To the Congress of the United States:

Mr. Speaker, Mr. Vice President, Members of Congress:

It is a great privilege to be here to outline a new budget and a new approach
for governing our great country. I thank you for your invitation to speak here
tonight. I want to thank so many of you who have accepted my invitation to come
to the White House to discuss important issues. We are off to a good start. I
will continue to meet with you and ask for your input. You have been kind and
candid, and I thank you for making a new President feel welcome.

The last time I visited the Capitol, I came to take an oath. On the steps of
this building, I pledged to honor our Constitution and laws, and I asked you to
join me in setting a tone of civility and respect in Washington. I hope America
is noticing the difference. We are making progress. Together, we are changing
the tone of our Nations capital. And this spirit of respect and cooperation is
vitalbecause in the end, we will be judged not only by what we say or how we
say it, but by what we are able to accomplish.

America today is a nation with great challengesbut greater resources. An artist
using statistics as a brush could paint two very different pictures of our
country. One would have warning signs: increasing layoffs, rising energy prices,
too many failing schools, persistent poverty, the stubborn vestiges of racism.
Another picture would be full of blessings: a balanced budget, big surpluses, a
military that is second to none, a country at peace with its neighbors,
technology that is revolutionizing the world, and our greatest strength,
concerned citizens who care for our country and for each other. Neither picture
is complete in and of itself. And tonight I challenge and invite Congress to
work with me to use the resources of one picture to repaint the otherto direct
the advantages of our time to solve the problems of our people.

Some of these resources will come from governmentsome, but not all. Year after
year in Washington, budget debates seem to come down to an old, tired argument:
on one side, those who want more government, regardless of the cost; on the
other, those who want less government, regardless of the need.

We should leave those arguments to the last century and chart a different
course. Government has a role, and an important one. Yet too much government
crowds out initiative and hard work, private charity and the private economy.
Our new governing vision says government should be active, but limited, engaged,
but not overbearing. My budget is based on that philosophy. It is reasonable and
it is responsible. It meets our obligations and funds our growing needs. We
increase spending next year for Social Security and Medicare and other
entitlement programs by $81 billion. We have increased spending for
discretionary programs by a very responsible 4 percent, above the rate of
inflation. My plan pays down an unprecedented amount of our national debt, and
then when money is still left over, my plan returns it to the people who earned
it in the first place.

A budgets impact is counted in dollars, but measured in lives. Excellent
schools, quality health care, a secure retirement, a cleaner environment, a
stronger defensethese are all important needs and we fund them.

The highest percentage increase in our budget should go to our childrens
education. Education is my top priority and by supporting this budget, you will
make it yours as well. Reading is the foundation of all learning, so during the
next 5 years, we triple spending, adding another $5 billion to help every child
in America learn to read. Values are important, so we have tripled funding for
character education to teach our children not only reading and writing, but
right from wrong.

We have increased funding to train and recruit teachers, because we know a good
education starts with a good teacher. And I have a wonderful partner in this
effort. I like teachers so much, I married one. Please help me salute our
gracious First Lady, Laura Bush.

Laura has begun a new effort to recruit Americans to the profession that will
shape our future: teaching. Laura will travel across America, to promote sound
teaching practices and early reading skills in our schools and in programs such
as Head Start.

When it comes to our schools, dollars alone do not always make the difference.
Funding is important, and so is reform. So we must tie funding to higher
standards and accountability for results.

I believe in local control of schools: we should not and we will not run our
public schools from Washington. Yet when the Federal Government spends tax
dollars, we must insist on results. Children should be tested on basic reading
and math skills every year, between grades three and eight. Measuring is the
only way to know whether all our children are learningand I want to know,
because I refuse to leave any child behind.

Critics of testing contend it distracts from learning. They talk about
teaching to the test. But let us put that logic to the test. If you test
children on basic math and reading skills, and you are teaching to the test,
you are teaching . . . math and reading. And that is the whole idea.

As standards rise, local schools will need more flexibility to meet them. So we
must streamline the dozens of Federal education programs into five and let
States spend money in those categories as they see fit.

Schools will be given a reasonable chance to improve, and the support to do so.
Yet if they do not, if they continue to fail, we must give parents and students
different optionsa better public school, a private school, tutoring, or a
charter school. In the end, every child in a bad situation must be given a
better choice, because when it comes to our children, failure is not an option.

Another priority in my budget is to keep the vital promises of Medicare and
Social Security, and together we will do so. To meet the health care needs of
all Americas seniors, we double the Medicare budget over the next 10 years.

My budget dedicates $238 billion to Medicare next year alone, enough to fund all
current programs and to begin a new prescription drug benefit for lowincome
seniors. No senior in America should have to choose between buying food and
buying prescriptions. To make sure the retirement savings of Americas seniors
are not diverted to any other programmy budget protects all $2.6 trillion of
the Social Security surplus for Social Security and for Social Security alone.

My budget puts a priority on access to health carewithout telling Americans
what doctor they have to see or what coverage they must choose. Many working
Americans do not have health care coverage. We will help them buy their own
insurance with refundable tax credits. And to provide quality care in low-income
neighborhoods, over the next 5 years we will double the number of people served
at community health care centers. And we will address the concerns of those who
have health coverage yet worry their insurance company does not care and will
not pay. Together, this Congress and this President will find common ground to
make sure doctors make medical decisions and patients get the health care they
deserve with a Patients Bill of Rights. When it comes to their health, people
want to get the medical care they need, not be forced to go to court because
they did not get it. We will ensure access to the courts for those with
legitimate claims, but first, let us put in place a strong independent review so
we promote quality health care, not frivolous lawsuits.

My budget also increases funding for medical research, which gives hope to many
who struggle with serious disease. Our prayers tonight are with one of your own
who is engaged in his own fight against cancer, a fine representative and a good
man, Congressman JOE MOAKLEY. God bless you, JOE. And I can think of no more
appropriate tribute to JOE than to have the Congress finish the job of doubling
the budget for the National Institutes of Health. My New Freedom Initiative for
Americans with Disabilities funds new technologies, expands opportunities to
work, and makes our society more welcoming. For the more than 50 million
Americans with disabilities, we must continue to break down barriers to
equality.

The budget I propose to you also supports the people who keep our country strong
and free, the men and women who serve in the United States military. I am
requesting $5.7 billion in increased military pay and benefits, and health care
and housing. Our men and women in uniform give America their best and we owe
them our support. Americas veterans honored their commitment to our country
through their military service. I will honor our commitment to them with a
billion dollar increase to ensure better access to quality care and faster
decisions on benefit claims.

My budget will improve our environment by accelerating the cleanup of toxic
Brownfields. And I propose we make a major investment in conservation by fully
funding the Land and Water Conservation Fund. Our National Parks have a special
place in our countrys life. Our parks are places of great natural beauty and
history. As good stewards, we must leave them better than we have found them, so
I propose providing $4.9 billion in resources over 5 years for the upkeep of
these national treasures.

And my budget adopts a hopeful new approach to help the poor and disadvantaged.
We must encourage and support the work of charities and faithbased and community
groups that offer help and love one person at a time. These groups are working
in every neighborhood in America, to fight homelessness and addiction and
domestic violence, to provide a hot meal or a mentor or a safe haven for our
children. Government should welcome these groups to apply for funds, not
discriminate against them.

Government cannot be replaced by charities or volunteers. And government should
not fund religious activities. But our Nations should support the good works of
these good people who are helping neighbors in need. So I am proposing allowing
all taxpayers, whether they itemize or not, to deduct their charitable
contributions. Estimates show this could encourage as much as $14 billion a year
in new charitable givingmoney that will save and change lives.

Our budget provides more than $700 million over the next 10 years for a Federal
Compassion Capital Fund with a focused and noble mission: to provide a mentor to
the more than 1 million children with a parent in prison, and to support other
local efforts to fight illiteracy, teen pregnancy, drug addiction, and other
difficult problems. With us tonight is the Mayor of Philadelphia. Please help me
welcome Mayor John Street. Mayor Street has encouraged faith-based and community
organizations to make a difference in Philadelphia and he has invited me to his
city this summer, to see compassion in action.

I am personally aware of just how effective the Mayor is. Mayor Street is a
Democrat. Let the record show that I lost his city. But some things are bigger
than politics. So I look forward to coming to your city to see your faithbased
programs in action.

As government promotes compassion, it also must promote justice. Too many of our
citizens have cause to doubt our Nations justice when the law points a finger
of suspicion at groups, instead of individuals. All our citizens are created
equal and must be treated equally. Earlier today I asked Attorney General
Ashcroft to develop specific recommendations to end racial profiling. It is
wrong. We must end it. In so doing, we will not hinder the work of our Nations
brave police officers. They protect us every day, often at great risk. But by
stopping the abuses of a few, we will add to the public confidence our police
officers earn and deserve.

My budget has funded a responsible increase in our ongoing operations, it has
funded our Nations important priorities, it has protected Social Security and
Medicare, and our surpluses are big enough that there is still money left over.

Many of you have talked about the need to pay down our national debt. I have
listened, and I agree.

My budget proposal pays down an unprecedented amount of public debt. We owe it
to our children and grandchildren to act now, and I hope you will join me to pay
down $2 trillion in debt during the next 10 years.

At the end of those 10 years, we will have paid down all the debt that is
available to retire. That is more debt repaid more quickly than has ever been
repaid by any nation at any time in history.

We should also prepare for the unexpected, for the uncertainties of the future.
We should approach our Nations budget as any prudent family would, with a
contingency fund for emergencies or additional spending needs.

For example, after a strategic review, we may need to increase defense spending,
we may need additional money for our farmers, or additional money to reform
Medicare. And so my budget sets aside almost a trillion dollars over 10 years
for additional needs . . . that is one trillion additional reasons you can feel
comfortable supporting this budget. We have increased our budget at a
responsible 4 percent, we have funded our priorities, we have paid down all the
available debt, we have prepared for contingenciesand we still have money left
over.

Yogi Berra once said: When you come to a fork in the road, take it. Now we
come to a fork in the road. We have two choices. Even though we have already met
our needs, we could spend the money on more and bigger government. That is the
road our Nation has traveled in recent years. Last year, government spending
shot up 8 percent. That is far more than our economy grew, far more than
personal income grew and far more than the rate of inflation. If you continue on
that road, you will spend the surplus and have to dip into Social Security to
pay other bills.

Unrestrained government spending is a dangerous road to deficits, so we must
take a different path. The other choice is to let the American people spend
their own money to meet their own needs, to fund their own priorities and pay
down their own debts. I hope you will join me and stand firmly on the side of
the people.

The growing surplus exists because taxes are too high and government is charging
more than it needs. The people of America have been overcharged and on their
behalf, I am here to ask for a refund.

Some say my tax plan is too big, others say it is too small. I respectfully
disagree. This tax relief is just right. I did not throw darts at a board to
come up with a number for tax relief. I did not take a poll, or develop an
arbitrary formula that might sound good. I looked at problems in the tax code
and calculated the cost to fix them. A tax rate of 15 percent is too high for
those who earn low wages, so we lowered the rate to 10 percent. No one should
pay more than a third of the money they earn in Federal income taxes, so we
lowered the top rate to 33 percent. This reform will be welcome relief for
Americas small businesses, which often pay taxes at the highest rate, and help
for small business means jobs for Americans.

We simplified the tax code by reducing the number of tax rates from the current
five rates to four lower ones: 10, 15, 25, and 33 percent. In my plan, no one is
targeted in or targeted out . . . every one who pays income taxes will get tax
relief.

Our government should not tax, and thereby discourage marriage, so we reduced
the marriage penalty. I want to help families rear and support their children,
so we doubled the child credit to $1,000 per child. It is not fair to tax the
same earnings twiceonce when you earn them, and again when you die, so we must
repeal the death tax. These changes add up to significant help. A typical family
with two children will save $1,600 a year on their Federal income taxes. Sixteen
hundred dollars may not sound like a lot to some, but it means a lot to many
families. Sixteen hundred dollars buys gas for two cars for an entire year, it
pays tuition for a year at a community college, it pays the average family
grocery bill for 3 months. That is real money.

With us tonight, representing many American families, are Steven and Josefina
Ramos. Please help me welcome them. The Ramoses are from Pennsylvania, but they
could be from any one of your districts. Steven is a network administrator for a
school district, Josefina is a Spanish teacher at a charter school, and they
have a 2-yearold daughter, Lianna. Steven and Josefina tell me they pay almost
$8,000 a year in Federal income taxes; my plan will same them more than $2,000.
Let me tell you what Steven says:

Two thousand dollars a year means a lot to my family. If we had this money, it
would help us reach our goal of paying off our personal debt in two years.
After that, Steven and Josefina want to start saving for Liannas college
education. Government should never stand in the way of families achieving their
dreams. The surplus is not the governments money, the surplus is the peoples
money.

For lower-income families, my tax relief plan restores basic fairness. Right
now, complicated tax rules punish hard work. A waitress supporting two children
on $25,000 a year can lose nearly half of every additional dollar she earns. Her
overtime, her hardest hours, are taxed at nearly 50 percent. This sends a
terrible message: You will never get ahead. But Americas message must be
different: We must honor hard work, never punish it.

With tax relief, overtime will no longer be overtax time for the waitress.
People with the smallest incomes will get the highest percentage reductions. And
millions of additional American families will be removed from the income tax
rolls entirely.

Tax relief is right and tax relief is urgent. The long economic expansion that
began almost 10 years ago is faltering. Lower interest rates will eventually
help, but we cannot assume they will do the job all by themselves. Forty years
ago and then twenty years ago, two Presidents, one Democrat and one Republican,
John F. Kennedy and Ronald Reagan, advocated tax cuts toin President Kennedys
wordsget this country moving again.

They knew then, what we must do now: To create economic growth and opportunity,
we must put money back into the hands of the people who buy goods and create
jobs.

We must act quickly. The Chairman of the Federal Reserve has testified before
Congress that tax cuts often come too late to stimulate economic recovery. So I
want to work with you to give our economy an important jump start by making tax
relief retroactive. We must act now because it is the right thing to do. We must
also act now because we have other things to do. We must show courage to
confront and resolve tough challenges: to restructure our Nations defenses, to
meet our growing need for energy, and to reform Medicare and Social Security.
America has a window of opportunity to extend and secure our present peace by
promoting a distinctly American internationalism. We will work with our allies
and friends to be a force for good and a champion of freedom. We will work for
free markets and free trade and freedom from oppression. Nations making progress
toward freedom will find America is their friend. We will promote our values,
and we will promote peace. And we need a strong military to keep the peace. But
our military was shaped to confront the challenges of the past. So I have asked
the Secretary of Defense to review Americas armed forces and prepare to
transform them to meet emerging threats. My budget makes a downpayment on the
research and development that will be required. Yet, in our broader
transformation effort, we must put strategy first, then spending. Our defense
vision will drive our defense budget, not the other way around. Our Nation also
needs a clear strategy to confront the threats of the 21st century, threats that
are more widespread and less certain. They range from terrorists who threaten
with bombs to tyrants and rogue nations intent on developing weapons of mass
destruction. To protect our own people, our allies and friends, we must develop
and we must deploy effective missile defenses.

And as we transform our military, we can discard Cold War relics, and reduce our
own nuclear forces to reflect todays needs.

A strong America is the worlds best hope for peace and freedom. Yet the cause
of freedom rests on more than our ability to defend ourselves and our allies.
Freedom is exported every day, as we ship goods and products that improve the
lives of millions of people. Free trade brings greater political and personal
freedom.

Each of the previous five Presidents has had the ability to negotiate
farreaching trade agreements. Tonight I ask you to give me the strong hand of
presidential trade promotion authority, and to do so quickly.

As we meet tonight, many citizens are struggling with the high costs of energy.
We have a serious energy problem that demands a national energy policy. The West
is confronting a major energy shortage that has resulted in high prices and
uncertainty. I have asked Federal agencies to work with California officials to
help speed construction of new energy sources. And I have directed Vice
President CHENEY, Commerce Secretary Evans, Energy Secretary Abraham, and other
senior members of my Administration to recommend a national energy policy.

Our energy demand outstrips our supply. We can produce more energy at home while
protecting our environment, and we must. We can produce more electricity to meet
demand, and we must. We can promote alternative energy sources and conservation,
and we must. America must become more energy independent.

Perhaps the biggest test of our foresight and courage will be reforming Medicare
and Social Security. Medicares finances are strained and its coverage is
outdated. Ninety-nine percent of employer-provided health plans offer some form
of prescription drug coverage . . . Medicare does not. The framework for reform
has been developed by Senators FRIST and BREAUX and Congressman THOMAS, and now,
it is time to act. Medicare must be modernized. And we must make sure that every
senior on Medicare can choose a health plan that offers prescription drugs.

Seven years from now, the baby boom generation will begin to claim Social
Security benefits. Everyone in this chamber knows that Social Security is not
prepared to fully fund their retirement. And we only have a couple of years to
get prepared. Without reform, this country will one day awaken to a stark
choice: either a drastic rise in payroll taxes, or a radical cut in retirement
benefits. There is a better way.

This spring I will form a presidential commission to reform Social Security. The
commission will make its recommendations by next fall. Reform should be based on
these principles: It must preserve the benefits of all current retirees and
those nearing retirement. It must return Social Security to sound financial
footing. And it must offer personal savings accounts to younger workers who want
them. Social Security now offers workers a return of less than 2 percent on the
money they pay into the system. To save the system, we must increase that by
allowing younger workers to make safe, sound investments at a higher rate of
return.

Ownership, access to wealth, and independence should not be the privilege of a
few. They are the hope of every American . . . and we must make them the
foundation of Social Security. By confronting the tough challenge of reform, by
being responsible with our budget, we can earn the trust of the American people.
And, we can add to that trust by enacting fair and balanced election and
campaign finance reforms.

The agenda I have set before you tonight is worthy of a great country. America
is a nation at peace, but not a nation at rest. Much has been given to us, and
much is expected. Let us agree to bridge old divides. But let us also agree that
our good will must be dedicated to great goals. Bipartisanship is more than
minding our manners, it is doing our duty. No one can speak in this Capitol and
not be awed by its history. At so many turning points, debates in these chambers
have reflected the collected or divided conscience of our country. And when we
walk through Statuary Hall, and see those men and women of marble, we are
reminded of their courage and achievement.

Yet Americas purpose is never found in statues or history. Americas purpose
always stands before us. Our generation must show courage in a time of blessing,
as our Nation has always shown in times of crisis. And our courage issue by
issue, can gather to greatness, and serve our country. This is the privilege,
and responsibility, we share. And if we work together, we can prove that public
service is noble.

We all came here for a reason. We all have things we want to accomplish, and
promises to keep. Juntos podemos, together we can. We can make Americans proud
of their government. Together we can share in the credit of making our country
more prosperous and generous and justand earn from our conscience and from our
fellow citizens, the highest possible praise: well done, good and faithful
servants.

Thank you. Good night. And God Bless America.

GEORGE W. BUSH.
THE WHITE HOUSE, February 27, 2001.