REMARKS AS PREPARED FOR DELIVERY SANDY K. BARUAH ASSISTANT SECRETARY OF COMMERCE FOR ECONOMIC DEVELOPMENT SALEM CHAMBER OF COMMERCE SALEM, OREGON

Monday, October 8, 2007

AS PREPARED FOR DELIVERY

I. OPENING

It is a pleasure to be back home in Salem. Even though I’ve spend a chunk of time away from Oregon over the past several years, I still consider this place home and one of my favorite sensations is the feeling of landing back home in Oregon, especially when I’m escaping those humid summers in Washington. As the wheels touch down on the runway, I can immediately feel more relaxed. There really is no place like home.

Being back in Salem, where I went to elementary school, middle school, high school and graduate school, is always good. I would like to acknowledge several special guests in the audience today:

• Ranee Baruah

• Sharron and Dick Seideman

• And Mayor Janet Taylor.

In 1993, I returned to Oregon to work on my MBA at Willamette after serving both Senator Packwood and the first President Bush. To help put gas in my car I worked part-time at Meier & Frank – now known as Macy’s – which was the same job I had a decade before while I was at Sprague High School.

What’s funny about that is that when I ran into folks I hadn’t seen since high school at Meier & Frank, and they asked what I was up to, I’d respond, “Well, I’m living at home and going to school.” And I could see their reaction on their face, “Poor guy – 10 years after high school and he hasn’t progressed a bit – still living at home going to school. We had such high hopes for him.” So being back in Salem has sometimes been interesting.

So it is a real pleasure to be here addressing the Chamber of Commerce of the city I grew up in on behalf of the President of the United States. As a senior member of the Administration’s economic team, I take great pride in serving President Bush, and equal pride in our economic accomplishments over the past six years.

II. ECONOMIC ACCOMPLISHMENTS

We meet at a positive time for the U.S. economy. Just on Friday the government announced that last month we created 110,000 new jobs. And in addition the July and August job numbers were revised upward. Our national unemployment level remains low at 4.7 % – and when I was taking economics at the University of Oregon, my professors told me that anything below 5% was essentially full employment. In the last year alone, the American economy has generated over 2 million new jobs – and for those of you keeping score at home, that’s over 8 million new jobs since the economic expansion began in late 2003 – which is the longest continuous record of job expansion in our nation’s history.

• Inflation remains low – 2% over the past year.

• Productivity growth is strong, averaging 2.5% per year since 2001, which is a stronger pace than the 1970s, 1980s, or 1990s.

• Worker wages are on the rise, for an overall increase of 12% since President Bush has been in office, resulting in a real, after-tax, adjusted for inflation increase of over $3,500 per person.

And despite returning over $1 trillion to American taxpayers through tax cuts, tax revenues are up more than 37% over the last three years. Last year alone, tax revenues to the Federal Government increased 11.8% over 2005, and 2007’s revenues are expected to be at least 7% greater than 2006. So the amount of money flowing into the Federal Treasury is not a problem, and the tax cuts and pro-growth policies have actually increased the taxes collected.

The President’s policies, by the way, have resulted in the removal of 5 million Americans from the tax rolls – their taxes have been eliminated entirely. If the President’s tax cuts are not made permanent, these lower income Americans will once again be added to the tax rolls – and the President is fighting to ensure that does not happen.

People often ask me about the budget deficit – they thinks it’s too high, and I agree. But here is some perspective:

• Our deficit this year is expected to be $205 billion – that’s $43 billion less than last year.

• Currently, our deficit of $205 billion represents just 1.5% of our GDP – which is actually lower than our deficits of the much of the 1970s, all of the 1980s, and early 1990s.

• Even with our global war on terror, and tax cuts, our deficit has gone down for three years in a row and we are on track under the President’s budget proposals to balance the budget by 2012.

The duration of our current economic expansion is remarkable – beating the expansions of the 1980s or 1990s – with 49 straight months of job growth and nearly six years of uninterrupted GDP growth, including a 3.8% rate of growth last quarter. GDP growth has averaged nearly 3% a year since the end of 2001.

Corporate profits are strong. The stock market has increased more than 30% since 2001 (long-term), and 9% since mid-August of this year (short-term), and we are now back to our all-time-high territory of earlier this summer.

Think of what’s been thrown at our economy in the last six years:

• The 9-11 terror attacks, when many Americans lost their jobs in the six months following the attacks.

• The bursting of the Internet stock bubble.

• The corporate scandals that brewed during the 1990s and came to light early this decade.

• The largest natural disaster in our nation’s history: Hurricane Katrina.

• And a spike in energy prices.

Given where we are – and what we’ve been through – you can understand why I so strongly support President Bush’s policies to keep our taxes low, watch growth in spending and create an environment in which jobs are created and people and businesses are prepared to risk their capital and expand our economy.

All this shows that we have a very resilient, diversified, and flexible economy.

III. FTAs

The President’s team is also focused on understanding, capitalizing on and adapting to the global marketplace. We are focused on ensuring that America is prepared to compete and win in the global marketplace, and that American workers and businesses have access to the global marketplace. This is important as 95% of our potential customers live outside the United States.

One of the key reasons for America’s economic strength is the growth in U.S. exports – a reflection of our nation’s ability to succeed in the 21st century worldwide marketplace.

U.S. exports have increased by 11% over 2006. And the trade deficit has narrowed nearly 8% or $30 billion compared to the same period in 2006.

And Oregon is a leader, and a clear beneficiary of America’s success in tapping world markets. Here in Oregon, exports in 2006 totaled over $15 billion. Oregon companies are selling their goods and services in 191 countries.

Nationwide, exports are growing more than twice as fast as imports, which is important, because the jobs associated with exports have higher wages than other jobs, which helps drive our national prosperity.

A key tool to open world markets to U.S. companies is the Free Trade Agreement – FTAs. When President Bush took office, we had Free Trade Agreements with just 3 countries – Israel, Canada and Mexico. Today, we have free trade agreements with 16 countries with 4 more under consideration.

The critical role exports play in Oregon’s economy highlights the importance of the Free Trade Agreements the President is pursuing with Columbia, Panama, Peru and South Korea. These FTAs will provide U.S. companies, farmers, manufacturers and workers access to over 126 million consumers in emerging markets across the globe – representing a combined GDP of over $1 trillion.

These FTAs will:

• eliminate tariffs and other barriers to American products and services being exported to these countries;

• promote economic growth and strengthen economic ties between the U.S. and these nations;

• Protect U.S. investments in these nations.

• Strengthen protections for U.S. patents, trademarks, and trade secrets; and more.

• Address government transparency and corruption, worker rights, protection of the environment, trade capacity building and dispute settlement in these nations.

So, thanks – at least in part – to our strong export performance, it is clear that the American economy is resilient and strong. This is good news not just for the nation, but for Oregon as well – because a strong, growing national economy allows individuals and economic regions in Oregon to tap into this expanding economic pie and share in our national prosperity. It takes both smart national policies and forward-thinking regional action in order for economic growth to occur. And forward thinking regional action is what’s happening in Salem under the leadership of Mayor Janet Taylor.

IV. LOOKING FORWARD

Speaking of forward-thinking, let’s consider for a moment what the future may hold for the American economy in the 21st century worldwide marketplace, and what steps we might take – as companies, individuals, and as the government – to help our Nation continue to thrive long into the future.

We live in a dynamic, changing world. While some may wish for the simpler, slower times of our past, the world doesn’t work that way. Change is coming at us faster than ever before and this pace of change will only continue to accelerate. Think of this; it took 55 years for the automobile to reach one-quarter of the American populace…it took the Internet only 7 years to reach that same milestone. Imagine how quickly we will adopt the next “big thing.”

We are also living in a truly global economy, where our competition is no longer the company, county – or even state – next door. Our competition comes from any person, on any point on this globe, with a good idea, a good education, and a good Internet connection.

This means that when businesses think of their market, they need to be thinking of not just of the State of Oregon, or even the United States of America, but of the 95% of the world’s population that live outside the United States. For a business looking for opportunity, that’s a wonderful prospect – 95% of my potential customers are located somewhere on this globe outside my country. And with the Internet, global shipping and supply chains, and the right trade policies, American businesses can tap into these global markets.

In our dynamic, global economy, we can no longer rely on business models or government approaches designed for yesterday’s environment. If we know one thing about the future, it is that being able to adapt – at both an institutional and individual level – will be the key to our success. It comes down to our ability to innovate. For our ability to innovate is our – and another nation’s – only potential sustainable competitive advantage.

The 20th century undoubtedly belonged tto the United States as a result of our ability to innovate – to bring more products, technology, and ideas to the market than any other country. This ability to innovate made not just our country, but every other country more prosperous, healthier, and safer.

Given that innovation and the ability to adapt is key to our success, let’s be careful about where wee look for solutions. We are about to enter another presidential election year. As in all elections, there will be a robust debate regarding the role of government. For what it’s worth, let me share with you my perspective as someone who has been in both the public and private sector and is committed to expanding economic opportunity.

Government is important – there is no doubt about that. But let’s remember that government, especially at the Federal level, is a blunt instrument. Government, by design, moves slowly. It is slow to react and resistant to change – and this is problematic in our fast paced global marketplace.

Government is slow to change for several reasons. As it should in a representative democracy, government has many “bosses,” and when there are lots of bosses, the impetus for reform or to try something new is low. Government is dominated by two types of folks. Some will do everything they can to avoid doing anything that makes the press. Some will say anything they can to ensure that they make the press. It’s an interesting mix, and not necessarily ideal for addressing the “what’s next” question we all face in the 21st century.

What drives our innovation is individual businesses and the entrepreneurial spirit of individuals. Policies, from both a Federal and local government perspective, should always strike the right balance between ensuring government executes its important responsibilities and ensuring that the private sector and the individual operate in an environment that encourages the risk of capital, encourages new ideas, encourages the advancement of lifelong learning, encourages the quest to penetrate new markets, and encourages the hiring of new employees in endeavors that result in more higher-skill, higher-wage jobs. That’s what drives our economy.

V. CLOSE

It has been my distinct pleasure to be back home in Oregon – a State I love dearly and still consider home. Thank you for your kind invitation to be here today. On behalf of the President of the United States, thank you for your individual efforts to make America a more productive and prosperous country with the best standard of living in the world.

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