The Vice President's Remarks at the Chicago Mercantile Exchange
Chicago Mercantile Exchange
THE VICE PRESIDENT: Thank you. (Applause.) Thank you. (Applause.) Well, thank you all very much. And, thank you, Terry, I appreciate the introduction and the warm welcome, and see some old friends in the audience.
I've been to Chicago many, many times over the years, and I always enjoy coming back. I have great respect for the leaders of industry, finance, and trade who do business here every day, as well as the many fine public servants from this area. One of those public servants, of course, is my friend Don Rumsfeld, who served Illinois in Congress for many years and then as a senior executive in the business community here in Chicago. I'm sure in those days Don was every bit as shy and retiring as he is today. (Laughter.) He's a great American and doing a superb job for the men and women of the United States military.
Let me thank the Board of Directors and senior executives of the Exchange for giving me the opportunity this morning to speak to you today about the nation's economy. No other futures market in the world is as large as the Chicago Mercantile Exchange. The CME is fueled by hard work and creativity and built on the foundation of more than a century of innovation and integrity. The free market in action is vital to the nation's prosperity, and it's the primary reason America is still the best place to do business anywhere in the world. Your influence reaches well beyond the heartland. You help keep the entrepreneurial spirit strong. So I'm very pleased to be with you, and I bring good wishes from the President, George W. Bush.
The President visited the CME in March of 2001, about six weeks after we took office. It was a very different time in the life of our country, and from the standpoint of our economy. The President pointed out that afternoon that the economy had already begun a significant slowdown. And as the leader of the nation, he offered a program to restart the engine and return America to the path of steady growth and job creation.
Our economic program proceeded from a basic understanding of government's responsibilities. The principle behind the mercantile exchange is equally true for the economy as a whole: markets operate and needs are met because of billions of separate decisions made by individuals each and every day. Choice and competition provide value to the consumer, and the hope of a good return on investment drives the entrepreneur to take risk and to bet on the future. Government could not conceivably direct something so immense, so complex, and so decentralized. And if it ever tried, the only method would be control and coercion -- which would simply cause confusion, fear, and scarcity. The true role of government in a free society is to create an environment in which consumers have the confidence to spend, savers have the confidence to save, and entrepreneurs have 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 his administration, President Bush asked Congress to pass significant, broad-based tax relief. And the House and Senate responded with historic pro-growth legislation.
What we could not have known early in 2001 was just how critical a pro-growth package would turn out to be. Before the year's end, we had the attacks of 9/11 -- took the lives of some 3,000 Americans. These acts of aggression were also aimed at the very heart of our economy and designed to frighten everyone in the country. Stock and futures trading was suspended, stores were closed, and tens of thousands of flights were cancelled. And in the three-and-a-half months between 9/11 and Christmas, nearly a million Americans lost their jobs. Not long afterward came news of major abuses in some parts of corporate America -- scandals that shook the confidence of many investors and had a serious negative effect on the overall economy.
In recalling that time, and then considering everything else that's happened over the last five years, it is striking to realize all of the massive challenges that have confronted America, one after the other -- from the recession, to historic natural disasters, to the urgent, difficult, and ongoing efforts in the war on terror. Yet this country has been able to withstand all these challenges -- to the point that the economy of the United States is larger and stronger than ever before, and getting better every day.
What we are seeing today are the good results of sensible, focused, and above all timely action on the economy. Five years ago, working with bipartisan majorities in the House and Senate, the President reduced taxes for every American who pays income taxes. He doubled the child tax credit, reduced the marriage penalty, created new incentives for small businesses to invest. The Bush tax relief has left more than $880 billion in the hands of workers, investors, small businesses, and families. And they have used those resources to fuel more than four years of uninterrupted economic growth.
Another crucial decision we made was to cut taxes on dividends and capital gains. These cuts were designed to lower the cost of capital, and to encourage businesses to expand and hire new workers. They were passed in 2003. I should point out that when the matter came up in the Senate, the vote that day was 50 senators in favor, 50 senators opposed. This is one of those occasions when I got to cast the tie-breaking vote -- not that I deserve any special credit. The President didn't give me a lot of options that day when I went to Capitol Hill. (Laughter.) The great thing about it is, every time I vote, we win. (Laughter and applause.)
The tax reductions on cap gains and dividends are doing exactly what we expected. When they were passed three years ago, business investment had been dropping for several years. Since that time, business investment has been growing at more than nine percent a year. Spending on equipment and software has hit record levels. And the benefits are reaching not just businesses but families as well. Some 57 million American households -- about half the total -- have some investment in the stock market, whether through company shares, mutual funds, or their retirement plans. By cutting the taxes on dividends and capital gains, we helped to add about $4 trillion in new wealth to the stock market. And last month the President signed a bill renewing those tax cuts, so we can continue to expect a strong flow of capital investment -- the very kind of investment that generates even more new jobs down the road.
As it is right now, the jobs picture is the best in our history; more Americans are working today than ever before. Since August of 2003, the United States has added over 5.3 million new jobs -- more than Japan and the 25 nations of the European Community combined. The national unemployment rate is 4.6 percent -- lower than the average rate of the 1970s, the 1980s, or the 1990s. Productivity over the last five years has grown at the fastest rate in decades -- and higher productivity leads to higher wages for American workers. Hourly compensation grew at an annual rate of over 5 percent in the first quarter of this year. American workers are taking home bigger paychecks and their standard of living is on the rise. Household net worth is at an all-time high. Real after-tax income is up more than 7 percent per person since the beginning of 2001.
In the first quarter of this year, our economy grew at an annual rate of 5.3 percent. This follows a vigorous 2005, when the American economy grew by 3.5 percent -- faster than Japan, twice as fast as France, three times as fast as Germany. President Bush's tax relief plan was right for America -- and it is working.
These are not just facts and figures, these are your family, friends, and neighbors who are working and taking home more of their hard-earned money rather than sending it to Washington.
The economic expansion is also translating into higher than projected federal revenues, as we knew would happen. When the President proposed cutting taxes, many in Congress opposed him and argued that we could not afford to lose the tax revenue. The President knew that tax relief was needed to help our economy grow and that a growing economy would produce more revenue. And last year, tax revenues grew by $274 billion -- an increase of nearly 15 percent over the previous year. And in the current fiscal year, so far, tax revenues are more than 10 percent higher -- also better than projected. About a quarter of these new tax revenues come from corporations, which pay more because they are growing with the economy. And as a result of this new revenue, we are on schedule to meet the President's goal of cutting the deficit in half by 2009.
The tremendous economic performance of the economy of the last several years is a credit, primarily, to the hard work, and the optimism, and enterprise of the American people. And it stands in sharp contrast to the gloomy predictions made by those who stood against the President's economic plan. Beginning in 2001, these critics, many of them in Congress, were stubbornly opposed to tax reductions on the grounds that leaving more money in the hands of Americans would "ruin" the economy, and "do nothing to create jobs." It's worth noting, as well, that the Bush economic program reduced taxes for every single American who pays income taxes. But in the mind of the current Chairman of the Democratic National Committee, the tax cuts were a bad idea because they went, in his words, to the wrong people.
The plain truth is that the tax cuts were fair. They were broad-based, and they were extraordinarily good for this nation. They represent good sense and a proper understanding of government's role in the economy. And they conform to an historical pattern. Over the last several generations, there have been three major tax cuts in the country -- in the 1960s under President Kennedy, in the 1980s under President Reagan, and now under President Bush. All three tax cuts resulted in sustained growth, new jobs, and new wealth across the country. By now the evidence is in -- and the best tax policy for America is found in the wisdom of John F. Kennedy, Ronald Reagan, and George W. Bush.
A low-tax policy continues to be at the center of our agenda to keep the economy growing. Under current law, many of the tax cuts are still set to expire over the next few years. If we do nothing, American families will face a massive tax increase, and our economy would sustain a major hit. As the President said to Congress several months ago, the nation needs more than a temporary expansion, so we need more than temporary tax relief. As soon as possible, the Congress should act responsibly, and make the Bush tax cuts permanent.
The House of Representatives took an important step yesterday when it passed further relief from the death tax. The practical effect of the death tax is to impose double taxation on many family assets, including family farms and ranches while hurting the source of many of our new jobs in this country -- small businesses. The President and I support a permanent repeal of the death tax. Fundamentally, the tax penalizes savings and risk-taking and reduces capital formation in the economy. Yesterday's action by a broad, bi-partisan majority in the House moves us in the right direction. We hope the Senate will take similar action to provide the American people and the economy much needed relief from this unfair tax. It's time to put the death tax on the road to extinction. (Applause.)
All of us in Washington also have a duty to be good stewards of the taxpayer's dollar. Every year since the President and I took office, our administration has slowed the growth of discretionary spending that is not related to the military or homeland security. The President's 2006 budget was the first to propose cuts of this kind since Ronald Reagan was in the White House.
We also believe strongly that it's time to take a second look at the way business has often been done in Washington. Earmarking for special projects has simply gotten out of hand. They now occur by the thousands. The President and I support earmark reform to get more unneeded spending out of the federal budget. Furthermore, the President is willing to make hard choices himself -- and so we call on the Senate to join the House -- it's already acted -- and give the President of the United States a line-item veto to stop wasteful spending.
We must also confront the larger challenge of mandatory spending, or entitlements. The retirement of the baby boom generation will put unprecedented strains on the federal government. By 2030, spending for Social Security, Medicare, and Medicaid alone will be almost 60 percent of the entire federal budget. And that will present future Congresses with impossible choices -- staggering tax increases, immense deficits, or deep cuts in every category of spending. Congress did not act last year on the President's proposal to save Social Security, yet the rising cost of entitlements is a problem that is not going to go away -- and with every year we fail to act, the situation will get worse. We need to put aside partisan politics, work together, and get this problem solved.
To keep the economy strong, we need to bring the health care system into line with the realities of life in the 21st century. This year, for the first time, seniors have prescription drug coverage under the Medicare program. We've enacted health savings accounts, so a person can save money for medical expenses tax free, and keep that money even if they move to a different job. We're asking Congress to enact association health plans, so small businesses can join together to get health care for their employees at the same discounts as bigger companies. And the nation needs medical liability reform, so that good, honest doctors aren't forced out of their practices by frivolous lawsuits.
To keep the economy strong, we need reliable and affordable sources of energy. The President is asking Congress to pass legislation to encourage in the building or expansion of new refineries. With all the energy needs of our massive economy, and with the experience of increased gasoline prices, it's incredible that this country has not built a new refinery since the 1970's. We've got a lot of catching up to do, and the sooner we get started, the better. And for long-term energy security, we'll encourage breakthrough technologies -- from zero-emission coal burning, to hydrogen fuel, to cutting-edge methods for producing ethanol. With the help of Congress, we'll put the nation on the course to a cleaner environment and a diverse, secure supply of energy.
To keep the economy strong, the United States must continue to engage the global marketplace with a confident, forward-looking spirit. President Bush often reminds Americans that we have 5 percent of the world's population -- so 95 percent of our potential customers live outside the United States.
There is, naturally, some anxiety in the United States over the outsourcing of jobs. And when a job is sent elsewhere, it's a heavy blow to the person who no longer has that paycheck. The real question for policymakers is how to face that challenge. One option is to attempt to freeze the status quo, and close ourselves off from the global economy. The obvious problem is that protectionism invites more of the same; if we turn our backs on other countries, we can expect them to respond in kind. Protectionism would take away our competitive edge; cost jobs in exporting industries; and cause a long-term decline in our standard of living.
There are far better ways to answer the challenge of outsourcing. To keep the nation competitive, one commitment is necessary above all others: We must continue to lead the world in human talent and creativity. Our greatest advantage in the world has always been our educated, hard-working, ambitious people -- and we must keep that edge. We need to encourage children to take more math and science, and make sure those courses are rigorous enough to compete with other nations. To do that, the President is proposing to train 70,000 high school teachers to lead advanced-placement courses in math and science, bring 30,000 math and science professionals to teach in the classroom, and to give early help to students who struggle with math, so they have a better chance at the good, knowledge-based, high-wage jobs of the 21st century.
The President has made two vital proposals to spur innovation inside the United States. First, he is asking Congress to double the federal commitment to the most critical basic research programs in the physical sciences over the next 10 years. This funding will support the work of America's most creative minds as they explore promising areas such as nanotechnology, supercomputing, and alternative energy sources. Second, he wants to make permanent the research and development tax credit, to encourage even bolder private-sector investment in technology. With more research in both the public and private sectors, we will ensure that this country leads the world in opportunity and innovation for decades to come.
All of these policies -- from tax relief and spending reform, to health care, free trade, education, and investment in technology -- reflect our fundamental confidence in the American system of free enterprise. And that confidence is rooted in more than just faith. The experience of this nation -- over the generations, and over the last several years -- has shown that every step we take to encourage entrepreneurship, risk-taking, and competitiveness on the global stage -- pays off in jobs, wealth, and progress for the American people.
Ronald Reagan, the only President born and raised in Illinois, said it best: "If we look to the answer as to why, for so many years, we achieved so much, prospered as no other people on Earth, it was because here, in this land, we unleashed the energy and individual genius of man to a greater extent than has ever been done before." (Applause.)
It will be noted of our generation that we passed through a difficult and a dangerous time, and faced unprecedented challenges. Yet we've faced up to those challenges, and in the process we've shown our many strengths as a people. Today, with President Bush as our leader, the U.S. is moving forward with great hopes and a great sense of purpose. Americans in this young century have no fear of the future -- because we intend to shape it.
Thank you very much. (Applause.)
END 11:16 A.M. CDT
Richard B. Cheney, The Vice President's Remarks at the Chicago Mercantile Exchange Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/283052