"The costs of frivolous lawsuits in some cases make it prohibitively expensive for a small business to stay in business or for a doctor to practice medicine, in which case it means the health care costs of a job provider or job creator is escalating," Mr. Bush said.
The president spoke at a two-day White House economic conference, reiterating his oft-stated plea for Congress to impose caps on legal awards.
"Justice ought to be fair," he said. "Those who have been hurt ought to have their day in court. But a judicial system run amok is one that makes it really hard for small businesses to stay in business."
Though the White House said the economic conference would include a broad cross-section of people, no one on the panel with the president disagreed with him on the issue of liability reform, reports CBS News Correspondent Mark Knoller.
The White House chose not to invite a representative of trial lawyers, who portray Mr. Bush as a tool of the insurance industry.
Vice President Dick Cheney opened the conference, saying it was critical to make Mr. Bush's tax cuts permanent during his second term while achieving broader reforms in the tax code and bolstering Social Security.
Cheney said the administration believed the four tax cuts over the past four years had provided a badly needed boost to get the economy out of recession. But he said now the focus needed to be on making the tax cuts permanent.
"We still have more work to do, but we believe we are on the right track," Cheney told the audience of business leaders, economists and Washington lobbyists.
The administration is hoping to build momentum for an ambitious second-term agenda during the conference.
However, the effort is already facing major obstacles. Such groups as AARP, which represents millions of retired people, and organized labor, represented by the AFL-CIO, have vowed to fight Mr. Bush's proposals on Social Security reform.
Treasury Secretary John Snow, whom the president decided last week to keep on as his chief economic spokesman, told the conference that the administration was determined to enact an overhaul of the tax system in the coming term, calling the current system too complex.
"Fundamental tax reform is a top priority of President Bush's second term in office. This administration is committed to the task, and we will get it done," Snow said. "A complicated code robs citizens and business owners of precious resources, namely their time and money. And it also allows too many people to find loopholes, which undermines our system of voluntary compliance."
Harvard economics professor Martin Feldstein, participating in a panel on economic conditions, said he believes the country has emerged from the 2001 recession and the prolonged period of weak job growth.
"I'm pleased to say the economy is now in very good shape," Feldstein said. "National income is growing, growing at an above-trend pace, employment is rising, inflation is low. So by all of the key measures, we're in good shape."
Feldstein, a Republican who is a candidate to succeed Federal Reserve Chairman Alan Greenspan, added, "The weakness of the economy we worried about a few years ago is now essentially all gone thanks to supportive, stimulative Fed policy and the combination of personal tax cuts and the tax incentives for business."
Feldstein plugged Mr. Bush's top domestic priority: reforming Social Security and including a private retirement account option. As he spoke, Cheney sipped from a coffee mug and took notes.
Bush aides acknowledge new proposals aren't in the cards for the forum on Wednesday and Thursday at the Reagan federal office building near the White House.
The speeches and panels are meant to highlight the president's major plans for boosting the economy: overhauling Social Security and the tax code, making recently passed tax cuts permanent, curbing lawsuit abuse, restraining federal spending, helping educate and train workers in a changing economy, making international trade freer, reducing the regulatory burden on businesses and passing a comprehensive energy plan.
More than 2 million jobs have been created in the past year, but Mr. Bush remains 313,000 jobs short of avoiding a net loss of jobs during his presidency.