CPAC Washington D.C. Conference
11 a.m. EST, Marriott Ballroom
February 11, 2011
Good morning. Thank you, Don, for that kind introduction.
It is great to be with you all today, and to have the opportunity to talk about the exciting, new path that the American people have chosen for this country.
Our country voted to change the way Washington is working and it is our responsibility to provide that change.
Two years ago in Puerto Rico, we similarly voted to change the way our government was working because it was also spending beyond what the people could afford.
Some have asked if those of us who cherish freedom and individual liberty can win the Hispanic vote while upholding our principles? Well, in Puerto Rico, we’ve done it.
As a Conservative Republican, I’ve been elected island-wide twice in the last 5 years. In 2008, I was elected by the biggest margin of electoral victory in 44 years.
We also had victories that included two-thirds of the seats in both houses of the State Legislature.
Why did we prevail when the votes were counted? Because when government is growing its own economy at the expense of the real economy - the people’s economy - Americans will choose freedom, opportunity and growth.
We must act now through steady leadership and bold action to take on the big challenges we face with honesty and courage. We must show that our brightest days are ahead and that we can reignite America’s engine of growth.
We need to put our faith in the hopes and dreams and plans of the citizens of this country, because they can out-think,out-dream, out-work and out-produce anybody in the world, as long as they are rewarded fairly when they do it.
That’s exactly what we are doing in Puerto Rico.
Through the tough decisions we made early in my Administration, we are addressing an inherited fiscal crisis that was the worst in the nation.
When I took office two years ago, we had been experiencing the deepest recession since the 1930s, a recession that began two full years before it commenced in the rest of the country.
I inherited a $3.3 billion budget deficit - proportionally speaking, the largest state budget deficit in the country, representing 44 percent of revenues.
Puerto Rico’s credit rating was on the verge of junk status, and I actually had to fly up to meet with the rating agencies before I was sworn in to avoid a downgrade of our bonds.
And after I was sworn in, we didn’t even have money to meet our first payroll. We had to take out a loan to pay it.
We immediately enacted fiscal emergency legislation, with the support of our Legislature, requiring serious spending cuts.
Encouraged by a clear mandate from taxpayers, in just two years, we have cut government expenses by 20 percent. Here’s what we did:
-I took a 10 percent pay cut and agency heads took a 5 percent cut;
-We froze all salaries for two fiscal years;
-We cut government services contracts by 15 percent;
-We cut government operating expenses 10 percent, including official vehicles, cell phones, and credit cards;
-We reduced political appointments by 30 percent;
-We shrank the government employee ranks by 17,000 through a combination of voluntary and mandatory measures. Another voluntary early retirement window enabled us to trim an additional 4,000 last month.
-We reduced the number of government agencies through consolidation;
-And we closed-out our defined benefit pension plan and moved to a performance based defined
contribution plan for future government employees.
We didn’t shy away from the tough decisions. In just two years, our progress is clear and compelling on both, the fiscal and economic side.
We have cut expenses and brought down the budget deficit from 44 percent to 11 percent of revenues. That includes cutting 17 percent of total payroll. And we are on course to balance our budget before the end of my first term.
We’ve reduced our deficit proportionally more than any other state or territory. In a ranking of all the states by budget deficit, as a percentage of revenues, we started of dead last. Now, we are ranked 20th in the country and closing in.
The rating agencies have noticed. They all increased our bond rating to its highest level in 35 years and granted us a “positive” outlook for the first time since 1983.
Now that we have stabilized the economy, we have turned our full focus to restoring growth, and creating the best business climate in the country. We turned to a model where entrepreneurship and innovation are the drivers of economic growth and opportunity, not government.
The debate has already begun at the national level on fundamental tax reform and addressing a tax regime that puts American business at a competitive disadvantage around the globe.
Puerto Rico, as a U.S. territory, has a code that is a mirror image of the Internal Revenue Code. We faced the same challenge in that high taxes – especially on the corporate side – have hindered our competitiveness.
I am convinced that $1 dollar in our taxpayers’ hands will be used more effectively that if that same dollar remains in the government’s hands. Thus, we just approved the largest across-the-board tax cuts at the individual and corporate level in our history.
Starting January of this year, we cut the top corporate rate from 41 percent to 30 percent. The previous seven-tier corporate bracket has been flattened, and in three years, the top corporate rate will drop to 25 percent.
For individuals, tax rates will drop an average of 25 percent this year, increasing to a nearly 50 percent reduction over six years.
To ensure that we sustain fiscal responsibility, individual tax reductions for years 2014 through 2016 will be contingent on the government meeting targeted goals to guarantee that we continue to balance our budget.
Thus, we are making the taxpayer the watchdog for fiscal discipline, and ensuring government keeps that discipline. In addition to the tax reform plan, we have instituted other significant planks in our reform agenda to promote growth and create jobs.
We enacted one of the most advanced and aggressive Public-Private Partnership laws in the country to encourage greater private investment and bring competition and efficiencies to schools, roads, airports, energy, water facilities and other public infrastructure.
We launched a new housing initiative that cuts property and capital gains taxes for buyers and sellers. During the first four months of the program, housing sales increased over 20 percent.
We have some of the highest energy costs in the nation and rely on imported oil for almost 70 percent of our power generation. So we have begun a comprehensive energy program to dramatically reduce our dependence on foreign oil, in favor of natural gas and renewable energy.
We are also merging government agencies to cut duplications, and streamlining operations to be quick, agile and efficient so that government red tape doesn’t get in the way of entrepreneurship and job creation.
A perfect example is the government permitting process. We had government agencies issuing 28 different permits. Now we have 1 permit to do business.
With these reforms, we are convinced that job creation will be spurred, consumers will be stronger, and the economy will be more competitive and prosperous.
I was fortunate in that I had the support of the Legislature and we were able to work as partners to address our challenges comprehensively.
So I think that with big pick-ups in November in Congress, Governors o"ces and state legislatures around the nation, bold leadership is possible. And as you know, the mandate from voters is that bold action in Washington is a must.
So my advice is: Don’t wait and don’t blink. Make the tough decisions early and stick to them with courage.
People are expecting leadership. At the beginning of my term, I went to the Legislature and on TV to tell the public exactly what we faced and what we needed to do to fix it.
Some may not like every decision, but they will respect you for doing what is right and what you said you would do.
The long practice of allowing debt and deficits to grow unchecked has made our country less competitive. It’s time for Government to put its finances on the path of fiscal responsibility.
I am confident that through clear and steady leadership, we will be able to address these challenges, just like many of us are doing around our Nation.
And that brings me back to the important topic I touched upon at the start – reaching out to Hispanics – because this is our time and our opportunity to elevate our pro-growth, pro-family policies and make huge inroads with our Hispanic community around the country.
The late President Reagan said that: “Hispanics are Republicans, they just don’t know it yet.” And he was so right. Actually, I started in the Republican Party as a student in D.C. stuffing envelopes in his campaign.
He brought many of us into the party. And the bottom line here is we are socially conservative, fiscally conservative, we have a natural distrust of government, we want lower taxes, education is key to us, and we want our small and medium-size businesses to flourish. Those are Republican values.
It is clear that Republicans must reach out to Hispanics to build trust. I strongly agree and leave you with this belief. We don’t have to run away from our values and our principles to attract their support. On the contrary, we have to proudly underscore them.
Let’s show America what we can accomplish if we protect individual freedom, promote growth and strengthen our values!
Thank you and God bless you.
Download the Speech in PDF Format.
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