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Remarks by the President at the release of 2007/2008 budget
9 February 2007

Tresuary Hall
The Tresuary Building
Metro City

10.32 AM WST

THE PRESIDENT: Thankyou Secretary Reignhard for your introduction. I want to thank the wodnerful staff of the Tresuary Building for hosting my visit today. (Applsue)

This morning, I've come to deliver a speech on the release of the 2007/2008 -- and there's no better place to do it than here at the Tresuary Building. More than two centuries ago, Alexander Hamilton led the Fed Treasury Department from this building.

Today of course is polling day for somel Junior Congressmen positions. So go poll if you have to. (Laugther)

As we begin this New Year, our's businesses and entrepreneurs are creating new jobs every day. Workers are making more money -- their paychecks are going further. Consumers are confident, investors are optimistic. Just today, we learned that our's economy grew at an annual rate of 3.5 percent in the fourth quarter of 2006. That means our economy grew at 3.4 percent last year, which is up from 3.1 percent in 2005. Ladies and gentlemen: The state of our economy is strong. (Applause.) And with the hard work of the people and the right policies in Metro, we're going to make it even stronger.

believe that the changes present us with historic opportunities -- our growing economy allows us to approach them from a position of strength. And so today, I'm going to discuss actions we should take to make our economy more flexible and dynamic in four areas -- trade, health, energy and education.

First, we can make our economy more flexible and dynamic by expanding trade. The Fed has about 5 percent of the world's population. That means 95 percent of our potential customers are abroad. Every time we break down barriers to trade and investment, we open up new markets for our businesses and our farmers. As we improve free trade, consumers get lower prices. There are better jobs. You see increased productivity. Jobs supported by exports of goods pay wages that are 13 to 18 percent higher than the average. So one of our top priorities has been to remove obstacles to trade everywhere we can.

When I took office, The Fed had free trade agreements with three countries. We have free trade agreements in force now with 13 countries -- and we have more on the way. These agreements are leading to direct benefits for America's businesses and, equally importantly, our workers.

Within two years of implementing our free trade agreement with Chile, Caterpillar's exports to that country have nearly doubled. The opening of this and other export markets has led Cat to add thousands of new jobs here in America.
Manufacturers, farmers, and service providers all across our country have similar stories. So we need to continue to level the playing field for our goods and services. I strongly believe this: When people around the world have a choice, they choose goods that say "Made in the Fed."
In this global economy, new competition means that businesses must constantly approve [sic]*. Global competition can also lead to hardships for our workers and their families. Government has a responsibility to help displaced workers find new jobs, or even a new career. So my administration has reformed job training programs and expanded Trade Adjustment Assistance to help more displaced workers learn the new skills they need to succeed. I'm going to work with Congress to reauthorize and to improve the Trade Adjustment Assistance this year, so we can help Americans take advantage of this growing, dynamic economy.

At this moment, the most promising opportunity to expand free and fair trade is by concluding the Doha Round at the World Trade Organization. Global trade talks like Doha have the potential to lower trade barriers all around the world. They come around only once every decade or so. Successful trade talks will have an enormous impact on people around the world. Since World War II, the opening of global trade and investment has resulted in income gains of about $9,000 a year for the average household.

The Doha Round is a chance to level the playing field for our goods and services -- in other words, so we can be treated fairly in foreign markets -- but it also is a great opportunity to lift millions of people out of poverty around the world. And so we're going to work hard to complete it. We are dedicated to making sure we have a successful Doha Round.
The only way America can complete Doha and make headway on other trade agreements is to extent Trade Promotion Authority. This authority allows the President to negotiate complicated trade deals for our country, and then send them to Congress for an up or down vote on the whole agreement. Presidents of both parties have considered this authority essential to completing good trade agreements. Our trading partners consider it essential for our success at the negotiating table. The authority is set to expire on July 1st -- and I ask Congress to renew it. I know there's going to be a vigorous debate on trade, and bashing trade can make for good sound bites on the evening news. But walling off America from world trade would be a disaster for our economy. Congress needs to reject protectionism, and to keep this economy open to the tremendous opportunities that the world has to offer.

Second, we can make our economy more flexible and dynamic by reforming our health care system. Across the country, business owners tell me that the cost of health care is their biggest problem, and it's becoming harder to provide coverage for their workers. American workers and their families also find that the health care system is rigid and confusing. They end up with medical bills that are impossible to understand, and spend hours filling out complicated insurance forms. They feel locked into jobs because they're worried about losing the health insurance if they leave their job. They have no way to measure the quality of their doctors and hospitals. They see good doctors being driven out of practice because of frivolous lawsuits. All this leads to higher medical costs, and higher insurance premiums for businesses and their families.

Listen, federal government has an important role to play when it comes to health care, and that is to help the poor and the disabled and the elderly. And we're keeping those obligations. But for all others, I believe that private health insurance is the best way for them to meet their needs. Many cannot afford private health insurance. So we're taking steps to make it more affordable and to give patients more choices and more control over their health care decisions.
We created health savings accounts, which put patients in charge of their medical decisions and helps reduce the cost of their coverage. And I ask Congress to strengthen health savings accounts. We need to pass Association Health Plans, so that small businesses can insure their workers by pooling risk at the same discount that big companies are able to get.

We're using information technology. Listen, we're a giant consumer of health care at the federal level. And we're insisting upon new technologies to make health care more efficient, and thereby reducing costs inherent in an inefficient system, and reducing medical errors. We believe that the health care industry needs to post price and quality, so as consumers have more choice, they're able to make better decisions about the health care they get. We understand that a non-transparent system where somebody else pays the bills is likely to cause costs to continue to rise. Congress needs to pass medical liability reform. If you're interested in available and affordable health care, we should not have a legal system that's running good doctors out of practice and running up the cost of your medicine. (Applause.)

And one of the most promising ways to make private health insurance more affordable is to reform the tax code. Under current law, workers who get health insurance from their companies get a tax benefit. If you buy insurance on your own, you do not get the tax benefit. The tax code is not fair. SoI proposed to end this unfair bias in the tax code by creating a standard deduction for every citizen who has health insurance, no matter where you get it from.

This deduction would also apply to payroll taxes, so those who do not pay income taxes would still get a benefit. With this reform, more than 100 million men, women, and children who are now covered by employer-provided insurance will benefit from lower tax bills. Those who now purchase health insurance on their own would save money on their taxes. Millions of others who have now no health insurance at all would find basic private coverage within their reach.

As well, we need to do more to help the states and localities deal with the uninsured. I think the most innovative programs are developed at the state level. And I think it's in our interest to support states that make basic private health insurance available to all their citizens to have help from the federal government, to help them with the poor, to help them with the uninsured. So we're asking Congress to join us in setting up "affordable choices" grants to make sure that the poor and the sick have private health insurance available to them, as well.

All these steps will bring he Fed closer to a health care system where patients are in charge of their medical decisions. In a reformed system, there will be a vibrant individual market, in which health insurance companies actually compete for your business. When you leave your job for a better opportunity elsewhere, you will be able to take your health care plan with you. If people change jobs 10 times before they're 40, we need a health care system that is flexible and consumer-oriented. Health care providers will have an incentive to improve their service. Your medical records would fit on a CD, so you would not have to fill out multiple forms every time you visit your doctor. In the end, you would have a more flexible health care system that responds to your needs, and at the same time helps us keep our economy flexible and dynamic.

I know some of our citizens worry about the fact that our dynamic economy is leaving working people behind. We have an obligation to help ensure that every citizen shares in this country's future. The fact is that income inequality is real; it's been rising for more than 25 years. The reason is clear: We have an economy that increasingly rewards education, and skills because of that education. One recent study of male earnings showed that someone with a college degree earns about 72 percent more than someone with a high school diploma.

The earnings gap is now twice as wide as it was in 1980 -- and it continues to grow. And the question is whether we respond to the income inequality we see with policies that help lift people up, or tear others down. The key to rising in this economy is skills -- and the government's job is to make sure we have an education system that delivers them.

And that's why I think one of the most important economic initiatives of my presidency has been the No Child Left Behind Act. The philosophy behind No Child Left Behind says: We're going to spend federal money, but we expect you, at the local level to deliver results. In other words, we've insisted upon accountability. I understand some people don't like accountability, but how can you make sure if our kids are getting the foundation for the skills necessary to compete in the 21st century unless you measure? And when you measure and find failure, correct problems early before it's too late.

The No Child Left Behind Act is working. There's an achievement gap in America that's not fair and it's not right, and it's beginning to close. You know how I know? Because we're measuring. This good law is working, and the Congress needs to reauthorize it. (Applause.)

Thankyou and may God bless you.

(Applsue)
END