FROM THE OFFICE OF PUBLIC AFFAIRS

Good morning.  It is a pleasure to join the ACCF Capital Formation Forum today. I want to tell you what I see happening in the economy and where it is headed.  First let me mention one particular issue that I think holds the greatest potential for creating jobs in the short run – enactment of federal terrorism risk insurance.  I’ll be joining President Bush later this morning when he calls together the House and Senate conferees on terrorism risk insurance, to urge completion of this important legislation.

Terrorism risk insurance legislation could have quicker, greater and more profound effect on job creation in our country than any other policy we can enact right now.  The President first put it in front of the Congress last December.  The House quickly passed it.  The Senate was not as quick to act.  Now the bill is in Conference Committee.  It needs a push.  At the President's Forum in Waco, the President of the Carpenter's Union told me that $8 billion in construction projects are on hold because the financing is stalled for lack of insurance against terrorist attacks.  That's thousands of guys in hardhats who aren't working because Congress hasn't finished that bill.

We have to get terrorism risk insurance passed, and we have to do it right, so that we insure American enterprise against unforeseeable attacks while also avoiding a bottomless trough in which trial lawyers would try to soak American taxpayers.
In the past eighteen months, we’ve seen some tough times for the American economy.  We've suffered through a bursting stock market bubble, terrorist attacks on New York and Washington, and discoveries of corporate fraud.  People have lost jobs, and a lot of retirement accounts are hurting.  Economic security is on all our minds.

The economy was in recession when President Bush took office last year, and we’ve been focused on recovery since inauguration day.  From the beginning of his Administration, the President has embraced economic freedom and individual accountability as the foundation for continuing prosperity.  His economic plan creates jobs, improves education and expands opportunities to save and invest.
First, the President's historic tax relief program last summer reduced taxes for the average family of four by $1,040 a year, and put cash in consumers pockets when we needed it most: last August and September.

Then in March, he signed the Job Creation Act to stimulate investment in our economy - a second major accomplishment.  By the end of 2002, these two tax relief programs will have allowed the private sector to create an additional one million jobs with resources that would otherwise have gone to Washington.  Our estimates now show that without that tax relief, the recession would have been deeper, and the recovery slower.

Our third victory for the economy has been new standards for corporate accountability. These ensure that people saving for their future can get accurate information for sound investment decisions.  We are holding corporations accountable for telling the truth to investors and employees, so Americans can save for college tuitions and comfortable retirements with greater confidence.  I am confident the worst is behind us for corporate scandals – call them what you will, but I can’t believe any CEO still standing would be stupid enough to falsely certify their books.  Not when jail time is the certain consequence.
And the most recent major accomplishment for our nation's prosperity is winning Trade Promotion Authority, which the President will use to open international markets to US exports, creating jobs here at home.  One in eleven working Americans - 12 million people - already work at jobs that depend on exports.  World competition also spurs American companies to higher levels of productivity and innovation, even as it reduces product costs and raises quality for American consumers.  Lower trade barriers work the same way as any other tax cut - by one estimate, reducing trade barriers by one-third would save $2,500 a year for every family of four in America.

Today, key economic fundamentals such as inflation, real wages, productivity, interest rates, business profits, and the housing sector are all strong because of the resilience and determination of the American people.   I am confident that we will return to 3 to 3.5% growth rates by the end of this year, and that growth will create jobs and renew our prosperity.

The latest indicators look good.  Interest rates at 40-year lows are providing a boost to both the auto market and housing.  Auto sales soared to the fifth highest monthly level on record in August and housing sales in July surpassed the 1 million mark for the first time in history.  Retail sales growth has averaged over 1 percent per month in the three months from June through August, and consumers are buying a lot more than cars.  Capital spending on equipment and software rose in the second quarter for the first time in seven quarters and looks even better for the third quarter.  And the unemployment rate fell to 5.7 percent in August from 5.9 percent in the previous two months.

But to a lot of folks out there watching, it doesn't feel like a recovery yet.  And the President won't be satisfied until everyone who wants a job has a job.  He's advancing the rest of his economic agenda to strengthen the recovery.

Since the attacks of September 11, the President has been asking Congress to enact terrorism risk insurance.   We also need President Bush's Homeland Security plan, because the physical security of our nation is essential to prosperity.  The brief economic freeze immediately following September 11 demonstrated that reality all too well.  We are working with Congress to complete the new Department of Homeland Security, which would better organize and deploy our resources toward preventing further attacks.

We'll also work with Congress to restrain wasteful government spending, because overspending in Washington burdens our economy with higher debts and taxes. 

And the President has called on Congress to protect individuals' control over their 401(k) holdings without undue constraints from employers.  Your retirement nest egg is yours alone - you earned it, and you should have full legal rights to control it.  The President is considering additional ideas raised at his economic forum in Texas last month to help stimulate investment and savings as well.

As we emerge from the turbulence of last year's recession, we're gaining new perspective on the recent past, and we're applying that perspective to the decade still beginning.  In short, we are facing our problems, dealing with them as a nation, and moving forward.

The question for our new era is not whether we can or should continue the economic success we enjoyed in the 1990s.  The question is how leaders of business and government should incorporate the best aspects of the 90s - growth, productivity, and innovation - into the emerging decade, while actively working to make this new era a time of both personal responsibility and public integrity.  How can we reaffirm the link between value and values, and restore public confidence in American enterprise?
In my view, the answer is simple: honesty and accountability.  With leadership that respects and promotes these values, everything is possible.  Without it, nothing is possible.  That is as true for American corporations as it is for American government.  In my experience, the example from the top becomes the model for everyone below.
In the economic domain, I believe the connection between creating value and affirming values in American business has always been strong.  Far away from the headlines, most business leaders, from mom and pop shop-owners to corporate chiefs, have always treated their shareholders and employees with honesty and fairness.  Today, however, doing your job with competence is not enough.  Leaders must stand up and set an example not just for their employees, but for the general public as well.  Honesty in business is the new patriotism.  There is nothing better business leaders can do for this country right now than restore faith in the system that has made it great.

The President's leadership at home and abroad is smoothing our road to recovery, and increasing the prospects for peace and prosperity around the world.  We will continue to pursue our vision, in which Americans have the greatest possible opportunity to live the lives we dream of: pursuing our chosen professions, owning a home, raising our children to be happy and successful, engaging in our communities, and attaining financial independence. 
Thank you.