Remarks by the Vice President to the Board of Directors of the U.S. Chamber of Commerce
U.S. Chamber of Commerce
1:16 P.M. EDT
THE VICE PRESIDENT: Thank you. Thank you all very much. A welcome like that is almost enough to make me want to run for office again. [Laughter.] Almost. Almost. But it's a pleasure as always to have a chance to come visit the U.S. Chamber of Commerce. I appreciate the invitation to talk to this fine organization and the board members here today. Although many of you are from elsewhere, you've probably heard the saying about this city that: "If you want a friend in Washington, get a dog." Just to cover myself, I got two.
But I'm happy to relate that the saying isn't really true, that I do have friends in Washington, and among them is Tom Donohue. Presidents come and go - but not at the Chamber of Commerce. [Laughter.] Tom's been on the job for better than a decade, and he remains one of the most effective advocates for the free enterprise system in the entire country, and I'm proud to call him my friend.
I'm delighted to have the chance to say a few words today about the economy, especially to this audience. I'll be relatively brief so we'll have time for a few questions at the end.
For my part, I'm greatly interested in the economy - and that's not because in seven months I'll be out of work. It's because I believe that our country has greater wealth-creating potential than ever before, and that with the right policies, we can create jobs and prosperity for our people on an historic scale.
In the last seven years alone, despite unprecedented challenges to this country, we have added more than two trillion dollars to our Gross Domestic Product - an amount exceeding the entire economy of Canada. And even with the recent headwinds - rising prices for food and gas, turmoil in the credit markets, and a major correction in housing - this economy has continued to grow. The world is changing around us, and new and powerful economic players are stepping onto the global stage. Yet ours remains the largest, most vibrant, most flexible economy. To keep that edge, we've got three big economic decisions to make. We need to make them soon, and we need to get them right.
The first decision is on taxes. Earlier this year, with the economy needing a boost, President Bush asked the House and the Senate to pass an immediate stimulus package. They responded quickly and on a bipartisan basis - and now more than 150 billion in rebates and business incentives are going to the taxpayers and into the private economy.
Members of both parties agreed that swift tax relief would be a good thing, and they were right. It follows that the opposite action - a sudden, major tax increase - would be the wrong prescription for our economy. But that is precisely what is set to occur in the not-too-distant future. In six months we'll be to the beginning of 2009, and the year after that, the Bush tax cuts passed by Congress in our first term, will expire under the language of the law. Letting the tax cuts expire would hit Americans with a 280-billion-dollar per year tax increase.
The death tax, which Congress voted to eliminate, would return with maximum force, at a peak rate of more than 50 percent. The top tax rate on capital gains would go up by one-third. The top rate on dividends would more than double. For couples, the marriage penalty would reappear in its old discriminatory form. For parents, the thousand-dollar per child tax credit would be cut in half, down to 500 dollars. The tax rate for every single income tax bracket would be increased. On average, some 116 million Americans would see average tax increases of 1,800 dollars a year.
Most of us in our lifetimes have seen bad economic news, either in the headlines or in our personal circumstances. But not many of us have taken a hit like an overnight income tax rate increase of 50 percent. But that's what is coming for some of our fellow citizens - and they happen to be the ones at the bottom. If the Bush tax cuts are allowed to expire, Americans in the lowest tax bracket would take the biggest hit.
Understandably, politicians who promise to get rid of the Bush tax cuts don't want to get into these details. They also neglect to point out that ending the tax cuts would hike the total Federal tax burden to about 20 percent of our Gross Domestic Product - nearly the highest ever. That would be a staggering burden on the nation's households, and it would throw discredit on the lawmakers who permitted government greed to reach that level.
For the economy as a whole, ending the Bush tax cuts would put intense downward pressure on potential growth; restrict the amount of capital available for startups; and leave small firms with fewer resources to expand and hire new workers.
In fact, the tax increase doesn't even have to take hold to have a negative impact. As one of the biggest government money-grabs in American history seems to draw closer, even the expectation of it is going to have an effect. The longer Congress fails to act, the greater the uncertainty among entrepreneurs, investors, and venture capitalists. Ever more projects will go undone; ever more job-creating prospects will be postponed or shelved.
There is a nearly endless stream of well reasoned and justified complaints about the federal tax code. It's too big and too complicated and it's hugely anti-competitive. For example, the corporate tax rate today, 35 percent, is the second-highest in the developed world - a persistent, indefensible disadvantage for American firms in the global marketplace. But in one small area, the case for the status quo is unassailable: We must preserve the tax cuts delivered by President George W. Bush. [Applause.]
The second big economic decision concerns global trade and investment. The question is whether our country will preserve a free-trade consensus built up over a generation - or give in to the false comforts of protectionism.
Here, too, the question is a practical and urgent one. Right now Congress has before it a free trade agreement with Colombia, which has been in the works for a number of years. It has a strong base of support in both parties, and for good reason. At present, more than 90 percent of what we buy from Colombia already enters America duty-free, while much of what we try to sell to Colombia goes in with tariffs of 35 percent or more. The Colombian government has agreed to lift the tariffs and level the playing field for American imports - and that includes everything from farm produce and tractors to high-tech equipment and motorcycles.
The problem with getting this agreement passed is that the House Democratic leadership has refused to bring it to a vote. They've even changed the rules of the House in order to keep it off the floor. And so, today and every day, about 8,000 American companies that export to Colombia are facing obstacles that not even the Colombians want them to face.
The agreement has national security implications as well. President Uribe of Colombia is an ally of the United States - a man of courage who has stood up to terrorists and to regional dictators. He has worked with us on the trade issue in complete good faith, as all the world has seen. If the Democratic leadership in Congress persists in blocking the agreement; the result will be a tremendous setback for one of our closest allies in Latin America, severe damage to our nation's credibility in the region, and a boost of confidence for demagogues who want to subvert democratic values in our own hemisphere. Prime Minister Harper of Canada has put it this way: "If the United States turns its back on its friends in Colombia, this will set back our cause far more than any Latin American dictator could hope to achieve." For its part, Canada has moved forward, and last Saturday concluded negotiations for its own Colombia Free Trade Agreement.
President Bush has noted that other leaders have asked him why the Congress won't do something as simple as pass a free trade agreement with a close friend like Colombia. When they ask that, the President said, "the tone of amazement passes, then there's a tone of concern about the United States becoming protectionist."
In response, the President tells these leaders that "politics is too strong right now" in the United States. And he's clearly correct about that. We've just seen the end of a primary season in which candidates for the presidency spoke the language of protectionism. We even heard pledges to undo existing treaties - solemn agreements put down in writing and duly ratified by the Senate. Some politicians seem determined to unravel the bipartisan consensus on free trade - a consensus epitomized by the North American Free Trade Agreement, which was proposed by Ronald Reagan, negotiated by George Bush, and finalized by Bill Clinton.
In a time when even NAFTA is being called into doubt - when candidates can draw cheers by denouncing trade deals with our next-door neighbors - then we're at risk of going down a very destructive path. And the timing could hardly be worse. Last year alone, 40 percent of the growth in America's economy - let me repeat that, 40 percent of the growth in America's economy - was due to exports. And openness to foreign investment has given the United States the flexibility it needs to deepen the capital stock and increase productivity.
America is good at many things, and commerce and competitiveness are among them. Much of the world is getting into the same game. Now more than ever, we need to engage the global marketplace, and allow trade and investment to flow freely into our economy. Protectionism is the refuge of a tired, fearful nation - and that is not the United States. It's time to renew our confidence and seek a world that trades in freedom, led by a secure and optimistic United States of America.
Confidence should also be the watchword when it comes to energy policy. And that's the third economic decision we need to get right. By almost any goal you have in mind - whether it's lower gas prices, a stronger economy, national security, or greater energy independence - it all points in the same direction: We must produce more energy right here in the United States.
With crude oil already over 130 dollars a barrel and gas at four dollars, everyone in elected office ought to explain what solutions they have in mind for bringing the cost down, or at least slowing the trend. And if they're honest about it, they'll end up talking about increasing supply.
Twenty, forty, or fifty years from now, I'm pretty sure this country will have energy sources that are more diverse and environmentally sound than many of us can even imagine today. A good deal of credit will belong to President Bush for giving unprecedented support to developing alternative and renewable fuels, and the engine technology to use those fuels with high efficiency. These are tremendously promising fields. And the United States, driven by a combination of market forces, concern for the environment, and our own native ingenuity, has chosen to lead the way.
I'm also confident that our nation will find sensible ways to address long-term concerns about carbon emissions. President Bush has outlined the principles for a solution - an approach that offers reasonable incentives and gives strong support to technology research. The cap-and-tax legislation, however, that was debated in the Senate last week was exactly the wrong way to address carbon emissions.
That bill would have effectively increased taxes by about a trillion dollars over ten years, raised the price of gas and electricity, and killed manufacturing jobs, and all of this while having no significant effect on the climate. No fewer than ten Democratic senators wrote to their leaders to make clear they could not support final passage of the bill. On the Republican side, Senator Jim Inhofe and others rightfully insisted that the bill be debated in full. That was enough to put the bill on the path to defeat - and for that, I think all Americans can be grateful.
Meanwhile, in the here and now, we are an economy that runs on petroleum - some 20 million barrels of it a day. That can and will change over time, but it will be a very long time. It will not change overnight. We'd be doing the whole country a favor if more of that oil were produced here at home, with the money going into American pockets and supporting American jobs. Yet on Capitol Hill, many have ignored the obvious and have stood in the way of more domestic energy production. You can't even call them shortsighted, because they fail to see the immediate, day-to-day needs of the economy.
It's my own view that we should be drilling in ANWR in an environmentally responsible way, which could increase our daily domestic oil production by as much as a million barrels a day. As for other locations, George Will pointed out in his column the other day that oil is being drilled right now 60 miles off the coast of Florida. But we're not doing it, the Chinese are, in cooperation with the Cuban government. Even the communists have figured out that a good answer to high prices is more supply.
Yet Congress has said no to drilling in ANWR, no to drilling off the East Coast, no to drilling off the West Coast, no to drilling off Florida. Given the high prices Americans are now paying, we should hear no more complaining from politicians who've stood in the way of increasing energy production inside this country. They are part of the problem.
And it's not just crude oil or natural gas production that's being held up. We also have to import ever larger amounts of refined gasoline, because we don't have enough refining capacity to satisfy our own demands. We haven't built a new refinery in the United States in three decades. It's high time we did so. There's not a reason in the world that our gasoline should not be made right here in the United States, at American refineries, by American workers.
In each of these areas - taxes, trade, and energy - the choices we need to make soon are going to have an enormous impact on our way of life. As board members of the Chamber of Commerce, you know this because all of you deal with major economic issues every day, not as abstractions, but as practical, real-world concerns. You know better than most how public policy can help private enterprise, or harm it. And with great decisions at hand, the nation's policymakers need your voice, your input, your experience, and your wisdom.
I'm sure you agree with the President that in times of challenge the best thing to do is to go to our strengths. And America's greatest economic strengths are the free market and the entrepreneurial spirit. If we make the choice to face the world with confidence, and turn loose the greatness of our free enterprise system, our nation will thrive and prosper as never before.
Thank you very much. [Applause.]
MR. TOM DONOHUE: Mr. Vice President, that was a great talk. I was prepared to stand up and ask you some questions about when are we going to start to drill for the stuff that we have and we need. Perhaps, and what you had to say is exactly what we believe, and going to be pushing forward with our energy institute here as these elections begin to move forward. Because of your experience in the industry, which sometimes in this town is not respected, perhaps you could just extend your remarks a little bit about where we can best put that pressure. Where are the weak spots for us to probe and see if we can get some results in the Congress?
THE VICE PRESIDENT: I think that's a key question, Tom. A few years ago, I think it was '95, the Congress passed legislation authorizing the development of ANWR. The Alaskan National Wildlife Reserve was established, as I recall, back in about 1979 or 1980. I was relatively a junior member of the House in those days, serving on the Interior Committee, we considered and reported and passed the legislation. And as I recall we set this area up as a wildlife reserve because that was less restrictive than if we designated it a wilderness. And the reason we did that was because it was believed that there were energy resources there that we might someday want to develop for the country, and therefore we designated it, as I say, as a wilderness reserve.
In '95 Congress said let's open it up and go develop it and, of course, Bill Clinton vetoed it. And that was some 12 or 13 years ago. Today, if we had, in fact, followed through on what the Congress wanted to do then we would have roughly a million barrels a day is the estimate; but certainly that would be a positive impact on today's situation.
The frustration I sense, and I think a lot of people sense, I'm all for pursuing new technologies. I think we ought to invest in new, more efficient engines, and hybrid and electric and hydrogen, and all the technologies you can think of out there, we need to obviously see what can be developed.
One of the benefits, frankly, that we'll see I think now given the current situation of the market is a lot of those will get a push because of the basic fundamental economics of it.
But we have to recognize that there isn't anything out there that is going to get us away from a hydrocarbon economy any time in the near future. We've got a huge hydrocarbon resource. We've got an enormous infrastructure that's been built up over a century. That's the way our economy operates. That's the way the world economy operates basically. And at this point, there really isn't anything on the horizon that today is economic relative, for example, to basic good old oil and gas.
And the solution for us in the near term, near term being over the next few years, is to increase production. But we have, as a nation, had in place now for many years set up policies that limits our ability to produce those products in the United States. We put a cap on what we're able to produce. Now that was a choice that was made by previous administrations and previous Congresses. That was a time, obviously, when gasoline cost a lot less than four dollars a gallon.
Today, we're in a situation where we're supposed to go out and scream and yell at folks who are producing and try to get them to produce more while we aren't willing to produce all that we have here at home ourselves.
The situation is such that I think with the pressures that Congress is feeling now because of prices, I think the tremendous adverse impact that a lot of this is having on the American people, it's just a huge -- for somebody out there who's living close to the edge or living on a fixed income, or having to live from paycheck to paycheck all of a sudden to get hit with a doubling of the price of gasoline is a major blow. And I think Congress has got an obligation to act and I think at the heart of that strategy needs to be the basic proposition that we want to increase the supply of domestically produced oil. And I think if we do that, we're not going to produce all we need, we're still going to be dependent on imports, but we could go a long way towards moderating the current situation in the marketplace. Instead, we've got a lot of people running around looking for scapegoats and the legislation that was defeated this week in the Senate, for example, windfall profits tax, it's not going to produce a single additional barrel of oil. We tried it. Jimmy Carter put on a windfall profits tax in 1980 and the Congressional Research Service, non-partisan, bi-partisan, not linked to any industry concluded that that period from 1980 to 1988 that windfall profits tax reduced our overall production. You do not get more of something by taxing it higher, and that's just a basic fundamental law of economics and that's still valid here.
So we can do it. We've got the technology to do it. Our technology these days in terms of developing and producing oil and gas in an environmentally safe and sound manner is unbelievable. We can do all kinds of things: deep water, off-shore, and directional drilling. You know, Katrina hit Louisiana and one of the amazing things that happened down there that never got reported was we didn't have any oil spills; no pollution, if you will, of the environment as a result of one of the worst natural disasters in history, in an area that is absolutely smack-dab in the heart of our producing country. So we can do it. We can do it in a sound and safe manner. We just need serious effort and I think the recognition that, for far too long, too many politicians have advocated all kinds of other courses of action without facing up to the basic fundamental fact that today we have a hydrocarbon economy and if you're going to have cheap, affordable energy available in the amounts it needs to be to run our economy, you're going to have to produce more of it.
Q: Mr. Vice President, my name is Jim Wordsworth; McLean, Virginia. You were just in our restaurant last month and I appreciate that. [Laughter.] He was.
THE VICE PRESIDENT: It was pretty good food, too.
Q: Anybody who didn't hear that? [Laughter.] Looking back over the past eight years, what do you believe have been the most important achievements of the Administration and any disappointments, if you think there have been any?
THE VICE PRESIDENT: Most important achievements of our administration, well, I would point to what we've done with respect to the global war on terror. I mean, when we ran in 2000 and I remember signing on with the President, we had a number of issues we were focused on. We wanted to strengthen national defense. We wanted to improve our educational system, No Child Left Behind. We wanted to cut taxes. We thought it was important to reduce the overall tax burden on the American people. We had budget surpluses at that point and we didn't want government to take any more money than it needed. That's sort of the basis upon which we ran and I think we were able to deliver on most of those. We got the education program passed; the tax package passed finally in '03, for example; and put in place a lot of those cuts that I talked about here today. So I feel good about that. What we did not anticipate when we ran, obviously, was 9/11. And what 9/11 represented was, sort of, the culmination, if you will, of a series of attacks on Americans and American interests that went back a good 10 years. Certainly the first World Trade Center bombing in '93, Kobar Towers in '96, the East Africa embassy bombings in '98, U.S.S. Cole in 2000. Of course on 9/11 what happened was we ended up with the 19 terrorists here in the United States here in Washington and New York and a field in Pennsylvania, murdered nearly 3,000 Americans. And that was significant in many respects partly because it showed that virtually anybody who wanted to be objective about it that terrorism wasn't a law enforcement problem; that it was, in fact, a strategic threat to the United States; that what al Qaeda represented required a strategic response from us. And I would put foremost among what we accomplished as an administration the President's judgment and then decision that we then acted upon and have implemented. That, since it was a strategic threat, that we needed to martial all of the elements of strategic power to deal with it and try to defeat it. Military force, our intelligence capabilities, law enforcement when that was appropriate, go after the terrorists themselves, go after the state sponsors of terror, go after those who provided safe harbor and sanctuary to terrorists, who provided them with the weapons for deadly technologies they might use to attack us. That was a big shift.
A part of that were a set of decisions the President made with respect to defending the homeland. That if we were going to be able to fend off or disrupt or defeat attacks like 9/11 we had to do a much better job especially in terms of collecting intelligence on what our adversaries had planned for us. And we did that in three major ways. One, we passed the Patriot Act, which gave to our folks the same tools for prosecuting terrorism that we already were using for Narco traffickers. Second was the Terrorist Surveillance Program that let us monitor international communications and capture the content and the fact of communications between al Qaeda related individuals or organizations overseas and people here in the United States.
And third was the program we put in place with the CIA that let us build and operate an effective interrogation program of high-value detainees; a handful of individuals, men like Khalid Sheikh Mohammed who we captured in the summer of '03 who was the mastermind of 9/11; the man, who more than any other, was responsible for killing 3,000 Americans that day. You just saw within the last couple of weeks he's going to trial now down in Guantanamo. We needed an interrogation program that was fully consistent with our Constitution; fully consistent with our treaty obligation and the laws of the land; but also let us collect intelligence from some very hard cases; relatively few in number, specifically who could tell us about al Qaeda, about where they operated from, about what their plans were for the future. And we did that, and we did it with all of the legal requirements met and satisfied. We do not torture. We didn't torture then. We don't torture now. But we did have an effective program for interrogating, let's say this handful of individuals that we captured during the course of the global war on terror.
I'm convinced that that combination of things, from the Patriot Act to the Terrorist Surveillance Program and an effective program for interrogating detainees that we've saved thousands of lives. And it is not an accident that it's been now nearly seven years since 9/11 and we haven't been hit again. Because we know they're trying. We know they've been out there trying. You all may remember the plot to capture airliners after they left Heathrow and blow them up over the United States. There's a continuing, on-going effort on the part of al Qaeda to find ways to get at us and to kill more Americans. And so far they have failed in every single instance. That's because of some very good decisions made by the President of the United States backed up with good support in the Congress and implemented and carried out by our military personnel and our intelligence and law enforcement people.
But I would point to that fact as being right at the top of the list. I also would say Mike Hayden who's the director of the CIA, gave last week I believe, it was an extensive interview to the Washington Post. I'd recommend it to you because Mike, who was a career Air Force officer, he's not a Republican or Democrat; he's not partisan in any fashion, but he's been in the battle up to his eyeballs from the very beginning. He was the director of the National Security Agency on 9/11. He's been directing the CIA now for a couple of years. He gave a rundown on where we are with respect to the battle with al Qaeda and the war on terror. It's very positive because we've had an enormous impact on it.
But we can't let up for a minute and we've got now -- it's become a partisan issue. Frankly, the Democrats in the House have refused to renew the authorization for the Terrorist Surveillance Program. We've been working on that for months but our capabilities are somewhat reduced today because Congress won't give us the same authority that we operated under up until February when it expired. We've had fifty-some members, Democratic members, of the House this week sign a letter demanding a special prosecutor to investigate those of us who had responsibilities in the administration when the detainee program was put in place -- interrogation of al Qaeda suspects.
So there are, you know, it's unfortunately got to the partisan point. I think it's fair to say, and I'd offer it up, I think one of the most important decisions we're going to make in this election is whether or not we're going to have a President and a Congress who will be committed to pursuing an aggressive prosecution of the global war on terror.
And that means that we succeed and finish what we're doing in Afghanistan and Iraq and that we do whatever's necessary to defend the American people here at home. We can do it. We've proved it now for the last seven years and the next government, both the legislative and executive branches will be tested in terms of whether or not they're willing to continue on that vein or buy into the proposition that somehow we ought to dismantle it all and that we shouldn't be doing what we're doing. I think we did exactly the right thing and I plan to do everything I can to defend it.
Thank you. [Applause.]
THE VICE PRESIDENT: That's a high note to end on. Well, let me thank all of you again for the great work you do for the Chamber and on behalf of all of us. The Chamber has been a tremendous organization over the years, and I'm delighted always to have an opportunity to work with you and to participate in your worthy enterprises.
Tom, thank you very much. [Applause.]
END 1:40 P.M. EDT
Richard B. Cheney, Remarks by the Vice President to the Board of Directors of the U.S. Chamber of Commerce Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/286009