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8:01 P.M. EDT

THE PRESIDENT:  Hello, everybody. 
Please have a seat.

Good evening.  Before I take
questions from the correspondents I want to give everyone who’s watching tonight
an update on the steps we’re taking to move this economy from recession to
recovery and ultimately to prosperity.

It’s important to remember that
this crisis didn’t happen overnight, and it didn’t result from any one action or
decision. It took many years and many failures to lead us here, and it will take
many months and many different solutions to lead us out.  There are no quick
fixes, and there are no silver bullets.

That’s why we’ve put in place a
comprehensive strategy designed to attack this crisis on all fronts.  It’s a
strategy to create jobs, to help responsible homeowners, to restart lending, and
to grow our economy over the long term.  And we’re beginning to see signs of

The first step we took was to pass
a recovery plan to jumpstart job creation and put money in people’s pockets. 
This plan has already saved the jobs of teachers and police officers. It’s
creating construction jobs to rebuild roads and bridges, and yesterday I met
with a man whose company is reopening a factory outside of Pittsburgh that’s
rehiring workers to build some of the most energy-efficient windows in the
world.  And this plan will provide a tax cut to 95 percent of all working
families that will appear in people’s paychecks by April 1st.

The second step we took was to
launch a plan to stabilize the housing market and help responsible homeowners
stay in their homes.  This plan is one reason that mortgage interest rates are
now at near-historic lows.  We’ve already seen a jump in refinancing of some
mortgages, as homeowners take advantage of lower rates, and every American
should know that up to 40 percent of all mortgages are now eligible for
refinancing.  This is the equivalent of another tax cut.  And we’re also
beginning to see signs of increased sales and stabilizing home prices for the
first time in a very long time.

The third part of our strategy is
to restart the flow of credit to families and businesses.  To that end, we’ve
launched a program designed to support the market for more affordable auto
loans, student loans, and small business loans –- a program that’s already
securitized more of this lending in the last week than in the last four months
combined.  Yesterday, Secretary Geithner announced a new plan that will partner
government resources with private investment to buy up the assets that are
preventing our banks from lending money.  And we will continue to do whatever is
necessary in the weeks ahead to ensure the banks Americans depend on have the
money they need to lend even if the economy gets worse.

Finally, the most critical part of
our strategy is to ensure that we do not return to an economic cycle of bubble
and bust in this country.  We know that an economy built on reckless
speculation, inflated home prices, and maxed-out credit cards does not create
lasting wealth.  It creates the illusion of prosperity, and it’s endangered us

The budget I submitted to Congress
will build our economic recovery on a stronger foundation, so that we don’t face
another crisis like this 10 or 20 years from now.  We invest in the renewable
sources of energy that will lead to new jobs, new businesses, and less
dependence on foreign oil.  We invest in our schools and our teachers so that
our children have the skills they need to compete with any workers in the
world.  We invest in reform that will bring down the cost of health care for
families, businesses and our government.  And in this budget, we have — we have
to make the tough choices necessary to cut our deficit in half by the end of my
first term — even under the most pessimistic estimates.

At the end of the day, the best
way to bring our deficit down in the long run is not with a budget that
continues the very same policies that have led to a narrow prosperity and
massive debt.  It’s with a budget that leads to broad economic growth by moving
from an era of borrow and spend to one where we save and invest.

And that’s why [sic] clean energy
jobs and businesses will do all across America.  That’s what a highly skilled
workforce can do all across America.  That’s what an efficient health care
system that controls costs and entitlements like Medicare and Medicaid will do. 
That’s why this budget is inseparable from this recovery — because it is what
lays the foundation for a secure and lasting prosperity.

The road to that prosperity is
still long, and we will hit our share of bumps and setbacks before it ends.  But
we must remember that we can get there if we travel that road as one nation  —
as one people.  You know, there was a lot of outrage and finger-pointing last
week, and much of it is understandable. I’m as angry as anybody about those
bonuses that went to some of the very same individuals who brought our financial
system to its knees — partly because it’s yet another symptom of the culture
that led us to this point.

But one of the most important
lessons to learn from this crisis is that our economy only works if we recognize
that we’re all in this together — that we all have responsibilities to each
other and to our country.  Bankers and executives on Wall Street need to realize
that enriching themselves on the taxpayers’ dime is inexcusable; that the days
of outsized rewards and reckless speculation that puts us all at risk have to be

At the same time, the rest of us
can’t afford to demonize every investor or entrepreneur who seeks to make a
profit.  That drive is what has always fueled our prosperity, and it is what
will ultimately get these banks lending and our economy moving once

We’ll recover from this recession,
but it will take time, it will take patience, and it will take an understanding
that when we all work together, when each of us looks beyond our own short-term
interest to the wider set of obligations we have towards each other — that’s
when we succeed; that’s when we prosper.  And that’s what is needed right now. 
So let’s look towards the future with a renewed sense of common purpose, a
renewed determination, and most importantly, a renewed confidence that a better
day will come. 

All right, with that, let me take
some questions.  And I’ve got a list here.  Let’s start off with Jennifer Loven,

Q    Thank you, Mr. President. 
Your Treasury Secretary and the Fed Chairman were on Capitol Hill today asking
for this new authority that you want to regulate big, complex financial
institutions.  But given the problems that the financial bailout program has had
so far — banks not wanting to talk about how they’re spending the money, the
AIG bonuses that you mentioned — why do you think the public should sign on for
another new, sweeping authority for the government to take over companies,

THE PRESIDENT:  Well, keep in mind
that it is precisely because of the lack of this authority that the AIG
situation has gotten worse.  Understand that AIG is not a bank, it’s an
insurance company.  If it were a bank and it had effectively collapsed, then the
FDIC could step in, as it does with a whole host of banks, as it did with
IndyMac, and in a structured way, renegotiate contracts, get rid of bad assets,
strengthen capital requirements, resell it on the private marketplace. 

So we’ve got a regular mechanism
whereby we deal with FDIC-insured banks.  We don’t have that same capacity with
an institution like AIG.  And that’s part of the reason why it has proved so
problematic.  I think a lot of people, understandably, say, well, if we’re
putting all this money in there, and if it’s such a big systemic risk to allow
AIG to liquidate, why is it that we can’t restructure some of these contracts;
why can’t we do some of the things that need to be done in a more orderly way?
And the reason is, is because we have not obtained this authority. 

We should have obtained it much
earlier so that any institution that poses a systemic risk that could bring down
the financial system, we can handle, and we can do it in an orderly fashion that
quarantines it from other institutions.  We don’t have that power right now. 
That’s what Secretary Geithner was talking about. 

And I think that there’s going to
be strong support from the American people and from Congress to provide that
authority so that we don’t find ourselves in a situation where we’ve got to
choose between either allowing an enormous institution like AIG — which is not
just insuring other banks but is also insuring pension funds, potentially
putting people’s 401(k)s at risk if it goes under — that’s one choice.  And
then the other choice is just to allow them to take taxpayer money without the
kind of conditions that we’d like to see on it.

So that’s why I think the
authority is so important.

Q    Why should the public trust
the government to handle that authority well?

THE PRESIDENT:  Well, as I said
before, if you look at how the FDIC has handled a situation like Indy Bank, for
example, it actually does these kinds of resolutions effectively when it’s got
the tools to do it.  We don’t have the tools right now.

Okay, Chuck Todd.

Q    Thank you, Mr. President. 
Some have compared this financial crisis to a war, and in times of war past
Presidents have called for some form of sacrifice.  Some of your programs,
whether for Main Street or Wall Street, have actually cushioned the blow for
those that were irresponsible during this — during this economic period of
prosperity, or supposed prosperity that you were talking about.  Why, given this
new era of responsibility that you’re asking for, why haven’t you asked for
something specific that the public should be sacrificing to participate in this
economic recovery?

THE PRESIDENT:  Well, let me —
let me take that question in a couple of phases.  First of all, it’s not true
that we have not asked sacrifice from people who are getting taxpayer money.  We
have imposed some very stiff conditions.  The only problem that we’ve had so far
are contracts that were put in place before we took over.  But moving forward,
anybody — any bank, for example, that is receiving capital from the taxpayers
is going to have to have some very strict conditions in terms of how it pays out
its executives, how it pays out dividends, how it’s reporting its lending
practices.  So we want to make sure that there’s some stiff conditions in

With respect to the American
people, I think folks are sacrificing left and right.  You’ve got a lot of
parents who are cutting back on everything to make sure that their kids can
still go to college.  You’ve got workers who are deciding to cut an entire day
— and entire day’s worth of pay — so that their fellow coworkers aren’t laid
off.  I think that across the board people are making adjustments, large and
small, to accommodate the fact that we’re in very difficult times right

What I’ve said here in Washington
is that we’ve got to make some tough choices.  We got to make some tough
budgetary choices. What we can’t do, though, is sacrifice long-term growth,
investments that are critical to the future.  And that’s why my budget focuses
on health care, energy, education — the kinds of things that can build a
foundation for long-term economic growth, as opposed to the fleeting prosperity
that we’ve seen over the last several years.

I mean, when you have an economy
in which the majority of growth is coming from the financial sector, when AIG
selling a derivative is counted as an increase in the Gross Domestic Product,
then that’s not a model for sustainable economic growth. And what we have to do
is invest in those things that will allow the American people’s capacity for
ingenuity and innovation, their ability to take risks but make sure that those
risks are grounded in good products and good services that they believe they can
market to the rest of the country — that those models of economic growth are
what we’re promoting.  And that’s what I think our budget does.

     Q    But you don’t think there should be a specific call
to action — I mean, this is — you’ve described this as a economic crisis like
nothing we have seen since the Great Depression.

     THE PRESIDENT:  Well, as I said, the American people are
making a host of sacrifices in their individual lives.  We are going through an
extraordinary crisis, but we believe that taken — if you take the steps that
we’ve already taken with respect to housing, with respect to small businesses,
if you look at what we’re doing in terms of increasing liquidity in the
financial system, that the steps that we’re taking can actually stabilize the
economy and get it moving again.

     What I’m looking from the American people to do is that
they are going to be doing what they’ve always done, which is working hard,
looking after their families, making sure that despite the economic hard times,
that they’re still contributing to their community, that they’re still
participating in volunteer activities, that they are paying attention to the
debates that are going on in Washington; and the budgets that we’re putting
forward and some of the decisions that we’re having to make are going to be
tough decisions and we’re going to need the support of the American people.  And
that’s part of why — what I’ve tried to do is to be out front as much as
possible explaining in very clear terms exactly what we’re doing.


     Q    Thank you, Mr. President.  Right now on Capitol
Hill Senate Democrats are writing a budget and, according to press accounts and
their own statements, they’re not including the middle-class tax cut that you
include in the stimulus; they’re talking about phasing that out.  They’re not
including the cap and trade that you have in your budget, and they’re not
including other measures.  I know when you outlined your four priorities over
the weekend, a number of these things were not in there.  Will you sign a budget
if it does not contain a middle-class tax cut, does not contain cap and

     THE PRESIDENT:  Well, I’ve emphasized repeatedly what I
expect out of this budget.  I expect that there’s serious efforts at health care
reform and that we are driving down costs for families and businesses and
ultimately for the federal and state governments that are going to be broke if
we continue on the current path.  I’ve said that we’ve got to have a serious
energy policy that frees ourselves from dependence on foreign oil and makes
clean energy the profitable kind of energy.  We’ve got to invest in education,
K-12 and beyond, to upgrade the skills of the American worker so we can compete
in the international economy.  And I’ve said that we’ve got to start driving our
deficit numbers down.

     Now, we never expected when we printed out our budget
that they would simply Xerox it and vote on it.  We assume that it has to go
through the legislative process.  I have not yet seen the final product coming
out of the Senate or the House and we’re in constant conversations with them.  I
am confident that the budget we put forward will have those principles in place.

     When it comes to the middle-class tax cut, we already
had that in the recovery.  We know that that’s going to be in place for at least
the next two years.  We had identified a specific way to pay for it.  If
Congress has better ideas in terms of how to pay for it, then we’re happy to

When it comes to cap and trade,
the broader principle is that we’ve got to move to a new energy era, and that
means moving away from polluting energy sources towards cleaner energy sources. 
That is a potential engine for economic growth.  I think cap and trade is the
best way, from my perspective, to achieve some of those gains because what it
does is it starts pricing the pollution that’s being sent into the

The way it’s structured has to
take into account regional differences; it has to protect consumers from huge
spikes in electricity prices.  So there are a lot of technical issues that are
going to have to be sorted through.  Our point in the budget is let’s get
started now, we can’t wait.  And my expectation is that the energy committees or
other relevant committees in both the House and the Senate are going to be
moving forward a strong energy package.  It will be authorized, we’ll get it
done and I will sign it.

Q    So is that a “yes,” sir? 
You’re willing to sign a budget that doesn’t have those two

THE PRESIDENT:  No, I — what I
said was I haven’t seen yet what provisions are in there.  The bottom line is,
is that I want to see health care, energy, education and serious efforts to
reduce our budget deficit.  And there are going to be a lot of details that are
still being worked out, but I have confidence that we’re going to be able to get
a budget done that’s reflective of what needs to happen in order to make sure
that America grows.

Chip Reid.

Q    Thank you, Mr. President.  At
both of your town hall meetings in California last week you said, “I didn’t run
for President to pass on our problems to the next generation.”  But under your
budget the debt will increase $7 trillion over the next 10 years; the
Congressional Budget Office says $9.3 trillion.  And today on Capitol Hill some
Republicans called your budget, with all the spending on health care, education
and the  environment, the most irresponsible budget in American

Isn’t that kind of debt exactly what you were talking about
when you said “passing on our problems to the next generation”?

THE PRESIDENT:  First of all, I
suspect that some of those Republican critics have a short memory, because as I
recall I’m inheriting a $1.3 trillion deficit, annual deficit, from them.  That
would be point number one.

     Point number two:  Both under our estimates and under
the CBO estimates, both the most conservative estimates out there, we drive down
the deficit over the first five years of our budget.  The deficit is cut in
half.  And folks aren’t disputing that.

     Where the dispute comes in is what happens in a whole
bunch of out-years.  And the main difference between the budget that we
presented and the budget that came out of Congressional Budget Office is
assumptions about growth.  They’re assuming a growth rate of 2.2 [percent]. 
We’re assuming a growth rate of 2.6 [percent].  Those small differences end up
adding up to a lot of money.  Our assumptions are perfectly consistent with what
blue-chip forecasters out there are saying. 

Now, none of us know exactly
what’s going to happen six or eight or 10 years from now.  Here’s what I do
know:  If we don’t tackle energy, if we don’t improve our education system, if
we don’t drive down the costs of health care, if we’re not making serious
investments in science and technology and our infrastructure, then we won’t grow
2.6 percent, we won’t grow 2.2 percent.  We won’t grow. 

And so what we’ve said is let’s
make the investments that ensure that we meet our growth targets that put us on
a pathway to growth, as opposed to a situation in which we’re not making those
investments and we still have trillion-dollar deficits.

And there’s an interesting reason
why some of these critics haven’t put out their own budget.  We haven’t seen an
alternative budget out of them.  And the reason is because they know that in
fact the biggest driver of long-term deficits are the huge health care costs
that we’ve got out here that we’re going to have to tackle, and that if we don’t
deal with some of the structural problems in our deficit, ones that were here
long before I got here, then we’re going to continue to see some of the problems
in those out-years.

     And so, what we’re trying to emphasize is, let’s make
sure that we’re making the investments that we need to grow, to meet those
growth targets; at the same time we’re still reducing the deficit by a couple of
trillion dollars; we are cutting out wasteful spending in areas like Medicare;
we’re changing procurement practices when it comes to the Pentagon budget; we
are looking at social service programs and education programs that don’t work,
and eliminate them.  And we will continue to go line by line through this
budget, and where we find programs that don’t work we will eliminate

     But it is — it is going to be a impossible task for us
to balance our budget if we’re not taking on rising health care costs.  And it’s
going to be an impossible task to balance our budget, or even approximate it, if
we are not boosting our growth rates.  And that’s why our budget focuses on the
investments we need to make that happen.

     Q    But even under your budget, as you said, over the
next four or five years, you’re going to cut the deficit in half.  Then after
that, six years in a row, it goes up, up, up.  If you’re making all these
long-term structural cuts, why does it continue to go up in the

     THE PRESIDENT:  Well, look, it is going to take a whole
host of adjustments — and we couldn’t reflect all of those adjustments in this
budget.  Let me give you an example.  There’s been a lot of talk about
entitlements and Medicare and Medicaid. The biggest problem we have long term is
Medicare and Medicaid, but whatever reforms we initiative on that front — and
we’re very serious about working on a bipartisan basis to reduce those deficits,
or reduce those costs — you’re not going to see those savings reflected until
much later. 

And so a budget is a snapshot of
what we can get done right now, understanding that eight, 10 years from now we
will have had a whole series of new budgets — and we’re going to have to make
additional adjustments.  And once we get out of this current economic crisis,
then it’s going to be absolutely important for us to take another look and say,
are we growing as fast as we need to grow?  Are there further cuts that we need
to make?  What other adjustments is it going to take for us to have a
sustainable budget level?  

But keep in mind, just to give one
other example — as a percentage of Gross Domestic Product, we are reducing
non-defense discretionary spending to its lowest level since the ’60s — lower
than it was under Reagan, lower than it was under Clinton, lower than it was
under Bush — or both Bushes. 

And so if we’re growing, if we are
doing what’s necessary to create new businesses and to expand the economy, and
we are making sure that we’re eliminating some of these programs that aren’t
working, then over time that gap can close.

But I’m — look, I’m not going to
lie to you, it is tough, as I said.  That’s why the critics tend to criticize,
but they don’t offer an alternative budget.  Because even if we were not doing
health care, we were not doing energy, we were not doing education, they’d still
have a whole bunch of problems in those out-years, according to CBO
projections.  The only difference is that we will not have invested in what’s
necessary to make this economy grow.

Is Lurdes here — from

Q    Thank you, Mr. President. 
Today your administration presented a plan to help curb the violence in Mexico,
and also to control any, or prevent any spillover of the violence into the
United States.  Do you consider the situation now a national security threat? 
And do you believe that it could require sending national troops to the border? 
Governor Perry of Texas has said that you still need more troops and more
agents.  How do you respond to that?

THE PRESIDENT:  Well, first of
all, let’s focus on what we did today.  It’s very significant.  We are sending
millions of dollars in additional equipment to provide more effective
surveillance.  We are providing hundreds of additional personnel that can help
control the border, deal with customs issues.  We are coordinating very
effectively with the Mexican government and President Calderón, who has taken on
a extraordinarily difficult task of dealing with these drug cartels that have
gotten completely out of hand.

And so the steps that we’ve taken
are designed to make sure that the border communities in the United States are
protected and you’re not seeing a spillover of violence, and that we are helping
the Mexican government deal with a very challenging situation.

Now, we are going to continue to
monitor the situation.  And if the steps we’ve taken do not get the job done,
then we will do more.

One last point that I want to make
about this.  As I said, President Calderón has been very courageous in taking on
these drug cartels.  We’ve got to also take some steps.  Even as he is doing
more to deal with the drug cartels sending drugs into the United States, we need
to do more to make sure that illegal guns and cash aren’t flowing back to these
cartels.  That’s part of what’s financing their operations, that’s part of
what’s arming them, that’s what makes them so dangerous.  And this is something
that we take very seriously and we’re going to continue to work on diligently in
the months to come.

Kevin Baron, Stars and Stripes. 
Is Kevin here?  There you go.

Q    Mr. President, where do you
plan to find savings in the Defense and Veterans Administrations’ budgets when
so many items that seem destined for the chopping block are politically
untenable, perhaps?

THE PRESIDENT:  I’m sorry, so

Q    When so many items that may
be destined for the chopping block seem politically untenable — from major
weapons systems, as you mentioned, procurement, to wounded warrior care costs,
or increased operations in Afghanistan, or the size of the military

THE PRESIDENT:  Well, a couple of
— a couple of points I want to make.  The budget that we put forward reflects
the largest increase in veterans funding in 30 years.  That’s the right thing to

Chuck asked earlier about
sacrifices.  I don’t think anybody doubts the extraordinary sacrifices that men
and women in uniform have already made.  And when they come home, then they have
earned the benefits that they receive, and, unfortunately, over the last several
years all too often the VA has been under-resourced when it comes to dealing
with things like Post-Traumatic Stress Disorder or Traumatic Brain Injury,
dealing with some of the backlogs in admission to VA hospitals.

     So there are a whole host of veterans issues that I
think every American wants to see properly funded, and that’s what’s reflected
in our budget.

     Where the savings should come in — and I’ve been
working with Secretary Gates on this and will be detailing it more in the weeks
to come — is how do we reform our procurement system so that it keeps America
safe, and we’re not wasting taxpayer dollars. 

And there is uniform
acknowledgement that the procurement system right now doesn’t work.  That’s not
just my opinion, that’s John McCain’s opinion; that’s Carl Levin’s opinion. 
There are a whole host of people who are students of the procurement process
that will say if you’ve got a whole range of billion-dollar —
multibillion-dollar systems that are — where we’re seeing cost overruns at 30
percent or 40 percent or 50 percent, and then still don’t perform the way
they’re supposed to, or are providing our troops with the kinds of tools that
they need to succeed on their missions, then we’ve got a problem.

Now, I think everybody in this
town knows that the politics of changing procurement is tough because lobbyists
are very active in this area, contractors are very good at dispersing the jobs
and plants in the Defense Department widely.  And so what we have to do is to go
through this process very carefully, be more disciplined than we’ve been in the
last several years.  As I’ve said, we’ve already identified potentially $40
billion in savings just by some of the procurement reforms that are pretty
apparent to a lot of critics out there.  And we are going to continue to find
savings in a way that allows us to put the resources where they’re needed, but
to make sure that we’re not simply fattening defense contractors.

One last point.  In order for us
to get a handle on these costs, it’s also important that we are honest in what
these costs are.  And that’s why it was so important for us to acknowledge the
true costs of the Iraq war and the Afghan war, because if those costs are
somehow off the books and we’re not thinking about them, then it’s hard for us
to make some of the tough choices that need to be made.

Ed Henry.  Where’s

Q    Thank you, Mr. President. 
You spoke again at the top  about your anger about AIG.  You’ve been saying that
for days now.  But why is it that it seems Andrew Cuomo seems to be in New York
getting more actual action on it?  And when you and Secretary Geithner first
learned about this 10 days, two weeks ago, you didn’t go public immediately with
that that outrage — you waited a few days, and then you went public after you
realized Secretary Geithner really had no legal avenue to stop it. 

And more broadly — I just want to
follow up on Chip and Jake — you’ve been very critical of President Bush
doubling the national debt.  And to be fair, it’s not just Republicans hitting
you — Democrat Kent Conrad, as you know, said, “When I look at this budget, I
see the debt doubling again.”  You keep saying that you’ve inherited a big
fiscal mess.  Do you worry, though, that your daughters — not to mention the
next President — will be inheriting an even bigger fiscal mess if the spending
goes out of control?

THE PRESIDENT:  Of course I do,
Ed, which is why we’re doing everything we can to reduce that deficit.  Look, if
this were easy, then we would have already had it done, and the budget would
have been voted on and everybody could go home.  This is hard.  And the reason
it’s hard is because we’ve accumulated a structural deficit that’s going to take
a long time, and we’re not going to be able to do it next year or the year after
or three years form now.  What we have to do is bend the curve on these deficit
projections.  And the best way for us to do that is to reduce health care
costs.  That’s not just my opinion; that’s the opinion of almost every single
person who has looked at our long-term fiscal situation.

Now, how do we — how are we going
to reduce health care costs — because the problem is not just in government-run
programs; the problem is in the private sector, as well. It’s experienced by
families, it’s experienced by businesses.  And so what we’ve said is, look,
let’s invest in health information technologies; let’s invest in preventive
care; let’s invest in mechanisms that look at who’s doing a better job
controlling costs while producing good quality outcomes in various states, and
let’s reimburse on the basis of improved quality, as opposed to simply how many
procedures you’re doing.  Let’s do a whole host of things, some of which cost
money on the front end but offer the prospect of reducing costs on the back

Now, the alternative is to stand
pat and to simply say we are just going to not invest in health care, we’re not
going to take on energy; we’ll wait until the next time that gas gets to $4 a
gallon; we will not improve our schools, and we’ll allow China or India or other
countries to lap our young people in terms of their performance; we will settle
on lower growth rates; and we will continue to contract, both as an economy and
our ability to provide a better life for our kids.

That I don’t think is the better
option.  Now, have — am I completely satisfied with all the work that needs to
be done on deficits?  No.  That’s why I convened a fiscal responsibility summit,
started in this room, to start looking at entitlements and to start looking at
the big drivers of costs over the long term.  Not all of those are reflected in
our budget, partly because the savings we anticipate would be coming in years
outside of the 10-year budget cycle that we’re talking about.  Okay?

Q    On AIG, why did you wait —
why did you wait days to come out and express that outrage?  It seems like the
action is coming out of New York and the Attorney General’s Office.  It took you
days to come public with Secretary Geithner and say, look, we’re outraged.  Why
did it take so long?

THE PRESIDENT:  It took us a
couple of days because I like to know what I’m talking about before I speak, you
know?  (Laughter.)


Q    Good evening, Mr. President. 
Thank you.  Taking this economic debate a bit globally, senior Chinese officials
have publically expressed an interest in international currency.  This is
described by Chinese specialists as a sign that they are less confident than
they used to be in the value and the reliability of the U.S. dollar.  European
countries have resisted your calls to spend more on economic stimulus.  I
wonder, sir, as a candidate who ran concerned about the image of the United
States globally, how comfortable you are with the Chinese government, run by
Communists, less confident than they used to be in the U.S. dollar, and European
governments, some of them center-left, some of them Socialist, who say you’re
asking them to spend too much.

THE PRESIDENT:  Well, first of
all, I haven’t asked them to do anything.  What I’ve suggested is, is that all
of us are going to have to take steps in order to lift the economy.  We don’t
want a situation in which some countries are making extraordinary efforts, and
other countries aren’t, with the hope that somehow the countries that are making
those important steps lift everybody up.  And so somebody has got to take

It’s not just me, by the way.  I
was with Kevin Rudd, the Prime Minister of Australia, today, who was very
forceful in suggesting that countries around the world, those with the capacity
to do so, take the steps that are needed to fill this enormous hole in global
demand.  Gordon Brown, when he came to visit me, said the exact same

So the goal at the G20 summit, I
think, is to do a couple of things:  Number one, say to all countries, let’s do
what’s necessary in order to create jobs and to get the economy moving again. 
Let’s avoid steps that could result in protectionism that would further contract
global trade.  Let’s focus on how are we going to move our regulatory process
forward in order that we do not see the kinds of systemic breakdowns that we’ve
already seen.  And that requires — that means not just dealing with banks, but
also some of the other financial flows that are out here that are currently
unregulated.  We’ve got to update regulations that date back to the 1930s, and
we’re going to have to do some coordination with other countries in order to
accomplish that.

As far as confidence in the U.S.
economy or the dollar, I would just point out that the dollar is extraordinarily
strong right now.  And the reason the dollar is strong right now is because
investors consider the United States the strongest economy in the world, with
the most stable political system in the world.  So you don’t have to take my
word for it.  I think that there is a great deal of confidence that ultimately,
although we are going through a rough patch, that the prospects for the world
economy are very, very strong.

And last point I would make in
terms of changing America’s image in the world, Garrett, I — you know, I
haven’t looked at the latest polling around the world, but I think — I think
it’s fair to say that the response that people have had to our administration
and the steps that we’ve taken are ones that are restoring a sense of confidence
and the ability of the United States to assert global leadership.  That will
just strengthen.

Q    And the need for a global


Q    — the need for a global

THE PRESIDENT:  I don’t believe
that there’s a need for a global currency.

Mike Allen, Politico.  Hi,

Q    Thank you, Mr. President. 
Are you reconsidering your plan to cut the interest rate deduction for mortgages
and for charities?  And do you regret having proposed that in the first

THE PRESIDENT:  No, I think it’s
— I think it’s the right thing to do, where we’ve got to make some difficult
choices.  Here’s what we did with respect to tax policy.  What we said was, that
over the last decade, the average worker, the average family have seen their
wages and incomes flat.  Even at times where supposedly we were in the middle of
an economic boom, as a practical matter, their incomes didn’t go up.  And so
what we said, let’s give them a tax cut, let’s give them some relief, some help
— 95 percent of American families.

Now, for the top 5 percent,
they’re the ones who typically saw huge gains in their income.  I fall in that
category.  And what we’ve said is for those folks, let’s not renew the Bush tax
cuts, so let’s go back to the rates that existed back in — during the Clinton
era when wealthy people were still wealthy and doing just fine; and let’s look
at the level in which people can itemize their deductions.  And what we’ve said
is let’s go back to the rate that existed under Ronald Reagan.

People are still going to be able
to make charitable contributions.  It just means, if you give $100 and you’re in
this tax bracket, at a certain point, instead of being able write off 36 or 39
percent, you’re writing off 28 percent.  Now, if it’s really a charitable
contribution, I’m assuming that that shouldn’t be a determining factor as to
whether you’re given that $100 to the homeless shelter down the

And so this provision would affect
about 1 percent of the American people.  They would still get deductions.  It’s
just that they wouldn’t be able to write off 39 percent.  In that sense, what it
would do is it would equalize — when I give $100, I’d get the same amount of
deduction as when some — a bus driver, who’s making $50,000 a year, or $40,000
a year gives that same $100.  Right now he gets 28 percent — he gets to write
off 28 percent; I get to write off 39 percent.  I don’t think that’s fair. 

So I think this was a good idea. 
I think it is a realistic way for us to raise some revenue from people who
benefited enormously over the last several years.  It’s not going to cripple
them; they’ll still be well-to-do.  And ultimately, if we’re going to tackle the
serious problems that we’ve got, then in some cases those who are more fortunate
are going to have to pay a little bit more.

Q    But it’s not the well-to-do
people, it’s the charities.  Given what you just said, are you confident the
charities are wrong when they contend that this would discourage

mean, if you look at the evidence, there’s very little evidence that this has a
significant impact on charitable giving.

I’ll tell you what has a
significant impact on charitable giving, is a financial crisis in an economy
that’s contracting.  And so the most important thing that I can do for
charitable giving is to fix the economy; to get banks lending again, to get
businesses opening their doors again, and to get people back to work again. 
Then I think charities will do just fine.

Kevin Chappell.  Hi,

Q    Thank you, Mr. President.  A
recent report found that as a result of the economic downturn, one in 50
children are now homeless in America.  With shelters at full capacity, tent
cities are sprouting up across the country.  In passing your stimulus package,
you said that help was on the way.  But what would you say to these families,
especially children, who are sleeping under bridges in tents across the

THE PRESIDENT:  Well, the first
thing I’d say is that I’m heartbroken that any child in America is homeless. 
And the most important thing that I can do on their behalf is to make sure their
parents have a job. 

And that’s why the recovery
package said as a first priority how we’re going to save or create 3.5 million
jobs; how can we prevent layoffs for teachers and police officers; how can we
make sure that we are investing in the infrastructure for the future — they can
put people back to work right away; how do we make sure that when people do lose
their jobs, that their unemployment insurance is extended, that they can keep
their health care.

So there are a whole host of steps
that we’ve done to provide a cushion for folks who have fallen on very hard
times and to try to spur immediate projects that can put people back to

Now, in the meantime, we’ve got to
work very closely with the states to monitor and to help people who are still
falling through the cracks.  And the homeless problem was bad even when the
economy was good.  Part of the change in attitudes that I want to see here in
Washington and all across the country is a belief that it is not acceptable for
children and families to be without a roof over their heads in a country as
wealthy as ours. And so we’re going to be initiating a range of programs, as
well, to deal with homelessness.

One area in particular I want to
focus on is the issue of veterans.  The rate of homelessness among veterans is
much, much higher than for non-veteran populations.  And so we’ve got — a
number of the increases that we’re looking for in our budget on veterans funding
directly addresses the issue of homeless veterans.  That, I think, can provide
some real help.

Ann Compton.  Hey,

Q    Sir — hey.  (Laughter.)

surprised. (Laughter.)  

Q    I am surprised.  Could I ask
you about race?


Q    Yours is a rather historic
presidency.  And I’m just wondering whether in any of the policy debates that
you’ve had within the White House, the issue of race has come up, or whether it
has in the way you feel you’ve been perceived by other leaders or by the
American people.  Or has the last 64 days been a relatively colorblind

THE PRESIDENT:  I think that the
last 64 days has been dominated by me trying to figure out how we’re going to
fix the economy.  And that’s — affects black, brown and white.   And, you know,
obviously at the inauguration I think that there was justifiable pride on the
part of the country that we had taken a step to move us beyond some of the
searing legacies of racial discrimination in this country.  But that lasted
about a day — (laughter) — and, you know, right now the American people are
judging me exactly the way I should be judged, and that is are we taking the
steps to improve liquidity in the financial markets, create jobs, get businesses
to reopen, keep America safe.  And that’s what I’ve been spending my time
thinking about.

Jon Ward, Washington Times. 
Where’s Jon?

Q    Right here,


Q    Thank you, Mr.


Q    In your remarks on stem cell
research earlier this month, you talked about a majority consensus in
determining whether or not this is the right thing to do, to federally fund
embryonic stem cell research.  I’m just wondering, though, how much you,
personally, wrestled with the morality or ethics of federally funding this kind
of research, especially given the fact that science so far has shown a lot of
progress with adult stem cells, but not a lot with embryonic.

THE PRESIDENT:  Okay.  I think
it’s a legitimate question.  I wrestle with these issues every day, as I
mentioned to — I think in an interview a couple of days ago.  By the time an
issue reaches my desk, it’s a hard issue.  If it was an easy issue, somebody
else would have solved it and it wouldn’t have reached me.

Look, I believe that it is very
important for us to have strong moral guidelines, ethical guidelines when it
comes to stem cell research or anything that touches on, you know, the issues of
possible cloning or issues related to, you know, the human life sciences.  I
think those issues are all critical, and I’ve said so before.  I wrestle with it
on stem cell, I wrestle with it on issues like abortion.

I think that the guidelines that
we provided meet that ethical test.  What we have said is that for embryos that
are typically about to be discarded, for us to be able to use those in order to
find cures for Parkinson’s or for Alzheimer’s or, you know, all sorts of other
debilitating diseases — juvenile diabetes — that it is the right thing to do. 
And that’s not just my opinion; that is the opinion of a number of people who
are also against abortion.

Now, I am glad to see progress is
being made in adult stem cells.  And if the science determines that we can
completely avoid a set of ethical questions or political disputes, then that’s
great.  I have — I have no investment in causing controversy.  I’m happy to
avoid it, if that’s where the science leads us.  But what I don’t want to do is
predetermine this based on a very rigid, ideological approach, and that’s what I
think is reflected in the executive order that I signed.

Q    I meant to ask a follow-up,
though.  Do you think that scientific consensus is enough to tell us what we can
and cannot do?

THE PRESIDENT:  No.  I think
there’s always an ethical and a moral element that has to be — be a part of
this.  And so as I said, I don’t take decisions like this lightly.  They’re ones
that I take seriously.  And I respect people who have different opinions on this
issue.  But I think that this was the right thing to do and the ethical thing to
do.  And as I said before, my hope is, is that we can find a mechanism
ultimately to cure these diseases in a way that gains 100 percent consensus. 
And we certainly haven’t achieved that yet, but I think on balance this was the
right step to take.

Stephen Collinson,

Q    Mr. President, you came into
office pledging to work for peace between Israel and the Palestinians.  How
realistic do you think those hopes are now, given the likelihood of a Prime
Minister who’s not fully signed up to a two-state solution and a Foreign
Minister who has been accused of insulting Arabs?

THE PRESIDENT:  It’s not easier
than it was, but I think it’s just as necessary.  We don’t yet know what the
Israeli government is going to look like and we don’t yet know what the future
shape of Palestinian leadership is going to be comprised of.  What we do know is
this:  that the status quo is unsustainable; that it is critical for us to
advance a two-state solution where Israelis and Palestinians can live side by
side in their own states with peace and security.

And by assigning George Mitchell
the task of working as Special Envoy, what we’ve signaled is that we’re going to
be serious from day one in trying to move the parties in a direction that
acknowledges that reality.  How effective these negotiations may be, I think
we’re going to have to wait and see.  But, you know, we were here for St.
Patrick’s Day and you’ll recall that we had what had been previously sworn
enemies celebrating here in this very room — you know, leaders from the two
sides in Northern Ireland that, you know, a couple of decades ago or even a
decade ago, people would have said could never achieve peace.  And here they
were, jointly appearing and talking about their commitment even in the face of
violent provocation.  And what that tells me is that if you stick to it, if you
are persistent, then — then these problems can be dealt with.

That whole philosophy of
persistence, by the way, is one that I’m going to be emphasizing again and again
in the months and years to come, as long as I’m in this office.  I’m a big
believer in persistence.  I think that when it comes to domestic affairs, if we
keep on working at it, if we acknowledge that we make mistakes sometimes and
that we don’t always have the right answer and we’re inheriting very knotty
problems, that we can pass health care, we can find better solutions to our
energy challenges, we can teach our children more effectively, we can deal with
a very real budget crisis — that is not fully dealt with in my budget at this
point, but makes progress.

I think when it comes to the
banking system, you know, it was just a few days ago or weeks ago where people
were certain that Secretary Geithner couldn’t deliver a plan.  Today the
headlines all look like, well, all right, there’s a plan.  And I’m sure there
will be more criticism and we’ll have to make more adjustments, but we’re moving
in the right direction.

When it comes to Iran, you know,
we did a video sending a message to the Iranian people and the leadership of the
Islamic Republic of Iran.  And some people said, well, they did not immediately
say that we’re eliminating nuclear weapons and stop funding terrorism.  Well, we
didn’t expect that.  We expect that we’re going to make steady progress on this
front.  We haven’t immediately eliminated the influence of lobbyists in
Washington.  We have not immediately eliminated wasteful pork projects.  And
we’re not immediately going to get Middle East peace.  We’ve been in office now
a little over 60 days.

What I am confident about is that
we’re moving in the right direction and that the decisions we’re making are
based on how are we going to get this economy moving, how are we going to put
Americans back to work, how are we going to make sure that our people are safe,
and how are we going to create not just prosperity here but work with other
countries for global peace and prosperity.  And we are going to stay with it as
long as I’m in this office, and I think that you look back four years from now,
I think hopefully people will judge that body of work and say, this is a big
ocean liner — it’s not a speedboat; it doesn’t turn around immediately — but
we’re in a better — better place because of the decisions that we

All right.  Thank you,