U.S. Secretary of Labor Elaine L. Chao
Archived Speech — Caution: Information may be out of date.
Remarks as Prepared
Remarks to the City Club of Chicago’s
Public
Policy Luncheon Forum
The Drake Hotel
Chicago, Illinois
April 15,
2003
Thank you, Jay [D. Doherty, President of the City Club] for that gracious welcome and introduction.
It’s great to be here today…and to have the opportunity to speak before one of America’s great civic forums. I feel strong ties to Chicago because Cam Findlay—the Deputy Secretary of Labor—was born and raised here. And the Director of the Labor Department’s Women’s Bureau, Shinae Chun, is the former Director of the Illinois Department of Labor and spent much of her career in Chicago. They’ve told me about the crusading spirit of this Club, which helped make Chicago one of the premier cities in America. Congratulations on a century of leadership and achievement!
So much attention these days—even on Tax Day—is focused on the war overseas. And it should be. Many young Americans have risked their lives to end a brutal dictatorship in Iraq and to make the world safe from terrorism and weapons of mass destruction. It’s hard not to burst with pride over the magnificent performance of our men and women in uniform!
But I also want you to know that President George W. Bush is as focused on our economic security, as he is on protecting our national security.
He understands they are the twin pillars of our nation’s strength.
We must ensure that our young people—particularly those coming back from defending liberty overseas—face bright futures. And the basis of a bright future is a good education and a good job.
That’s why I’d like to talk to you today about the need to enact the President’s jobs and growth plan.
As leaders from every sector of this community, you know the challenges we’re facing. Although we’re in the second year of a recovery, the economy is still not performing as well as it should. Business investment is lagging. Jobs are not being created fast enough. And the stock market hasn’t fully recovered.
That’s why it’s more important than ever before for the Congress to enact the President’s stimulus plan. It will jump-start the economy by pumping billions of dollars into the private economy over the next two years. And the vehicle to deliver that economic jolt is an across the board tax cut for every American taxpayer.
The philosophy behind the Administration’s approach to economic stimulus is straightforward.It acknowledges that the cumulative effect of millions of consumers making economic decisions is what drives the American economy.
The President stated that clearly, when he unveiled his stimulus packageright here in Chicago last January. He noted that consumer spending accounts for 70 % of our economy. Without robust consumer confidence and spending, businesses cannot grow. If they don’t grow, new jobs are not created.
By putting more money into the pockets of every American family, the President’s plan revs up the engine that powers our economic growth and creates new jobs. At the same time, it delivers critical short-term assistance—through extended unemployment benefits and personal reemployment accounts—to those having the most difficulty finding work.
Here are just a few examples of the plan’s immediate impact on the economy in Illinois:
- By eliminating the marriage penalty, 1.5 million Illinois married couples would see a significant savings on tax day, every year.
- By increasing the child tax credit, 1.1 million Illinois families would receive an additional $400 per child to spend or save annually.
- And by tripling the equipment expense limit, 1 million Illinois small business owners will receive an average $2,042 to invest this year.
This last feature is particularly important because small businesses create one half of all news jobs in this country.
Just to bring the point home that the President’s package will help everyone, consider this. By stimulating overall economic growth in Illinois, the President’s plan will increase Illinois state tax revenues by about $138 million in 2003 and $250 million in 2004.
The President’s tax cuts make so much sense that Congress has already approved some of them—but with a hitch. They won’t take effect for years!
For the sake of America’s workers and their families, we need the stimulus effect of the President’s entire package of tax cuts—right now. And they need to be retroactive, so that working families will start receiving checks before the year is over.
A big part of the stimulus effect of the President’s plan is his proposal to eliminate the double taxation on dividend income. Unfortunately, this is one of the least understood provisions of his package. That’s a shame, because this proposal alone is responsible for more than 40 percent of the 1.4 million new jobs the President’s plan would create over the next 18 months. That’s560,000 new jobs for American workers!
The President explained the rationale behind this proposal during a recent trip to Florida. He noted that the double taxation of dividends takes money out of the capital markets. It robs the economy of resources that would otherwise be invested in businesses, so they can grow and create new jobs. That’s particularly important to the Mid-West, where lagging business investment is contributing to the downturn in manufacturing employment.
In addition, the double taxation of dividends deprives senior citizens—many of whom rely upon dividend income—of extra resources in retirement. An estimated 1.5 million taxpayers in Illinois—many of them seniors—would benefit if this provision of the President’s plan were enacted.
And eliminating the double taxation of dividend income would also have a positive effect on corporate governance. It would reduce the bias in the tax code that encourages corporations to focus on earnings per share, which can be manipulated, rather than dividends, which are concrete, quantifiable and real. As the President has said, you can fudge earnings, but you can’t fudge cash!
The case for the President’s stimulus package grows stronger each day.
As the most recent Business Roundtable survey indicates, many employers are holding off on new business investment because they lack faith that robust consumer spending will continue.
Even as we make progress in fighting terrorism, our economy is still suffering the economic aftershocks of the September 11 attacks. The retail and restaurant sectors lost jobs in February and March. Eating and drinking establishments suffered because Americans cut back on business and leisure travel. Since the attacks of September 11, the United States has lost a total of 1.6 million jobs. We can’t let this continue.
With the President’s stimulus plan, I believe we can turn this around.
The favorable resolution of the war in Iraq will help by taking some of the uncertainty out of the markets.
As our world becomes safer and the summer vacation season approaches, more Americans will be traveling. This should have a positive impact on jobs in the transportation, hospitality and restaurant sectors.
Historically low interest rates have sustained the boom in home ownership. And mortgage refinancing has put additional income into the pockets of many American families, which is shoring up the economy.
In fact, consumer optimism about the economy is on the rise. Last Friday, the University of Michigan’s Index of Consumer Sentiment rose to 83.2 percent, from 77.6 percent. That is far better than expected.
But to ensure that the economy recovery continues, we must ensure that consumption remains robust. That means enacting the President’s jobs and growth package.
Recently, the size of the tax cut in the President’s package has been in the news. But the number I focus on is the number of jobs the President’s package will create. A reduction in the size of the tax cut means a reduction in the number of new jobs created. That’s why the President remains committed to the key elements of his plan, as originally proposed.
Tax cuts are a proven strategy to achieve economic growth. President Bush faced three quarters of negative economic growth when he came into office. But passage of his 2001 tax cuts helped make the recession he inherited one of the shallowest in recent history.
Tax cuts worked then and they will work now, because the fundamental principles of the American economy have not changed.
As the President has said many times, we talk a lot about numbers in Washington.
But we must never forget that behind each number is a person.
One person out of work is one person too many.
We will never be satisfied until every American who wants a job can find a job.
That’s the promise of the American dream. And my job as Secretary of Labor is to help the President bring this promise to every willing heart.
But positive change needs willing allies and an aggressive plan of action—just like the one this Administration put into place in Iraq. The President’s jobs and growth package is realistic and principled. It’s the right plan to win the battle for our economic security. And it’s the right plan to secure more jobs for Illinois’ working families. I hope you will join me in supporting it.
Thank you.
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Archived Speech — Caution: Information may be out of date.
