THE PRESIDENT: Good morning. This week Congress took vital action to create jobs in America. Following the outlines of a jobs and growth package I announced in January, members of the House and Senate reached agreement on a bill to strengthen our nation's economy by reducing income tax rates, lowering the marriage penalty, increasing the child credit from $600 to $1,000, increasing the expensing the allowance for small business investment, and significantly reducing taxes on dividends. These tax cuts will go into effect immediately, and some retroactively.
About 25 million families with children will see their child credit increase and will receive checks of up to $400 per child. And 136 million Americans who pay income taxes, including 23 million small business owners who pay taxes at the individual rate, will see their taxes lowered.
By leaving American families with more to spend, more to save and more to invest, these reforms will help boost the nation's economy and create jobs. When people have extra take-home pay, there's greater demand for goods and services. And employers will need more workers to meet that demand.
A higher expensing allowance will help small firms, including farms and ranches, to buy new equipment so they can become more productive and expand their operations. They will also have more money to add new employees. And reducing the tax rate on dividends will help shareholders across America, from teachers invested in 401(k) accounts, to seniors who depend on dividends for their financial well being.
I appreciate the leadership of Congressman Bill Thomas of California and Senator Chuck Grassley of Iowa, who worked with their colleagues to hammer out a final agreement. This achievement is a victory for every family struggling to pay the bills, every entrepreneur hoping to expand the business and create new jobs and every American looking for work. I look forward to signing this jobs and growth legislation in the coming week.
I will also work with Congress to bring down the budget deficit that has resulted from war, recession and terrorist attacks. Faster growth in the economy will bring more revenues into the federal Treasury. Yet moving toward a balanced budget also requires that we hold federal spending to a responsible level. Spending discipline is crucial to my economic program. I urge the Congress to set priorities and stick to the responsible budget plan they passed back in April.
By that measure, discretionary federal spending will rise by 4 percent, about the same as the increase in the average American family's income. Governments should not grow faster than worker's paychecks. Governments should follow the example the American families by setting priorities and staying with them.
Our citizens and our economy have endured great challenges over the last two and a half years. Yet this nation's workers and entrepreneurs, who remain the most productive in the world, are rising to meet every challenge. Our economy continues to grow, and inflation and interest rates remain low. With new relief for the taxpayers, we have laid the foundation for even stronger growth in the years ahead and more jobs for American workers.
Thank you for listening.