FROM THE OFFICE OF PUBLIC AFFAIRS

Good morning.  It’s a pleasure to be here with South Carolina’s business leaders.

The past year has been full of shocks and surprises for those who study and participate in American business. 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.  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.  Combined, these two tax relief measures saved one million jobs in the US economy this year.  Without that tax relief, the recession would have been deeper and the recovery slower.

Today, key economic fundamentals such as inflation, real wages, productivity, interest rates, and business profits are all strong.  We are on the bumpy road to recovery.  The auto and housing markets are strong.  Consumers are taking advantage of low interest rates to buy cars and homes.  We need to see business investment and job creation pick up, and we will as we soak up the excess capacity in the system today.

We’ve also taken strong steps to advance corporate accountability.   We’ve improved the system, putting new standards in place to hold corporations accountable for telling the truth to investors and employees, so Americans can save for college tuitions and comfortable retirements with greater confidence. 

And now that the August 14 deadline for certifying financial statements is past, I am confident that the worst of the corporate scandals is behind us – 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.  We’ll recover from this wave of scandals as we have every other, and we’ll move on to new heights.

We’ll be better for it too, as legitimate technological advances, productivity gains, and improved regulatory structures raise our overall standard of living, and set the stage for further growth.

Any of you who have studied economic history know there is nothing truly unprecedented in today’s trials and hearings, or the images of shamed ex-executives led off in chains.  Those infatuated with greed eventually get their due, in every generation.  Our economic system has the flexibility to absorb these shocks, adjust, and recover.

A company with real leadership, honest and accountable, is one that helps all its employees to work together toward a common goal, and to realize their potential to a far greater extent than they could otherwise.  Effective organizations unlock human potential for all who strive within it.  And that only happens when those people at the top, the leaders, set the example.

So what really happened with these corporate leaders now fallen?  I think they strayed from their values in the anything-goes 90s, and by the time they realized how far they had strayed – after all, in their minds, everyone else was doing it, or would if they could – it was too late. 

The question for our new, post-Y2K 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: honest, accountable leadership.  With leadership, everything is possible; without it, nothing is possible. 

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 small shopowners 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.

Thank you.