February 1, 2006
JS-4000

The Honorable John W. Snow
Prepared Remarks
The Greater Philadelphia Investment Conference

Good evening; thank you so much for having me here tonight. As always, it's great to be in Philadelphia. And I truly cannot imagine a better city in which to discuss the topic that I have come here with. Because Philadelphia, the historic political birthplace of our nation, is also the place where an economic marvel began. Born just 230 years ago, today it is the unrivaled envy of the world: the American economy.

Philadelphia is also celebrating the 300^th birthday of your favorite son, Benjamin Franklin – one of the great innovators of all time. That tradition of creativity and innovation is alive and well in this region today. I saw it in action this afternoon at a company called Centocor, where research and development are leading to products and medicines that improve the quality of life for people not only in this country, but also people all over the world.

There's an important connection here – the President highlighted it last night – between our ability to create, discover and innovate, and America's remarkable ability to compete in a changing global economy. We've been doing it for all of our history, and with the focus on good policies, we will continue to achieve higher and higher standards of living far into the future.

It was an important message the President delivered last night. He told America, correctly, that our economy is performing very well – far better than other major economies. But, as the President said, we live in a new world and are facing competition from new economic players like China, India, and other "emerging market" countries. In order for America to continue to be a dynamic engine of growth, President Bush is outlining action in three key areas: health, energy, and America's competitiveness.

Affordable and Accessible Health Care. The President's reform agenda will help to make health care more affordable and accessible. Health Savings Accounts – putting patients in charge of their health care – will contribute to this goal. We need to make health insurance portable, make the system more efficient, and lower costs.

Advanced Energy Initiative. The President has said that the best way to break America's dependence on foreign sources of energy is through new technology. So the President announced the Advanced Energy Initiative, which provides for a 22 percent increase in clean-energy research at the Department of Energy. This initiative also builds on the energy legislation finally passed by the Congress last year that encourages and rewards energy conservation activity.

American Competitiveness Initiative. This ambitious strategy by the President will significantly increase federal investment in critical research, ensure that the U.S. continues to lead the world in opportunity and innovation, and provide American children with a strong foundation in math and science.

With a focus on these and other good policies, we'll keep America competitive in the world and keep our economy strong as it has been for some time now. A current snapshot of this economy illustrates its strength: GDP growth was over 3.5 percent last year. Over four and a half million new jobs have been created since May of 2003, two million of them in the last year alone. Unemployment is running lower than the 1970s, 1980s and 1990s, U.S. equity markets are rising, and household wealth is at an all-time high.

The picture of our economy was not as good a few years ago, and I'm proud to be part of an Administration that has a deep understanding of what makes the American economy work. The President has advanced a rich and varied set of policies – from tax cuts to trade, energy to health care – that put entrepreneurs and consumers in the drivers' seat, where they belong. Based on principles and proven theory, these policies have helped our economy – which is naturally buoyant in its structure – to get solidly back on track.

Everywhere I go in this world, and every time I host finance ministers and colleagues from other countries, I am asked the same question: how does the U.S. do it? How do you keep your economy so robust?

And while there are plenty of current policies that I can point to, it's important to remember the answer actually begins here in Philadelphia. The words written by our founding fathers here in this city, without a doubt, created the environment in which innovation, productivity and economic growth could and would occur for hundreds of years to come. And no one understands that better than the President. In fact, a lot of what his agenda aims to accomplish is a devotion to the excellent structure that our economy is built on.

It is worth noting that the words of the constitution were not written in a vacuum. Not in a quiet or pastoral setting. They were written here, in a city that was booming with commerce and innovation. The City of Brotherly Love was, at that time, the largest city on the east coast, teeming with shipping and trading, buying and selling, production and innovation.

The basic structure of the United States was a profound theory – but maybe in part thanks to the success of a young Philadelphia, the men who laid it out already knew this theory would work.

As the President often says, government does not create wealth. Government creates an environment in which economic growth and progress can occur.

This is how the country, and the economy, was set up. We have a stable economic and political system that is checked and balanced. It's bicameral and federalist so that no one group – legislative or political – can gain too much power. It means that the power resides with the people when it comes to government, and with consumers when it comes to business.

Both property and intellectual rights are protected because our founders valued the individual, and we have stuck by that principle, as a nation, decade after decade.

Although people on my side of the aisle are forever trying to shrink the influence of government – or maybe because we are forever trying – the fact is that the U.S. remains a land of relatively low rates of both regulation and taxation, which is absolutely critical for business growth, innovation and job creation.

Americans, beginning with the founders, have a value for the individual and more than a tendency toward independence.

Truly free free-enterprise has, over the years, given rise to capital markets that are very well-developed and deep.

Credible, low-inflation monetary policy provides steady foundation for all of this, of course. The fact that the Federal Reserve Board is independent and well-run is an economic factor whose importance cannot be over-emphasized. We were fortunate to have Alan Greenspan at its helm for as long as we did, and I have the utmost confidence that my friend and colleague Ben Bernanke is going to be a successor worthy of the Greenspan legacy.

Another critical economic element is the United States' openness to free trade. As the President often points out, 95 percent of the world's customers live outside of the U.S. And in a country that thoroughly embraces free enterprise, customers and products alike have no borders.

A literal openness to people led to high levels of immigration. We have been a beacon of light to those who wish to live in true freedom and independence, and the assimilation of foreign-born entrepreneurs has given us an enormous advantage when it comes to innovation. It helps to explain why we are by far the world's innovation leader.

The opportunity to take a risk and succeed has not only drawn people to the United States, it has enabled each generation of Americans to live better than the generation before. Entrepreneurship may look different from the days of the founders (who were virtually all entrepreneurs, by the way – farmers, businessmen, merchants, shippers, even land and securities speculators!), but the golden opportunity to take a risk and make a living off of your own ideas and sweat is just the same.

This is one of the reasons that I find news stories that predict a lack of financial opportunity for the up-and-coming generation to be just this side of absurd. Every generation worries about the next, but every generation has soared past their parents. We look back on 20 straight decades of more, better jobs each decade than the last. The evolution of our flexible and dynamic economy has made that possible, and I encourage all of you to take those stories for what they are: entertainment. They remind me of stories that once predicted massive failures of the banking system due to a lack of capable technology. Or, even further back, of a concern that half the population would need to be employed as telephone operators to connect all the calls that were being made.

We look back at those fears today and laugh! And we will again. You see, we've overcome every hurdle, every time. And if we keep our economy flexible and open we'll keep on doing just that.

The American economy owes much of its success to the embrace of entrepreneurship, which breeds the critical innovation that I'm talking about. The entrepreneurial spirit is exceptional in this country, and although we can always do better the government has done pretty well at staying out of that powerful spirit's way. This is a point of great pride for our President, whose economic agenda is largely a small-business agenda.

We may be known, internationally, for the names of our biggest companies, but it is small business that has kept our economic engine running strong and smooth. It has also given us incredible stability because it avoids situations where too many people's livelihood depends on just a few big employers. Most of our new jobs (around three quarters) are actually created by small business, and that's a sign of tremendous stability and forward-movement in an economy.

This is something other governments are picking up on and hoping to emulate. I've had very productive dialogue on the topic of entrepreneurship, and how to foster it, with government colleagues in Europe and Brazil, just to give two examples, in recent months.

We must always keep in mind that the foundations of our economy are always vulnerable to a chipping-away effect that comes from well-intentioned governing. As an institution, government sometimes can't help but intrude, here and there, on a free-market system. Taxes are necessary. Some regulation is necessary. But finding how much of each can be tough. And when government goes too far and starts acting like a drag on the economy, it's time to roll it back.

President Bush has rolled back taxes on individuals and entrepreneurs, capital and investors. This has helped the economy recover from what was a really difficult period just a few years ago.

The last time I was in government, at the Department of Transportation, we rolled back regulation on the trucking industry which was another important step toward a better economic environment.

The urge of government to tinker with the free market is almost irresistible, so we've always got to keep an eye on it.

Every new rule, regulation or tax must be scrutinized for the impact it could have on the economic structure that has served the country so very well for so long.

Are there bumps on the free market road? Of course. And government does have a role in protecting citizens when they are at risk of drowning in the tide of change.

But the tide is also, as John Kennedy said, what will ultimately cause their boats to rise.

How does all of this impact today's public policy debate? Primarily I'm concerned with keeping taxes low. The President's tax cuts have clearly benefited the economy and he's not about to accept tax increases now. I'm helping him communicate that plain fact to Congress. This also keeps American businesses competitive so that they can continue to invest and create jobs.

Keeping budgets under control is a current area of focus for the Administration as well. We'll unveil a budget next week that is true to the President's goals of reducing the deficit and keeping the growth of government in check by holding overall discretionary spending below the rate of inflation. It proposes cutting programs that aren't delivering their promises to the taxpayers and proposes tens of billions of dollars of savings on entitlement programs. It is a budget that works to ensure that future generations of Americans will have the opportunity to live in a Nation that is more prosperous and more secure.

Education and worker training policies – to point out one part of that budget – must be constantly adapted to the changing times and the changing, growing economy. As the President said in announcing the American Competitiveness Initiative last night, a strong economy depends on a skilled and talented workforce. The President sees great success and potential in the ability of community colleges to provide relevant, focused training for jobs that exist today – jobs that may not have existed even five years ago because of innovation. And workers should be able to continue to learn new skills for the changing business environment. This is an investment in our future that is more important than venture capital itself!

Health care costs have got to be brought down, and we've included some mechanisms in the budget to address that pressing issue. As the President pointed out in his State of the Union Address last night, it's time to allow Americans to save more in their Health Savings Accounts. We hope this will encourage more people to start HSAs, which put patients back in charge of their health-care purchasing decisions while saving money on a tax-preferred basis.

So I'm not recommending a static environment. Keeping that environment open and flexible will take great effort, and great restraint, from every level of government on every day of our history.

In closing I want to say, unequivocally, that the future of the American economy is very bright. As Ronald Reagan once said, "there are no great limits to growth because there are no limits of human intelligence, imagination, and wonder." That's what this country, and this terrific economy, is all about.

Thanks so much for having me here tonight.