help shape that outcome. You understand what makes our economy run -- how things are made, how jobs are created, how to keep an economy growing. You're respected in your communities, and known as voices of common sense. And it's good that you're here.

The President and I hope to count on your support. We realize, of course, that that support must be earned. So I'm prepared to do my part now, by taking a few questions from the audience.

Thank you very much.

MR. ENGLER: Thank you very much, Mr. Vice President. That was terrific and we appreciate the announcement on the card check legislation. That's something that's strongly opposed by members of the NAM and a priority that we're talking with the members of Congress on.

Let me -- I've got a few questions that were given to me. One deals with the energy issue, and concerns the Secretary of Energy and testimony from House Energy Committee -- apparently indicating that the Department of Energy is unable to issue loan guarantees due to some of the language that's in the House continuing resolution. And we've got about a hundred -- as many as 140 energy projects that are stalled because of this. I know this is language going back to 2005. Is there any optimism or any procedures that might be used to be able to move the projects forward under current DOE guidelines? A little bit technical, but energy security is one of the important principles that your administration has stood for and something we're keenly in need of; we need kilowatts.

THE VICE PRESIDENT: Well, we're still wrestling with the CR and its impact, in many respects. Last year we worked through two appropriations bills -- the defense bill and the MilCon bill, or homeland security bill. We were left at the end of the year with all the other appropriations bills, and instead of work through those and pass them as we ordinarily would, one by one, or fold them all into an omnibus appropriations bill, in effect, what's been done is a continuing resolution that expires tomorrow, I believe.

And a CR is more restrictive than any of those other ways of going forward. We're having trouble, for example, with the Base Closing and Realignment Commission, the BRAC process, in terms of how those decisions to, in effect, operate at last year's levels under the CR will affect all of these other projects as well, too. Some adjustments are being made; I don't know if that particular area is being addressed in the bill. They are trying to take some of that into account, but it's going to be difficult to get much flexibility built into the system, I would think, until we move forward with this year's appropriations bills. That process should begin shortly. And, of course, the CR will be in force until September, and then we'll have new appropriations bills.

MR. ENGLER: U.S. economic competitiveness is certainly closely linked to innovation and the success of the high tech industry. Will the administration give priority to this question, to updating export controls -- and I guess deemed exports, the workforce, as well, would be part of that. But is that something that -- there's a lot of work being done on that and we think there's some opportunities that sort of create a win-win for both national security and U.S. exports.

THE VICE PRESIDENT: There is -- this gets into the whole area of CFIUS, important program that oversees these issues with respect to sensitive subjects and acquisitions and so forth, and that legislation is being revised now to try to strengthen that entire process. So I expect there will be some legislative action in this area sometime this year.

MR. ENGLER: A couple of trade-related questions. The first one, recent news reports suggest White House and Congress may be close to an agreement on extending Trade Promotion Authority. Is that right? What about prospects for free trade agreements -- Peru and Colombia -- and the negotiation of others, like Korea? You addressed that in part in your prepared text, but can you elaborate on where we are in working on a deal?

THE VICE PRESIDENT: Well, our Trade Promotion Authority, of course, runs out this year. And our ability to move forward to continue to advance the trade agenda that we've had in the past is going to depend upon getting Trade Promotion Authority extended. I think it's going to be a tough fight. We're strongly supportive of it, and we think it's very important the President continue to have that authority, but we're going to need help on Capitol Hill, without question. And these trade issues have gotten to be very, very difficult. The Central American Free Trade Agreement that we passed here a year or two ago was, frankly, one of the toughest votes I've been involved in, in the last six years. It was root, hog or die for every single one of those votes.

So we need to continue to push hard on it, but I would hope it would be a priority for the NAM to make sure your members of Congress understand how important this is.

The Doha round, of course, is crucial here going forward. We continue to work on it -- the round at Davos conference in Switzerland, here, a week or two ago, the trade ministers met; the major countries that are involved in these negotiations are trying to move the ball forward.

I'm told our people are somewhat more optimistic now than they were, when they get that done. Right now, the focus in that negotiation is on agriculture. That's the primary hangup. But the big winner here going forward, if we can get the agriculture problem solved, is in the whole area of services, which would be a huge boom to the American economy.

And so it's -- I'd say we're pushing the rock uphill. But we're still pushing. We're going to continue to push hard. We think it's important not to give up in our efforts to continue to advance an aggressive trade agenda.

MR. ENGLER: I think we can do one more and still keep our promise to have you free by 9:00 a.m. This one deals with -- specifically with China. Lots of questions. But the U.S.-China trade relationship is certainly one that has raised all kinds of issues with inside the NAM. There's an appreciation for Secretary Paulson's strategic initiative that's underway, and a recognition that the Chinese leadership is coming here in the spring -- their first visit here, but the return visit.

We've noted also -- and I know the issues like everything from currency to intellectual property to the subsidization -- the administration has been taking what seems to be a firmer line in terms of adhering to WTO compliance. Is there anything relative just to the relationship with China that you have -- can offer, I guess, to this audience some reassurance that everybody has to play by the same rules? And I think, again, you said that well in the remarks.

THE VICE PRESIDENT: Sure. Well, I sense we're making progress where China is concerned. It's always been a source of frustration for a lot of us. A big problem I've had over the years is the intellectual property rights and the fact that they don't treat -- or they don't live up to international standards with respect to that.

And lots of times, when you go and address the issue, they'll talk a good game, but then the follow-through is weak. And I remember being over there once, meeting with a group of American businessmen in Shanghai, and we were talking about the problem of intellectual property rights. And they were telling me about a company that manufactures the Hummer, the General Motors Hummer -- only it's not General Motors. It's a local company over there doing this exact replica that looks exactly like the Hummer. And I asked them, what do they say when you point out the fact that it's an exact replica of an American product? They said, oh, it's just a coincidence. (Laughter.)

So that's a problem, without question, and that attitude. But we hammer and hammer and hammer at it. We have made progress in that regard. I think one of the best and most positive developments, where China is concerned, has been Hank Paulson coming on board, and Hank has devoted a lot of time to this. He had great relationships in China before he gave up his job at Goldman and joined the company -- administration as the Secretary of the Treasury.

He had about half the Cabinet over there a few weeks ago to focus on this whole range of issues. I think we've made progress on the currency front in terms of getting them to allow their currency to float and not be as directly pegged to the U.S. dollar as it has been in the past.

And what we've done now, I think, thanks to Hank's leadership, with the President's active support, is to place a lot of these issues front and center for the Chinese so they understand how important they are to us and the importance of addressing these in terms of our overall relationship. And so I think we've got them in a good place now. It will be a matter of follow-through and continuing to push on that agenda. But when the Secretary of the Treasury shows up in Beijing with half the U.S. Cabinet, they know we're deadly serious and we want to work these issues and we want to make progress on them. So we'll continue to push it.

MR. ENGLER: Ladies and gentlemen, lets give the Vice President a round of applause. Thank you very much for joining us.

THE VICE PRESIDENT: Thank you all. (Applause.)

END 9:00 A.M. EST

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