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Background: The State of the Economy

August 13, 2002 at 12:00 AM EDT
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SPENCER MICHELS: President Bush spent about 15 minutes at each of four small discussion groups this morning at the one-day economic forum in Waco, Texas. He shook hands and listened to comments from CEO’s to senior citizens. Vice President Dick Cheney visited four other sessions. Some 250 people, including top Bush administration officials, corporate executives, economists, and ordinary Americans, joined the President at Baylor University. The message from the President and his team was simple: Although the U.S. economy is on the mend, more work is needed.

PRESIDENT GEORGE W. BUSH: I have great confidence in the future of our country, because I understand America. I know what we’re made out of. And obviously we’ve got some problems we’ve got to address. But one problem we don’t have to address is the fundamental character of the country. The fundamental nature of the American people are resilient and strong. We talked a little in these other seminars about how some have let us down, cheated and didn’t tell the truth when it comes to their numbers on their balance sheets, and we’ll fine those and hold them to account. But by far the vast majority of Americans are really decent honorable people.

SPENCER MICHELS: In the summer of last year, President Bush signed into law a $1.35 trillion tax cut, the centerpiece of his economic plan. But since the IRS began sending out tax rebate checks in July of 2001, totaling $36 billion last year, there have been a series of blows to the U.S. economy: High unemployment, especially in the high-tech sector; a dramatic stock market slide; a string of corporate scandals; and the return of budget deficits. Add to that a series of weak economic indicators: Consumer spending is down and economic growth remains slow.

The administration has responded by signing new rules on corporate accounting practices and corporate responsibility. And last week, President Bush signed a new trade bill intended to open more markets to U.S. goods. Today in Texas, the President heard from, among others, investment counselor Charles Schwab.

CHARLES SCHWAB: There are ups and significant down periods, and some are quite painful as they are right now. The bear market we’re suffering right now is probably one of the worst I’ve ever gone through, and it’s not a comfortable place to be to say the least. But we have great confidence about our future. Investors also need to know that government is on their side.

SPENCER MICHELS: The owner of a grocery story chain told the President how the economy has affected his business.

LARRY JONSTON, CEO, Albertsons: Consumer confidence is weakening, there’s no doubt about that. Consumers are gun shy. We see it in their buying behavior. We see it in them buying private-label products instead of branded products. We see them buying things like hamburger instead of steak.

SPENCER MICHELS: And a senior citizen raised concerns about rising drug and insurance costs.

FLORA GREEN: Why can’t we have tax credits for the premiums that we are paying for our Medigap insurance? Why can’t we have tax credits for the… over a certain benchmark of prescription costs? These are things that seniors need and need now. They need to cut in the paperwork. I have a woman bring me a stack of papers like that. I said, “Don’t show it to me because I don’t know how to do it either.” And it’s really true. They just get confused.

SPENCER MICHELS: The forum just before lunchtime ended with all the participants gathered together. The president got a summary of what had been said. During his closing remarks, Mr. Bush announced he’s refusing to spend $5.1 billion in emergency funds set aside by Congress.

PRESIDENT GEORGE W. BUSH: At the end of the session, the Congress passed an emergency spending bill to strengthen our military, to protect the homeland, and to complete the commitment of $20 billion I made to the citizens of New York. But they also sent along more than $5 billion in extra spending I didn’t ask for. Some of that $5 billion I’ve endorsed and will work to secure through amendment to the ’03 budget, like AIDS prevention money and support for Israel and Palestine.

But a lot of that money has nothing to do with national emergency. And I’ll give you one example: A new facility for storing the government’s collection of bugs and worms. I made my opposition clear. We were pretty plainspoken about the supplemental. But those who wrote the bill designed it so I have to spend all five of the extra billion dollars or spend none of it. That’s how they wrote the supplemental. Those are the rules they placed upon my administration. I understand their position. And today, they’re going to learn mine. We’ll spend none of it. (Applause)

SPENCER MICHELS: Before the forum started, Democrats labeled it a cheerleading session filled with Republican donors. And afterwards House Minority Leader Richard Gephardt said: “I am disappointed that the White House has chosen to listen to the special interests that supported this administration’s failed economic program and has turned a deaf ear to those who have diverse views.” The White House defended today’s forum in Texas, saying the President believes the best solutions are to be found outside Washington.