|October 6, 2008|
Speeches by Secretary Elaine L. Chao
Remarks Prepared for Delivery by
Thank you, Mark [Mark Schaefer, Executive Director, Dr. Phillips Hospital and President International Drive Resort Area Chamber of Commerce], for that introduction.
It's wonderful to be here in Orlando among so many stakeholders in the Orlando area's economic development. And let me congratulate you on the 20th anniversary of the International Drive Resort Area Chamber of Commerce.
This afternoon, I'd like to share with you some thoughts about the economy and why we need to ensure that the President's tax cuts are made permanent. Then I'd like to say a few words about how important exports and trade are to keeping our economy moving forward.
As everyone knows, our nation's economy is currently experiencing some difficult short term challenges. Slowdowns in the housing sector, and the systemic under-pricing of risk in the financial sector have impacted our nation's economy significantly. But this Administration was watching carefully and took preemptive action. More than $50 billion in stimulus payments have already gone out the door, to be injected directly into the economy. Analysts expect to see the impact beginning in summer, but especially in the second half of this year. And aggressive action has been taken to stabilize the financial markets and help homeowners avoid foreclosure.
In fact, in the past two weeks we have seen some encouraging trends in a positive direction. First quarter GDP was revised upward last week to .09 percent. Unemployment claims have stabilized. And the national unemployment rate ticked down last month to 5.0 percent, which is lower than the 5.7 percent average of the decade of the 1990s.
Now I know there's a lot of talk about our country's economy being in a recession. And while no one knows what will happen in the future, by historical standards, it does not appear that is happening right now. There are five key indicators that the National Bureau of Economic Research uses to determine recessions. Only one indicator, which real measures retail, wholesale and manufacturing sales, is declining at rates commensurate with prior recessions. Recent industrial production numbers are close to the recession range, but will only be consistent with a recession if they persist or worsen. And while job loss is always unwelcome, it is less than half the rate that which prevailed during the mild recession of 2001. And the other two indicators GDP and real personal income are not in the recession range.
Yet, as I travel around the country, it is clear that there is a lot of justifiable concern about the economy. Declining home equity is hitting consumers hard. And consumers are reeling from the sticker shock of filling up at the gas pump and buying groceries. That's because high oil prices are a direct tax on the consumers, which is passed along in the price of just about everything.
That's why now is not the time to raise taxes and take more money out of the pockets of working families and employers who are trying to create jobs.
But that's just what will happen if Congress allows the President's tax cuts to expire.
It's been five years since President Bush signed the bill that brought tax relief to millions of hardworking Americans. These tax cuts, together with those enacted in 2001 reduced the marginal rate for every income tax bracket. By the end of 2007, Americans would have paid an additional $1.3 trillion more in taxes had it not been for these cuts that allowed families to keep more of their hard earned money.
If this tax relief is allowed to expire at the end of 2010, Americans will pay about $280 billion more in taxes each year the largest tax increase in our nation's history. And it will happen quietly. Congress will just do nothing and let them expire.
But make no mistake about it, every income taxpayer will be hit with an increase. Here are just a few examples:
Let me say a little more about small businesses, which is of particular interest to some of you here today. 75 percent of the taxpayers who benefited from the reduction in the top rate are small business owners. The looming tax increases are already affecting them by creating uncertainty, which is causing small businesses to think twice about expansion or hiring new workers. Helping small businesses is especially important to our economy because two-thirds of the new jobs created in this country in the last decade and a half have been created by small and medium-sized businesses. Small businesses are indeed the engine of job growth in our country. So it's important to make your voices heard on this issue.
And let me also mention that if the President's tax cuts are allowed to expire, the death tax will come back in full force. This would keep many Americans from passing on their family-owned business, or farm, to their children.
Let me also mention another issue that is important for our nation's economy, and that is maintaining public support for free and fair trade. As some of Florida's leading producers, you are all keenly aware of the export sector's importance to our nation's economy. Exports are a key driver of demand for Florida goods such as agricultural products, machinery, chemicals, and computers.
Florida's large export industry is also helping the state withstand recent economic challenges. In 2007, state exports totaled $44.8 billion up 80 percent from 2003. That's not even including Florida's largest industry tourism. And nationally, exports are booming and now account for a record 12.7 percent of our nation's GDP! Export related jobs are critical to keeping our country's economy moving forward. That's because a one percent increase in the growth of a trading partner's economy translates into a one percent increase in demand for products from the United States.
So now is not the time to isolate our country from the world by putting obstacles in the path of free and fair trade. We must ensure that worldwide markets remain open for U.S. produced products and services, which in turn create good jobs for workers here at home.
But unfortunately, some in Washington are turning away from the historic bipartisan support for free trade and refusing to allow a vote on the U.S.- Colombia Free Trade Agreement.
Colombia is the second largest Spanish speaking country in the world and our staunchest ally in Latin America. Currently, most products produced in Colombia and exported to the United States come in duty free under the Andean Trade Preferences Act. But many U.S. manufactured products exported to Colombia still face high tariffs.
Here are just a few examples:
A U.S.-Colombia FTA will immediately eliminate Colombia's duties on U.S. produced beef, cotton, wheat, soybeans, key fruits and vegetables, many processed foods, and also eliminate duties on U.S. manufactured heavy equipment, machinery and other items.
An FTA agreement with Colombia will have the added advantage of fostering stability and security in a region of critical interest to our national security.
I just visited Medellin, Colombia in April and saw firsthand the tremendous progress that the Uribe government has made in bringing down the level of violence in all sectors of Colombian society. Violence against trade unionists, which has been a particular criticism leveled against the FTA, has declined between 80 and 86 percent since 2002. In fact, the rate of violence against trade unionists in Colombia today is actually lower than the rate of violence against Colombian society in general. That is due, in part, to a special protection program paid for by the Colombian government. And although there is much that remains to be done, impartial observers agree that Colombia has turned the corner from impunity to democracy and hope.
The people of Colombia do not want a hand out. They want a hand up and they are looking to us, their neighbor to the North, as their partner in progress. And we believe they deserve a vote in the U.S. House of Representatives on the U.S.-Colombia Free Trade agreement.
Let me close by thanking you for the invitation to speak here today. It is always a pleasure to come to Florida, and witness the hospitality and dynamism of the Sunshine state.
Thank you for everything you are doing to create hope and opportunity for others, and to keep our country strong.
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