FROM THE OFFICE OF PUBLIC AFFAIRS

August 27, 2004
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Prepared Remarks by Treasury Secretary John Snow At West Michigan Piano Grand Rapids, MI

Good morning and thank you so much for having me here today. It's great to be back in Grand Rapids, a city that I have visited often over the years, and it's wonderful to visit West Michigan Piano. I wish my wife Carolyn could be with me today; she is the piano player in the Snow family and knowing of her love of fine pianos the visit would undoubtedly have been more expensive for me if she were here.

There is a lot of good news here at this company; I commend you on your success! Hard work and innovation has done for you what it has done for generations of American entrepreneurs: it has paid off for you, your associates, your customers, your suppliers and your community.

Today you are expanding your facilities and your reach. Your customers and suppliers will all benefit as a result. The American economy will benefit, too…and I'd like to talk more, later on today, about how critical businesses like this are to economic growth.

But perhaps the greatest beneficiary of any small-business success story is its employees.

When the business does well, an owner like Ken Wierenga is able to increase compensation for employees, add benefits, or even create new positions, which is great news for a community, a state and a country where workers need jobs.

And I know there is no greater feeling of success for a business owner than when one of their employees buys a new home, or maybe their first new car or is able to take that long dreamed of vacation. Success for those employees means everything to the person who started that business.

That's also why it is so frustrating for business owners who find themselves unable to afford health insurance for their employees - who find themselves squeezed by rising premiums.

Employees of a small or medium-sized firm are like extended family to the owner of the business. Many of them are actual family members. So when health insurance rates are rising steeply and becoming harder and harder to afford, a good business owner has many sleepless nights.

Ken has had his share of those sleepless nights, I know. But I'm delighted to say that a new law creating something called Health Savings Accounts (HSAs) is helping him get the rest he needs.

HSAs were created as part of the Presidents Medicare reform legislation. They are like super-charged IRAs that put patients back in charge of their health care. You own it, you control it, and you can leave it to your heirs.

One of the top benefits of HSAs is the fact that both employers and employees can save money by using them. And that's good news for the future of health coverage in this country. We need it to be more affordable so we can get more people covered.

I was delighted to learn that companies who offer HSAs are reporting to the Treasury Department that among those who sign up for the program, 25-40% of the enrollees were previously uninsured.

HSAs are a great start, a terrific new option for the small business community… but more must be done to address the rising cost of health care in this country. Health insurance premiums are acting as a drag on the small employers that mean so much to our economy.

Companies like West Michigan Piano - the small businesses on which our economy depends - create two-thirds of new private sector jobs in America. They employ more than half of all workers, and account for more than half of the output of our economy. That's why you'll often hear the President say: what's good for small business is good for America. Because when small business is growing, the American economy is growing.

The rising cost of health insurance is bad for the small-business community, and it impedes growth in the overall American economy.

Many small firms don't offer health insurance coverage because of the daunting cost. But that certainly isn't the outcome they want. They want to provide coverage because they care about their employees, they are their best asset… and they want to be able to offer it in order to attract the skilled workers they need to be competitive.

The President has called upon the Congress repeatedly to pass Association Health Plans, which would allow small-business owners and their employees to join together into larger groups to purchase health insurance. The savings to small business would be outstanding, and AHPs would provide another way for people like Ken and the employees of West Michigan Piano to save money on health insurance.

AHPs will provide small businesses the opportunity to band together through trade and professional associations to purchase affordable health benefits, giving them the greater bargaining power, economies of scale, and administrative efficiencies currently enjoyed by large employer and union plans. AHPs will level the playing field, giving small employers the same advantages as larger employers and unions.

AHP legislation is stalled in the U.S. Senate and that's a real shame. The Senate needs to act, without any further delay. The uninsured cannot wait any longer for reforms that will increase the availability and affordability of health insurance coverage. Small and family owned businesses ought to have the same advantages of the big firms. It's the right thing to do and the Senate needs to act now.

The Senate also needs to act to curb the abusive lawsuits that are directly contributing to these terribly high and rising health coverage costs.

As of 2002, 58 percent of physicians reported that they had been the target of a lawsuit, and their malpractice insurance typically rose between 30 and 75 percent over three years, from 2000 to 2002. The higher that malpractice insurance, the more doctors need to charge their patients to stay in business. Many doctors I know can't take it anymore. They have thrown in the towel. Retired early. Taken their life-saving abilities out of the medical system, because the risks of staying in are just too high, and because they've had enough.

Does anyone really believe that 58 percent of doctors are negligent? Of course not. Some small percentage of the members of any profession are going to fail to live up to the best standards of practice … but when 58 percent of them are being sued… well, that explains why the term "ambulance chaser" is part of our national vocabulary.

Legislation pending on Capitol Hill takes a common-sense approach to these problems and would go a long way toward protecting our health-care system from baseless suits that are ultimately robbing patients of the quality and convenience that they are paying dearly for.

The medical community is just one part of our economy that is hurt by baseless, abusive lawsuits. Everywhere I travel across America I hear the call from small business people for relief from these abusive lawsuits.

The threat of suits is a disincentive for hiring. And if a baseless suit is brought by a customer, employee or passer-by, small firms will often lose thousands of dollars by settling rather than going to court…because the cost of defending themselves would be even higher, and cash-flow is tight in a small firm.

This burden on America's job creators is the last thing we need in an economy that has seen very hard times, is in recovery and expansion now, and needs to create more good jobs for those who still seek work.

Our economy is incredibly resilient. It is more open, flexible and adaptive than any other in the world. And the most powerful elements of our economy are our small-business owners and entrepreneurs, our outstanding workforce, and the simple fact that we believe in free, open, competitive market.

The strength of our economy can be seen here today, at West Michigan Piano. This expanding business and its employees are a perfect example of what makes our economy tick.

That's why the President wants to keep Ken's taxes low. And that's why he wants to keep Ken's employees' taxes low. President Bush believes that Ken and his employees know best how to save and invest their own money.

The President understands that creating an environment in which America's innovators can flourish is the essential ingredient in any recipe for economic growth. Keeping taxes low gives businesses like this one room to grow.

The President's tax cuts allowed small-business owners like Ken to keep more of their business income, and encouraged them to invest in the growth of their companies. For example, nearly 725,000 business taxpayers in Michigan will save money on their 2004 taxes.

Similarly, the tax cuts have allowed individuals to keep more of their income. More than 3.6 million Michigan taxpayers will have lower income tax bills in 2004 thanks to the tax relief.

The results of letting people keep more of their own money, and spend it how they see fit, have helped put our nation on the right track. Nationwide, nearly 1.5 million jobs have been created since August 2003 according to the payroll survey; and 2.3 million jobs have been created since August 2003 according to the household survey. More people than ever before own their own homes, and new homes are being purchased every day. People are finding new jobs. They have more money in their pockets and can better afford things from cars to appliances to shoes for their children. That said, we are not satisfied. There is still more work to do.

The tax cuts were like oxygen for our economy. And we needed that oxygen badly; our economy was already in steep decline when the President took office. Then we were hit with the devastating blows of September 11th, the bursting of the stock market bubble and the corporate scandals. Those events literally kicked us when we were down. The tax cuts and the actions by the Federal Reserve gave our economy the stimulus it needed. Although we still face a lot of obstacles and won't be satisfied until every American and every Michigan worker who seeks work can find it, our economy is once again on solid footing.

We have plenty of work to do - in Michigan and across America. But if we continue on the path of freedom and making sure individuals and entrepreneurs have an environment in which they can work and grow, our best economic days will remain ahead of us and I am optimistic about our future.

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