Video and Text: Obama News Conference (24 March)

See Also: John Matlin on "Obama and the US Economy"

"If the Washington press corps successfully links Obama with the privileged in American society and nails him as unable to curb the worst excesses of Wall Street, his Presidency may descend into the disaster that few predicted and fewer, except died-in-the-wool Republicans, wanted."

CNN Summary: "Obama defends his budget as essential to recovery"



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

Good evening. Now, 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.

Now, 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 progress.

The first step we took was to pass a recovery plan to jump-start job creation and put money in people’s pockets. And this plan’s 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’s one reason that mortgage interest rates are now at near- historic lows.

We’ve already seen a jump in refinancings of 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 markets 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 all.

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 us 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 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 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 taxpayer’s dime is inexcusable, that the days of outsize rewards and reckless speculation that puts us all at risk have to be over. 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 more.

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, 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, AP.

QUESTION: Thank you, Mr. President.

Your Treasury secretary and the Fed chair have been -- 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, essentially?

PRESIDENT OBAMA: Well, keep in mind that it is precisely because of the lack of this authority that the AIG situation has gotten worse. Now, understand that AIG’s 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 and 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’s so important.

QUESTION: But why should the public trust the government to handle that authority well?

PRESIDENT OBAMA: Well, as I said before, if you look at how the FDIC has handled a situation like IndyBank, 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.

QUESTION: 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?

PRESIDENT OBAMA: Well, let me -- let me take that question in a couple -- 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 place.

With respect to the American people, I think folks are sacrificing left and right. They -- 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 co-workers 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 now.

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 domedic -- 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.

QUESTION: But you don’t think there should be a specific call to action that you want the American -- I mean, this is -- you’ve described this as an economic crisis like nothing we have seen since the Great Depression.

PRESIDENT OBAMA: 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.

Jake?

QUESTION: 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- trade?

PRESIDENT OBAMA: 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 through 12 and beyond, to upgrade the skills of the American worker so we can compete in -- 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 listen.

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 atmosphere.

The way it’s structured, it has to take into account regional differences. It has to protect consumers from huge spikes in electricity prices. So there are a -- 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’ll be authorized. We’ll get it done. And I will sign it. Okay?

QUESTION: So is that a yes, sir? You’re willing to sign a budget that doesn’t have those two provisions?

PRESIDENT OBAMA: No; I -- what I said was -- is 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. Okay?

Chip Reid.

QUESTION: Thank you, Mr. President.

At both of your town hall meetings in California last week, you said, quote, ”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 environment, the most irresponsible budget in American history.

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

PRESIDENT OBAMA: 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. We’re assuming a growth rate of 2.6. 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 a interesting reason why some of these critics haven’t put out their own budget. I mean, 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 we -- 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 -- 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 them.

But it is -- it is going to be a(n) 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 -- and that’s why our budget focuses on the investments we need to make that happen.

QUESTION: 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 --

PRESIDENT OBAMA: Right.

QUESTION: -- why does it continue to go up in the out years?

PRESIDENT OBAMA: 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 initiate 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 -- 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 are -- 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 would -- is that we will not have invested in what’s necessary to make this economy grow.

Is Lourdes here, from Univision? (Let’s see ?).

QUESTION: 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?

PRESIDENT OBAMA: 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 Calderon, who has taken on a(n) extraordinarily difficult task 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 that 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 Calderon 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.

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

PRESIDENT OBAMA: I’m sorry, so many?

QUESTION: 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 on Afghanistan, or the size of the military itself.

PRESIDENT OBAMA: Well, a couple of -- a couple of points I want to make.

The budget that we’ve put forward reflects the largest increase in veterans funding in 30 years. That’s the right thing to do. Chuck asked earlier about sacrifices. I -- 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 acknowledgment 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, multi-billion-dollar systems that are -- where we’re seeing cost overruns of 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, you know, lobbyists are very active in this area. You know, contractors are very good at dispersing the jobs in 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 -- 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 -- 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.

Okay. Ed Henry. Where’s Ed? There he is.

QUESTION: 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 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, quote, ”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?

PRESIDENT OBAMA: 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 from 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 end.

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 -- 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?

QUESTION: So on AIG, why did you wait -- why did you wait days to come out and express that outrage?

PRESIDENT OBAMA: I --

QUESTION: It seems like the action is coming out of New York in 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?

PRESIDENT OBAMA: Well, it took us a couple of days because I like to know what I’m talking about before I speak. (Laughter.) All right?

QUESTION: Secretary Geithner alluded --

PRESIDENT OBAMA: Major?

QUESTION: (Off mike.)

PRESIDENT OBAMA: Yeah.

QUESTION: Good evening, Mr. President. Thank you. Taking this economic debate a bit globally, senior Chinese officials have publicly expressed an interest in an 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 the center-left, some of them socialist, who say you’re asking them to spend too much?

PRESIDENT OBAMA: 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’s got to take leadership. It’s not just me, by the way. I was with Kevin Rudd, 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 thing.

So the goal at the G-20 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 so that we do not see the kinds of systemic breakdowns that we’ve already seen.

And that -- 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 -- 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 the -- it’s -- I think it’s fair to say that the response that people have had to our administration and the steps we have taken are ones that are restoring a sense of confidence and the ability of the United States to assert global leadership.

QUESTION: Is there a need --

PRESIDENT OBAMA: That will just strengthen -- excuse me?

QUESTION: Is there a need for a global currency?

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

Mike Allen, Politico. Hi, Mike.

QUESTION: Mr. President, are you -- (takes mic) -- thank you. 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 place?

PRESIDENT OBAMA: 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/well ?) 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 -- 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 at 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 to write off 36 (percent) 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 the determining factor as to whether you’re giving that hundred dollars to the homeless shelter down the street.

And so this provision would effect 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 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 hundred dollars. 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 benefitted enormously over the last several years. It’s not going to cripple them.

They’ll still be well-to-do. And, you know, 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.

QUESTION: It’s not the well-to-do people; it’s the charities. Given what you’ve just said --

PRESIDENT OBAMA: Yeah.

QUESTION: -- are you confident that charities are wrong when they contend that this would discourage giving?

PRESIDENT OBAMA: Yes. I am. I 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 and 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, to get people back to work again. Then I think charities will do just fine.

Kevin Chappell. Hi, Kevin.

QUESTION: 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 and in tents across the country?

PRESIDENT OBAMA: 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 are we 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 that 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 work.

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, you know, 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, Ann.

QUESTION: Sir. (Soft laughter.)

PRESIDENT OBAMA: You sound surprised. (Laughter.)

QUESTION: I am surprised! (Chuckles.) Could I ask you about race?

PRESIDENT OBAMA: You may.

QUESTION: 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 have the last 64 days been a relatively color- blind time?

PRESIDENT OBAMA: I -- 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. 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.

Okay. Jon Ward, Washington Times. Where’s Jon?

QUESTION: Right here, sir.

PRESIDENT OBAMA: There you go.

QUESTION: Thank you, Mr. President.

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?

PRESIDENT OBAMA: Okay. No, I -- I think it’s a -- I think it’s a legitimate question.

I -- 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 for, you know, all sorts of other debilitating diseases, juvenile diabetes, that -- 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.

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

PRESIDENT OBAMA: 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 -- 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 a hundred percent consensus. And we certainty haven’t achieved that yet. But I think on balance this was the right step to take.

STAFF: Last question.

PRESIDENT OBAMA: Okay. Stephen Collinson, AFP.

QUESTION: Mr. President, you came to office pledging to work for peace between Israel and the Palestinians.

PRESIDENT OBAMA: Yeah.

QUESTION: How realistic do you think those are 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’s been accused of insulting Arabs?

PRESIDENT OBAMA: 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 Saint 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 am 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 -- 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’ll 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 they were 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 made."

All right? Thank you, everybody.

Transcript: President Obama's Interview with New York Times

Related Post: Mr Obama’s War - Playing for Time in Afghanistan

The text of President Obama's 35-minute interview with The New York Times aboard Air Force One on Saturday:

Q. You said it’s going to take a long time to get out of this economic crisis. Can you assure the American people that the economy will be growing by the summer, the fall or the end of the year?

A. I don’t think that anybody has that kind of crystal ball. We are going through a wrenching process of de-leveraging in the financial sectors – not just here in the United States, but all around the world – that have profound consequences for Main Street. What started off as problems with the banks, led to a contraction of lending, which led in turn to both declining demand on the part of consumers, but also declining demand on the part of business. So it is going to take some time to work itself through.

Our job is to do a couple of key things. Number one, to put in place key investments that will cushion the blow. Our recovery plan had provisions for unemployment insurance, for food stamps, what we just saw today, grants and assistance to states so layoffs aren’t compounded. The second thing we’ve got to do is we’re going to have to strengthen the financial system. We’ve taken some significant steps already to do that – just for example this week, opening up a trillion-dollar credit line. But there’s going to be more work to be done there because there are some banks that are still limping along and we’ve got to strengthen their capital bases and get them lending again.

We’ve got to be able to distinguish in the marketplace between those banks that have real problems and those banks that are actually on pretty solid footing. We’ve still got the auto situation that we’re going to have to address. And finally, we’ve got to make the investments for long-term economic growth around energy, education and health care. I’m not trying to filibuster, it was a big question.

Our belief and expectation is that we will get all the pillars in place for recovery this year. Those are the things we have control over and we have confidence that working with Congress we can get the pillars of recovery in place. How long it will take before recovery actually translates into stronger job markets and so forth is going to depend on a whole range of factors, including our ability to get other countries to coordinate and take similar actions because part of what you’re seeing now is weaknesses in Europe that are actually greater than some of the weaknesses here, bouncing back and having an impact on our markets.

Q. Can you envision allowing a major institution to fail? Can you say with certainty that you won’t need to ask Congress for any more money beyond the $250 billion placeholder in your budget.

A. I am absolutely committed to making sure that our financial system is stable. And so I think people can be assured that we’ll do whatever is required to keep that from happening. For example, that would mean preventing institutions that could cause systemic risks to the system being just left on their own. We’re going to make sure that the financial system is stabilized and in terms of the resources that are involved. We think the $250 billion placeholder is a pretty good estimate. We have no reason to revise that estimate that’s in the budget. One of the benefits I think of this budget was we tried to surface as honestly and as forthrightly as possible, all the costs of this crisis, all the costs of the war in Iraq and Afghanistan, all the potential costs of things like fixing the AMT, which historically have been left off the budget. Something that I don’t think people recognize is that had we used the same gimmicks that had been used previously, we could have driven down our budget projections over the next 10 years, down to point where debt was only 1.3 or 1.5 percent of G.D.P. We could have made ourselves look really good, but I felt very strongly that part of what got us in trouble in the first place, both in the private sector and the public sector, was a failure to do honest accounting about what risks are out there, about what costs are out there and factoring those in, and that’s something that we’ve tried to change.

Q. Have you figured out how you would draw the lines against endless rescues?

A. Part of the function of the stress test that is being conducted by Treasury right now is to make a determination using some worst-case scenario – what that would mean for a bank’s balance sheet. And I think that what you should see emerging there is an awful lot of banks that are in decent shape considering the circumstances. They’ve been managed well. They didn’t take undue risks. Obviously, they’re being hit like every business is being hit by the recession, but they can recover, and if they do need help, it’s going to be short-term help. There may be a handful of institutions that have more serious problems. And what we want to do is to cauterize the wound.

Q. And they’ll have to fail, the ones that had more serious problems?

A. No, no, no, no. But what we’ll have to do is, we’ll probably have to take more significant action to deal with those institutions.

But the point is that our commitment is to make sure that any actions we take to maintain stability in the system, begin to loosen up credit and lending once again so that businesses and consumers can borrow. And if they can, then you’re going to start seeing businesses invest once again and you’re going to see people hired once again, but it’s going to take some time.

Q. The first six weeks have given people a glimpse of your spending priorities. Are you a socialist as some people have suggested?

A. You know, let’s take a look at the budget – the answer would be no.

Q. Is there anything wrong with saying yes?

A. Let’s just take a look at what we’ve done. We’ve essentially said that, number one, we’re going to reduce non-defense discretionary spending to the lowest levels in decades. So that part of the budget that doesn’t include entitlements and doesn’t include defense – that we have the most control over – we’re actually setting on a downward trajectory in terms of percentage of G.D.P. So we’re making more tough choices in terms of eliminating programs and cutting back on spending than any administration has done in a very long time. We’re making some very tough choices.

What we have done is in a couple of critical areas that we have put off action for a very long time, decided that now is the time to ask. One is on health care. As you heard in the health care summit yesterday, there is uniform belief that the status quo is broken and if we don’t do anything, we will be in a much worse place, both fiscally as well as in terms of what’s happening to families and businesses than if we did something.

The second area is on energy, which we’ve been talking about for decades. Now, in each of those cases, what we’ve said is, on our watch, we’re going to solve problems that have weakened this economy for a generation. And it’s going to be hard and it’s going to require some costs. But if you look on the revenue side what we’re proposing, what we’re looking at is essentially to go back to the tax rates that existed during the 1990s when, as I recall, rich people were doing very well. In fact everybody was doing very well. We have proposed a cap and trade system, which could create some additional costs, but the vast majority of that we want to give back in the form of tax breaks to the 95 percent of working families.

So if you look at our budget, what you have is a very disciplined, fiscally responsible budget, along with an effort to deal with some very serious problems that have been put off for a very long time. And that I think is exactly what I proposed during the campaign. We are following through on every commitment that we’ve made, and that’s what I think is ultimately going to get our economy back on track.

Q. So to people who suggested that you are more liberal than you suggested on the campaign, you say, what?

A. I think it would be hard to argue, Jeff. We have delivered on every promise that we’ve made so far. We said that we would end the war in Iraq and we’ve put forward a responsible plan.

Q. In terms of spending.

A. Oh, in terms of spending. Well, if you look at spending, what we said during the campaign was, is that we were going to raise taxes on the top five percent. That’s what our budget does. We said that we’d give a tax cut to 95 percent of working Americans. That’s exactly what we have done. That’s the right thing to do. It provides relief to families that basically saw no growth in wages and incomes over the last decade. It asks for a little bit more for people like myself who benefited greatly over the last decade and took a disproportionate share of a growing economy. I actually don’t think that anybody who examines our budget can come away with the conclusion that somehow this is a – that this is in any way different than what we proposed during the campaign.

But more to the point, it is what’s needed in order to put this economy on a more stable footing. One of the problems that we’ve had is that we have put off big problems again and again and again and again. And as I’ve said in my speech to the joint session of Congress, at some point there is a day of reckoning. Well, that day of reckoning has come.

What I’m refusing to do and what I’ve instructed my staff that we will not do is to try to kick the can down the road, to try to paper over problems, try to use gimmicks on budgets, try to pretend that health care is not an issue, to continue with a situation where we are exporting – importing – more and more oil from the middle east, continuing with a situation in which average working families are seeing their wages flat line. At some point, we’ve got to take on these problems.

Q. Is there one word name for your philosophy? If you’re not a socialist, are you a liberal? Are you progressive? One word?

A. No, I’m not going to engage in that.

Q. Mr. President, we need to turn it to foreign policy. I know we have a review going on right now about Afghanistan policy, but right now can you tell us, are we winning in Afghanistan?

A. No. I think that we are – we are doing an extraordinary job, or let me say it this way: Our troops are doing an extraordinary job in a very difficult situation. But you’ve seen conditions deteriorate over the last couple of years. The Taliban is bolder than it was. I think the – in the southern regions of the country, you’re seeing them attack in ways that we have not seen previously. The national government still has not gained the confidence of the Afghan people. And so its going to be critical for us to not only, get through these national elections to stabilize the security situation, but we’ve got to recast our policy so that our military, diplomatic and development goals are all aligned to ensure that al Qaeda and extremists that would do us harm don’t have the kinds of safe havens that allow them to operate.

At the heart of a new Afghanistan policy is going to be a smarter Pakistan policy. As long as you’ve got safe havens in these border regions that the Pakistani government can’t control or reach, in effective ways, we’re going to continue to see vulnerability on the afghan side of the border. And so it’s very important for us to reach out to the Pakistani government, and work with them more effectively.

Q. Do you see a time when you might be willing to reach out to more moderate elements of the Taliban, to try to peel them away, towards reconciliation?

A. I don’t want to pre-judge the review that’s currently taking place. If you talk to General Petraeus, I think he would argue that part of the success in Iraq involved reaching out to people that we would consider to be Islamic fundamentalists, but who were willing to work with us because they had been completely alienated by the tactics of Al Qaeda in Iraq.

There may be some comparable opportunities in Afghanistan and the Pakistani region. But the situation in Afghanistan is, if anything, more complex. You have a less governed region, a history of fierce independence among tribes. Those tribes are multiple and sometimes operate at cross purposes, so figuring all that out is going to be a much more of a challenge.

Q. In a post-9/11 world, when it comes to employing American power in that world, including at home and abroad, and the balance between securities and civil liberties, what do you think now that you’ve been in office, that President Bush, if anything, got right, in figuring out that balance?

A. I think that I would distinguish between some of the steps that were taken immediately after 9/11 and where we were by the time I took office. I think the C.I.A., for example, and some of the controversial programs that have been a focus of a lot of attention, took steps to correct certain policies and procedures after those first couple of years. I think that Admiral Hayden and Mike McConnell at D.N.I. were capable public servants who really had America’s security interests in mind when they acted, and I think were mindful of American values and ideals.

Q. Are we closer to that balance right now?

A. I think we’ve still got work to do in dealing with those initial steps. Guantanamo being Exhibit A. As a consequence of a series of early decisions, we now have people in Guantanamo who have not been tried, have not had an opportunity to answer charges, many of whom are dangerous, some of whom are very difficult to try, will be – some of whom will be difficult to try because of the manner in which evidence was obtained.

So there’s a clean-up operation that has to take place, and that’s complicated. As I said when I announced my decision to close Guantanamo, for us to have tried to have done that in less than a year would have been completely unrealistic. And even doing it within a year is requiring an enormous amount of attention and focus on the part of our ...

Q. Is it within the realm of possibility that some of these Guantanamo detainees might have actually been released into the United States, the Uighurs, or somebody like that?

A. I don’t want to, again, prejudge the reviews. We are being very deliberate, very careful to make sure that we get this right. There are still going to be some balancing – there is still going to be some balancing that has to be done and some competing interests that are going to have to be addressed. But what I’m confident about is moving forward we can create a national security operation and set of procedures that keep us safe and secure and are also true to our traditions. That I’m increasingly confident of.

Q. Leon Panetta has said that we’re going to continue renditions, provided we’re not sending people to countries that torture. Why continue them at all?

A. Well, I think that you’re giving a slightly more definitive response than Director Panetta provided, but what I’ll say is this: We are now conducting a review of the rendition policy, there could be situations, and I emphasize – could be – because we haven’t made a determination yet, where let’s say we have a well-known Al Qaeda operative, that doesn’t surface very often, appears in a third country, with whom we don’t have an extradition relationship, or would not be willing to prosecute him, but we think is a very dangerous person. I think we will have to think about how do we deal with that scenario in a way that comports with international law and abides by my very clear edict that we don’t torture, and that we ultimately provide anybody that we’re detaining an opportunity through habeas corpus. to answer to charges.

How all that sorts itself out is extremely complicated because it’s not just domestic law its also international law, our relationship with various other entities. And so, again, it will take this year to be able to get all of these procedures in place and on the right footing.

Q: Turning to other matters, when it comes to race relations, do you agree that we’re a nation of cowards?

A: I think it’s fair to say that if I had been advising my attorney general, we would have used different language. I think the point that he was making is that we’re oftentimes uncomfortable with talking about race until there’s some sort of racial flare-up or conflict, and that we could probably be more constructive in facing up to the painful legacy of slavery and Jim Crow and discrimination.

But what I would add to that is the fact that we’ve made enormous progress and we shouldn’t lose sight of that. And I’m not somebody who believes that constantly talking about race somehow solves racial tensions. I think what solves racial tensions is fixing the economy, putting people to work, making sure that people have heath care, ensuring that every kid is learning out here. I think if we do that, then we’ll probably have more fruitful conversations.

Q: Speaking of the economy, what advice would you give ordinary Americans who are struggling through these times? You’ve asked people for their patience. What should people do now?

A: Well, obviously, you’ve got 300 million Americans so I don’t think you can generalize across the board. I think that people would feel confident that every time we’ve had an economic challenge like the one that we’re having – although this is one of the bigger ones – that we’ve gotten through it, that the pillars of recovery will be in place this year.

Q: What should the unemployed in particular ...

A: Well, hold on a second. There are still groceries to be bought and kids to send to school and cars in need of repair and young families that need to find homes. And so what I would say to people is, obviously, be prudent. I think that ordinary families should have learned from the last few years and recent history that if something sounds too good to be true – whether it’s stock market returns or appreciating housing prices – that sometimes they are too good to be true, and that what we should be looking for is steady growth, steady accumulations of savings, steady and prudent investing. And that I think is what you’re going to see emerging after we’ve gotten through the worst of this crisis.

What I don’t think people should do is suddenly stuff money in their mattresses and pull back completely from spending. I don’t think that people should be fearful about our future. I don’t think that people should suddenly mistrust all of our financial institutions because the overwhelming majority of them actually have managed things reasonably well. But I think that coming out of this crisis what you’re going to see is, you know, a return to the fundamentals – hard work, investing for reasonable returns over time, saving steadily for your kids’ college education and for your retirement. All of us, thinking about our purchases and making sure that we’re taking care of the necessities before we go after the luxuries. And I think that’s true not only for individual families but I think that’s going to be true for government as well. And if we take those steps, if we return to the fundamentals, if we go back to that ad that used to run, where they say, you know, ‘we earn money the old fashioned way’ -- or what is it?

(Cross talk)

A: ‘We make money the old fashioned way, we earn it.’ If we go back to that philosophy and we finally tackle some problems we’ve been putting off, like health care, like energy, like education, then I think we’re going to come out of this stronger.

Q: Sir, we’re landing here, but what are you reading these days? What kind of newspapers do you read, do you read the clips, do you read actual papers, do you watch television?

A: Other than The New York Times?

Q: Other than The New York Times. Do you read Web sites? What Web sites do you look at?

A: I read most of the big national papers.

Q. Do you read them in clips or do you read them in the paper?

A. No, I read the paper. I like the feel of a newspaper. I read most of the weekly newsmagazines. I may not read them from cover to cover but I’ll thumb through them. You know, I spend most of my time these days reading a lot of briefings.

Q: And television? Do you watch? Web sites?

A: I don’t watch much television, I confess.

Q: And Web sites?

Q: No blogs?

A: I rarely read blogs.

Q: No reality shows with your girls?

A: No. They watch them, but I don’t join them. I watch basketball. That’s what I watch.

Q: Have you gotten a new appreciation at all, or maybe a little sympathy for what your predecessors went through in terms of a president can’t control all the events?

A: Oh, absolutely. Look, I actually appreciated that before I took office. I always felt that a president is accountable for making the best decisions, but that there are going to be a lot of unexpected twists and turns along the way. And as I said recently, this is still a human enterprise and these are big, tough, complicated problems. Somebody noted to me that by the time something reaches my desk, that means it’s really hard. Because if it were easy, somebody else would have made the decision and somebody else would have solved it. So typically, if something’s in my folder, it means that you’ve got some very big, difficult, sticky, contradictory issues to be wrestled with.

Q: Has anybody said to you, No, sir, you can’t do that? Has there been a moment in these last six weeks where you tried to do something and somebody said, Sorry, sir, it doesn’t work that way?

A: Well, I mean, I think what we were talking about earlier in terms of Guantanamo. People didn’t have to tell me, No you can’t do that. It was simply, Well, sir, here are the challenges that we face in terms of making a decision about that. In the entire banking sector – we spend every day, myself, Rahm Emanuel, Tim Geithner, Larry Summers, Christina Romer, every single day, we will spend at least an hour of my time just talking through how we are approaching the financial markets.

And part of the reason we don’t spend a lot of time looking at blogs is because if you haven’t looked at it very carefully then you may be under the impression that somehow there’s a clean answer one way or another – well, you just nationalize all the banks, or you just leave them alone and they’ll be fine, or this or that or the other. The truth is this is a very complex set of problems and bad decisions can result in huge taxpayer expenditures and poor results.

And so what I expect from my team is to constantly be guided by evidence, facts, talking through all the best arguments, drawing from all the best perspectives, and then talking the best course of action possible given the fact that there are some big uncertainties and that sometimes what people may want may actually be contradictory. So, for example, lately, people have been concerned – understandably – about the decline in the market. Well, the reason the market’s declining is because the economy’s declining and it’s generating a lot of bad news, not surprisingly. And so what I’m focused on is fixing the underlying economy. That’s ultimately what’s going to fix the markets, but in the interim you’ve got some folks who would love to see us artificially prop up the market by just putting in more taxpayer money which in the short term could make bank balance sheets look better, you know, make creditors and bondholders and shareholders of these financial institutions feel better and you could get a little blip. But we’d be in the exact same spot as we were six, eight, 10 months from now. So what I’ve got to do is make sure that we’re focused on the underlying economy and if we do that right, if we do that well, and I’m confident that we will, then after some very tough times, and after a lot of hardship on the part of some of the people that I hear from every day who’ve lost their jobs or don’t have health insurance or what have you, that we’re going to get this economy moving again. And I think over the long term we’re going to be much better off.

Q. Are you sleeping sir or is it hard to sleep?

A. Ohhhhh, I always sleep because when I’m not sleeping I’m working.

Q. You never feel burdened by it, though? You’ve come into – there are so many problems that the country faces. Do you feel the weight of that now as president?

A. As I said feel as if I’ve got a great team and we are making the best decisions under the circumstances. Do I wish that I had the luxury of maybe dealing with one monumental problem at a time during the course of the year? Of course and in fact, you know, you’ve been hearing sort of our opposition lately saying, ‘Well, he’s trying to do this and that and the other, and he shouldn’t – ‘Look, I wish I had the luxury of just dealing with a modest recession or just dealing with health care or just dealing with energy or just dealing with Iraq or just dealing with Afghanistan. I don’t have that luxury and I don’t think the American people do either. We’ve got to use this moment to solve some big problems once and for all so that the next generation is not saddled with even worse problems than we have right now. All right? Thanks.

******

At 2:30 p.m., President Obama called The New York Times, saying he wanted to clarify a point from the interview. Here is a transcript of that brief call:

President Obama: Just one thing I was thinking about as I was getting on the copter. It was hard for me to believe that you were entirely serious about that socialist question. I did think it might be useful to point out that it wasn’t under me that we started buying a bunch of shares of banks. It wasn’t on my watch. And it wasn’t on my watch that we passed a massive new entitlement – the prescription drug plan without a source of funding. And so I think it’s important just to note when you start hearing folks through these words around that we’ve actually been operating in a way that has been entirely consistent with free-market principles and that some of the same folks who are throwing the word socialist around can’t say the same.

Q. So who’s watch are we talking about here?

A. Well, I just think it’s clear by the time we got here, there already had been an enormous infusion of taxpayer money into the financial system. And the thing I constantly try to emphasize to people if that coming in, the market was doing fine, nobody would be happier than me to stay out of it. I have more than enough to do without having to worry the financial system. The fact that we’ve had to take these extraordinary measures and intervene is not an indication of my ideological preference, but an indication of the degree to which lax regulation and extravagant risk taking has precipitated a crisis.

I think that covers it.

Mr Obama's Piggy Bank: The Stark Reality of the US Budget

When my daughters were young children, both had “Piggy Banks”. These were for coins which they had been given and which would not be spent on sweets. One day, my eldest told me she wanted to save money for a Care Bear, the rage of the times. I suggested she use her Piggy Bank, but she replied that it was for other things. What she needed was a Care Bear bank.

I was reminded of this story as I looked at the principal features of the 10-year US budget proposed by the Obama Administration. The figures are mind-blowing. About $3.55 trillion has been requested for the Fiscal Year commencing October 2010. In excess of $2 trillion of that amount is required for Medicare, Medicaid, and Social Security.

Let us be clear about this. This spending is mandatory. The decisions of previous Congresses dictate that such sums must be spent.

Two issues arise from this simple requirement that taxpayers funds have to be spent on healthcare and the equivalent of old age pensions. One issue is the Piggy Bank.

During President Clinton’s second term, the federal budget went into surplus. Rather than refund the surplus to the taxpayer, Clinton decided it would be placed in a “Lockbox” to fund Social Security. One of George W. Bush’s first acts was to undo the lockbox and give a tax refund, which benefited his wealthy friends.

In Franklin Roosevelt’s day, 45 workers funded one retiree. Last year in America, two workers funded one retiree and the position may be even tighter now, as US unemployment rises. Much has been said of the third rail of American politics – touch Social Security and you die – but one thing is abundantly clear. The funding of Social Security from the outset was, effectively, a government-approved Ponzi scheme as new contributors paid for those who were retiring. This form of funding has now failed.

The other issue is that it is illogical for Republicans to hold fast to an ideology that seeks to outlaw universal healthcare. It is patent from the figures that healthcare funded by federal government has not only arrived; through Medicare and Medicaid it has been in place for the past 43 years. Since the White House has been in Republican hands for 28 of those years, I must ask why Republicans, who have effectively accepted a form of universal healthcare for decades, are building up a head of steam to object to Obama’s healthcare proposals. They should concentrate instead on making sure the proposals are in the best interests of the taxpayer and will work to benefit as many as possible.

When it comes to  “entitlements”, whether Americans believe in Republican free market orthodoxy or Democratic tax and spend is irrelevant. If Americans --- "left" or "right" --- want entitlements for which they may have contributed for years, they cannot expect a series of Piggy banks to be available to help them out. They have a stark choice. Either entitlements remain, in which event the national debt will continue to rise, or the entitlements are reduced, which will hurt the poor and the blue-collar community, i.e. the people least capable of defending themselves.

Since there's no Care Bear bank in sight, who would be Obama right now?