FROM THE OFFICE OF PUBLIC AFFAIRS

Good afternoon.  Thank you, Congressman Portman for the introduction. The people of Cincinnati have an outstanding representative in Washington.  President Bush appreciates your support.   Personally, I very much value your leadership.

I am here in Ohio to promote the President’s Jobs and Growth Plan, which is in front of Congress right now.

The President’s Jobs and Growth plan will create and secure jobs, accelerate and sustain our recovery, increase workers’ standards of living and increase the economic performance of our nation for many years to come -- and it will have a great effect here in Ohio.

Like the Nation’s economy, the Ohio’s economy has had good news and bad news lately – it’s not doing badly, but we believe it can do a lot better with the right incentives.  Unemployment in Ohio is better than the national average, but manufacturing employment has been falling.  Personal income has been rising.  And, if I can classify football as an economic indicator, the Ohio State Buckeyes football team beat the Miami Hurricanes in double overtime at the Fiesta Bowl, winning the Big Ten’s first undisputed national championship since 1968.  For the record, I am from Toledo and of both my parents went to Ohio State.

So it’s not all bad out there – but the President knows we can do a lot better.  Too many people who want jobs can’t find them, and too many people who have jobs are concerned about their job security.  That’s what his Jobs and Growth Plan addresses.

In the near-term, this plan puts money in consumers’ pockets right away, which will stimulate demand.  The 10% tax rate bracket will expand immediately, helping low-income earners keep more of their pay.  The punitive marriage penalty will end once and for all, and the child credit will increase by $400 to $1,000 per child this year.  The plan will accelerate the additional income tax relief approved in 2001, to accelerate the benefits to the American people.

Under the President's proposal this year, a typical family of four with two earners making a combined $39,000 will receive a total of $1,100 in tax relief, compared to 2002 – not just this year, but in every year thereafter.

In Ohio alone, the President’s growth package will reduce income tax bills for almost 4 million taxpayers, and nearly 1 million small businesses will have tax savings to apply toward new jobs and equipment.  More than 3 million married and single filers will benefit from the expanded 10-percent tax bracket.  The elimination of the marriage penalty will benefit 1.3 million couples; nearly a million parents will benefit from the increased child tax credit; and more than 1.3 million taxpayers will gain from the end of double taxation of dividends.

The tax rate cuts will also spur business investment in the near term.  Much investment and new employment comes from small businesses, most of which are S corporations, sole proprietorships, and partnerships.  These businesses are taxed at individual tax rates, so marginal rate reductions help to create new jobs and equipment in cities like Columbus, Cleveland, and Cincinnati – and every point in between.

Rate reductions combined with the proposed increase in new equipment expensing for small businesses will give our economy a big boost, and quickly.  According to this Administration’s analysis, our economy will add about 1.4 million new jobs under this plan by the end of next year – that’s the best kind of help for many families who really need it here in Ohio.

The President’s plan also contains the elements for a healthier, higher-performing economy over the longer-term.  A key element of the plan for both fairness and effectiveness is the complete elimination of the double-taxation of dividends.  Anything you tax more of, you will get less of – including business investment.  Today, corporate profits – when they’re taxed the first time -- are taxed at 35 percent.  Then these profits, which represent the return on business capital, are taxed a second time when they’re paid to shareholders.  So the total tax on this money can be as high as 60%.

Taxing anything twice is unfair.  It is nothing short of double jeopardy for those who invest in America, and we pay for it with American jobs.

This is a double tax on investment.  When you tax investment, you get less of it.  That policy is directly opposed to economic growth.  Investment is basic to the American economy.  We need to encourage business owners to invest for growth.   Why would we punish those who want to invest in America?

Double taxation makes it doubly difficult for companies to hire new workers, for hardworking taxpayers to save for their retirement, and for the economy to grow and create jobs.  For every dollar a business sends to Washington in taxes, it is one less dollar it can spend to hire a new employee, develop a new product or invest in the future.  For every dollar an individual taxpayer sends to Washington in the form of a dividend tax, it’s one less dollar to invest in a business or save for the future.

Because the President’s proposal lowers the cost of capital by reducing the double taxation of capital, it encourages investment and a higher long-term growth rate.  Lower capital taxes mean more capital, which means higher productivity, which means faster growth and higher wages for everyone.

Also, ending the double taxation of dividends will benefit people who may never receive a penny of dividends, because they will live in a more prosperous economy.

This package is good economics.  The President’s plan makes the economy more efficient, which raises productivity, which raises real wage rates, which raises the standard of living, which in turn provides more choice, opportunity, security and confidence for the American people. In addition, dividend tax relief will stimulate the economy by increasing disposable incomes and by raising stock market share prices, inducing a “wealth effect.”  We are now a nation of shareholders: over half of families own stock shares, many of which pay dividends.

I am sensitive to how the President’s plan will impact the states – which is why I am here to deliver good news.  In fact, higher growth from the President’s proposal will raise Ohio state tax revenues by about $185 million in 2003 and $336 million in 2004.  Nationwide GDP growth will be about 1 percent higher under the President’s plan than it would be otherwise, and Ohio’s should match that.

The President’s goal is to do something now that would pay off today and long into America’s future – not here today, gone tomorrow.  President Bush’s jobs and growth plan will help Americans – in Ohio and in every state – achieve their economic dreams and create a more abundant future, with more and better jobs and rising real wages.

Thank you.