President Bush, touting what he described as America's world-leading economic strength, urged Congress today to help him keep the economy "flexible and dynamic," while also cautioning the nation's corporate boardrooms to meet their responsibilities and scrutinize the huge salaries and bonuses they give to executives.
Bush later visited the floor of the New York Stock Exchange, shaking hands, signing autographs and posing for photos with traders.
In a speech on Wall Street that he billed as a "state of the economy" address, Bush offered no new proposals as he repeated familiar claims of strong economic stewardship and reiterated his prescriptions for continued growth.
But he also delivered a mild warning to U.S. corporations that have aroused some public indignation lately by lavishing their executives with compensation packages worth tens or even hundreds of millions of dollars.
"America's businesses have responsibilities here in America," Bush told the Association for a Better New York in his speech at Wall Street's Federal Hall, where George Washington was sworn in as president in 1789. "A free and vibrant economy depends on public trust. Shareholders should know what executive compensation packages look like."
Bush hailed new rules issued by the Securities and Exchange Commission that give investors clearer information on the salaries and bonuses of top executives running publicly traded companies. The rules, which took effect last month, "ensure that there is transparency when it comes to executive pay packages," he said.
"The print ought to be big and understandable," Bush said. "When people analyze their investment . . . they ought to be able to see with certainty the nature of the compensation packages for the people entrusted to run the companies in which they've got an investment."
He added: "Governments should not decide the compensation for America's corporate executives, but the salaries and bonuses of CEOs should be based on their success and improving their companies and bringing value to their shareholders. America's corporate boardrooms must step up to their responsibilities. They need to pay attention to the executive compensation packages that you approve. You need to show the world that America's businesses are a model of transparency and good corporate governance."
Bush did not go into much detail on the economy in last week's State of the Union speech in Washington, preferring to leave that subject to a separate speech in the nation's financial capital. Today's address was designed to highlight what the White House regards as strong economic progress under Bush's leadership.
However, Democrats have pointed to a growing gulf between the earnings of top corporate executives and average workers as a sign of broader economic disparity, an issue underscored in a speech delivered last week by freshman Sen. James Webb (D-Va.) in response to Bush's State of the Union address.
Hours before today's speech, the government reported that the economy grew at an annual pace of 3.5 percent during the final quarter of last year, a rate that was faster than expected and that followed a 2 percent rate in the third quarter.
Bush today painted an optimistic picture of the economy, pointing to 7.2 million jobs created since August 2003, an unemployment rate in December of 4.5 percent and the growth of real wages by 1.7 percent during 2006.
"Retail sales are up, consumer spending is strong, exports of goods and services have jumped by nearly 35 percent," Bush said. The Dow Jones industrial average "has set new records 26 times in the last four months," and strong productivity is translating into higher wages, he said.
"When people across the world look at America's economy, what they see is low inflation, low unemployment and the fastest growth of any major industrialized nation," Bush said. "There is one undisputed leader in the world in terms of economy, and that's the United States of America."
Bush called on Congress to make his tax cuts permanent, extend trade promotion authority that expires July 1 so that he can continue to negotiate trade agreements with other nations and give him a line-item veto to help reduce spending on lawmakers' pet projects.
In his response speech last week, Webb said of the economy that "it's almost as if we are living in two different countries." While the stock market is at an all-time high, he said, "so are corporate profits. But these benefits are not being fairly shared."
When he graduated from the U.S. Naval Academy in 1968, "the average corporate CEO made 20 times what the average worker did," Webb recalled. "Today, it's nearly 400 times. In other words, it takes the average worker more than a year to make the money that his or her boss makes in one day."
Listing other downsides of today's economy, Webb said that workers' wages "are at all-time lows as a percentage of national wealth," medical costs and college tuitions have skyrocketed, the U.S. manufacturing base "is being dismantled and sent overseas," and good jobs "are being sent along with them."
Critics have also noted that while the White House has repeatedly underscored job growth since August 2003, which now stands at 7.2 million, the net increase since Bush took office in January 2001 is half that number. By comparison, according to the federal Bureau of Labor Statistics, nearly 18 million jobs were added by the sixth year of President Bill Clinton's term and nearly 10 million were added at the same point in Ronald Reagan's presidency.
Bush tempered his implied criticism of profligate executive compensation by calling for unspecified changes in the way the Sarbanes-Oxley Act is implemented, apparently with the aim of reducing the corporate cost of compliance. The 2002 law, also known as the Public Company Accounting Reform and Investor Protection Act, was passed in response to a series of corporate scandals that cost investors and employees billions of dollars.
Bush said in his speech today that the law "helped boost investor confidence by establishing high standards for transparency and corporate governance." But he said that "complying with certain aspects of the law, such as Section 404, has been costly for businesses and may be discouraging companies from listing on our stock exchanges."
He added: "We don't need to change the law. We need to change the way the law is implemented." He did not elaborate. Under Section 404 of Sarbanes-Oxley, management is required to produce internal control reports regarding procedures for financial reporting.
Bush also repeated his pledge to submit a budget next week as part of a plan to eliminate the federal budget deficit by 2012. He said that strong U.S. economic growth, an expansion "roughly the size of the entire Canadian economy," has helped cut the deficit in half three years ahead of schedule. He attributed this performance to his tax cuts, which he said have spurred growth and led to "record tax revenues."
Bush warned, "Now is not the time for the federal government to be raising taxes on the American people."
He did not mention the national debt, which has continued to grow dramatically under his presidency. It currently stands at more than $8.68 trillion, up from $5.8 trillion in 2001.