THE PRESIDENT: Mr. Speaker, Vice President Cheney, members of Congress, distinguished citizens and fellow citizens: Every year, by law and by custom, we meet here to consider the state of the union. This year, we gather in this chamber deeply aware of decisive days that lie ahead.
You and I serve our country in a time of great consequence. During this session of Congress, we have the duty to reform domestic programs vital to our country; we have the opportunity to save millions of lives abroad from a terrible disease. We will work for a prosperity that is broadly shared, and we will answer every danger and every enemy that threatens the American people. (Applause.)

In all these days of promise and days of reckoning, we can be confident. In a whirlwind of change and hope and peril, our faith is sure, our resolve is firm, and our union is strong. (Applause.)
This country has many challenges. We will not deny, we will not ignore, we will not pass along our problems to other Congresses, to other presidents, and other generations. (Applause.) We will confront them with focus and clarity and courage.

During the last two years, we have seen what can be accomplished when we work together. To lift the standards of our public schools, we achieved historic education reform -- which must now be carried out in every school and in every classroom, so that every child in America can read and learn and succeed in life. (Applause.) To protect our country, we reorganized our government and created the Department of Homeland Security, which is mobilizing against the threats of a new era. To bring our economy out of recession, we delivered the largest tax relief in a generation.
(Applause.) To insist on integrity in American business we passed tough reforms, and we are holding corporate criminals to account. (Applause.)

Some might call this a good record; I call it a good start. Tonight I ask the House and Senate to join me in the next bold steps to serve our fellow citizens.

Our first goal is clear: We must have an economy that grows fast enough to employ every man and woman who seeks a job. (Applause.) After recession, terrorist attacks, corporate scandals and stock market declines, our economy is recovering -- yet it's not growing fast enough, or strongly enough. With unemployment rising, our nation needs more small businesses to open, more companies to invest and expand, more employers to put up the sign that says, "Help Wanted." (Applause.)

Jobs are created when the economy grows; the economy grows when Americans have more money to spend and invest; and the best and fairest way to make sure Americans have that money is not to tax it away in the first place. (Applause.)

I am proposing that all the income tax reductions set for 2004 and 2006 be made permanent and effective this year. (Applause.) And under my plan, as soon as I sign the bill, this extra money will start showing up in workers' paychecks. Instead of gradually reducing the marriage penalty, we should do it now. (Applause.) Instead of slowly raising the child credit to $1,000, we should send the checks to American families now. (Applause.)

The tax relief is for everyone who pays income taxes -- and it will help our economy immediately: 92 million Americans will keep, this year, an average of almost $1,000 more of their own money. A family of four with an income of $40,000 would see their federal income taxes fall from $1,178 to $45 per year. (Applause.) Our plan will improve the bottom line for more than 23 million small businesses.

You, the Congress, have already passed all these reductions, and promised them for future years. If this tax relief is good for Americans three, or five, or seven years from now, it is even better for Americans today. (Applause.)

We should also strengthen the economy by treating investors equally in our tax laws. It's fair to tax a company's profits. It is not fair to again tax the shareholder on the same profits. (Applause.) To boost investor confidence, and to help the nearly 10 million senior who receive dividend income, I ask you to end the unfair double taxation of dividends. (Applause.)

Lower taxes and greater investment will help this economy expand. More jobs mean more taxpayers, and higher revenues to our government. The best way to address the deficit and move toward a balanced budget is to encourage economic growth, and to show some spending discipline in Washington, D.C. (Applause.)

We must work together to fund only our most important priorities. I will send you a budget that increases discretionary spending by 4 percent next year -- about as much as the average family's income is expected to grow. And that is a good benchmark for us. Federal spending should not rise any faster than the paychecks of American families. (Applause.)

A growing economy and a focus on essential priorities will also be crucial to the future of Social Security. As we continue to work together to keep Social Security sound and reliable, we must offer younger workers a chance to invest in retirement accounts that they will control and they will own. (Applause.)

Our second goal is high quality, affordable health care for all Americans. (Applause.) The American system of medicine is a model of skill and innovation, with a pace of discovery that is adding good years to our lives. Yet for many people, medical care costs too much -- and many have no coverage at all. These problems will not be solved with a nationalized health care system that dictates coverage and rations care. (Applause.)

Instead, we must work toward a system in which all Americans have a good insurance policy, choose their own doctors, and seniors and low-income Americans receive the help they need. (Applause.) Instead of bureaucrats and trial lawyers and HMOs, we must put doctors and nurses and patients back in charge of American medicine. (Applause.)

Health care reform must begin with Medicare; Medicare is the binding commitment of a caring society. (Applause.) We must renew that commitment by giving seniors access to preventive medicine and new drugs that are transforming health care in America.

Seniors happy with the current Medicare system should be able to keep their coverage just the way it is. (Applause.) And just like you -- the members of Congress, and your staffs, and other federal employees -- all seniors should have the choice of a health care plan that provides prescription drugs. (Applause.)

My budget will commit an additional $400 billion over the next decade to reform and strengthen Medicare. Leaders of both political parties have talked for years about strengthening Medicare. I urge the members of this new Congress to act this year. (Applause.)

To improve our health care system, we must address one of the prime causes of higher cost, the constant threat that physicians and hospitals will be unfairly sued. (Applause.) Because of excessive litigation, everybody pays more for health care, and many parts of America are losing fine doctors. No one has ever been healed by a frivolous lawsuit. I urge the Congress to pass medical liability reform. (Applause.)

Our third goal is to promote energy independence for our country, while dramatically improving the environment. (Applause.) I have sent you a comprehensive energy plan to promote energy efficiency and conservation, to develop cleaner technology, and to produce more energy at home. (Applause.) I have sent you Clear Skies legislation that mandates a 70-percent cut in air pollution from power plants over the next 15 years. (Applause.) I have sent you a Healthy Forests Initiative, to help prevent the catastrophic fires that devastate communities, kill wildlife, and burn away millions of acres of treasured forest. (Applause.)

I urge you to pass these measures, for the good of both our environment and our economy. (Applause.) Even more, I ask you to take a crucial step and protect our environment in ways that generations before us could not have imagined.

In this century, the greatest environmental progress will come about not through endless lawsuits or command-and-control regulations, but through technology and innovation. Tonight I'm proposing $1.2 billion in research funding so that America can lead the world in developing clean, hydrogen-powered automobiles. (Applause.)

A single chemical reaction between hydrogen and oxygen generates energy, which can be used to power a car -- producing only water, not exhaust fumes. With a new national commitment, our scientist