Here is the transcript of the Q & A portion of Obama's first prime-time news conference:
OBAMA: And with that, I'll take some of your questions. And let me go to Jennifer Loven at AP. There you go.
QUESTION: Thank you, Mr. President. Earlier today in Indiana, you said something striking. You said that this nation could end up in a crisis without action that we would be unable to reverse.
Can you talk about what you know or what you're hearing that would lead you to say that our recession might be permanent when others in our history have not? And do you think that you risk losing some credibility or even talking down the economy by using dire language like that?
OBAMA: No, no, no, no. I think that what I've said is what other economists have said across the political spectrum, which is that, if you delay acting on an economy of this severity, then you potentially create a negative spiral that becomes much more difficult for us to get out of.
We saw this happen in Japan in the 1990s, where they did not act boldly and swiftly enough and, as a consequence, they suffered what was called the lost decade, where essentially, for the entire '90s, they did not see any significant economic growth.
So what I'm trying to underscore is what the people in Elkhart already understand, that this is not your ordinary, run-of-the-mill recession. We are going through the worst economic crisis since the Great Depression.
We've lost now 3.6 million jobs, but what's perhaps even more disturbing is that almost half of that job loss has taken place over the last three months, which means that the problems are accelerating instead of getting better.
Now, what I said in Elkhart today is what I repeat this evening, which is, I'm absolutely confident that we can solve this problem, but it's going to require us to take some significant, important steps.
Step number one: We have to pass an economic recovery and reinvestment plan. And we've made progress. There was a vote this evening that moved the process forward in the Senate. We already have a House bill that's passed. I'm hoping, over the next several days, that the House and the Senate can reconcile their differences and get that bill on my desk.
There have been criticisms from a bunch of different directions about this bill, so let me just address a few of them.
Some of the criticisms really are with the basic idea that government should intervene at all in this moment of crisis. Now, you have some people, very sincere, who philosophically just think the government has no business interfering in the marketplace. And, in fact, there are several who've suggested that FDR was wrong to interfere back in the New Deal. They're fighting battles that I thought were resolved a pretty long time ago.
Most economists almost unanimously recognize that, even if philosophically you're — you're wary of government intervening in the economy, when you have the kind of problem we have right now — what started on Wall Street, goes to Main Street, suddenly businesses can't get credit, they start paring back their investment, they start laying off workers, workers start pulling back in terms of spending — that, when you have that situation, that government is an important element of introducing some additional demand into the economy.
We stand to lose about $1 trillion worth of demand this year and another trillion next year. And what that means is you've got this gaping hole in the economy.
That's why the figure that we initially came up with of approximately $800 billion was put forward. That wasn't just some random number that I plucked out of — out of a hat. That was Republican and Democratic, conservative and liberal economists that I spoke to who indicated that, given the magnitude of the crisis and the fact that it's happening worldwide, it's important for us to have a bill of sufficient size and scope that we can save or create 4 million jobs.
That still means that you're going to have some net job loss, but at least we can start slowing the trend and moving it in the right direction.
Now, the recovery and reinvestment package is not the only thing we have to do. It's one leg of the stool. We are still going to have to make sure that we are attracting private capital, get the credit markets flowing again, because that's the lifeblood of the economy.
And so tomorrow my treasury secretary, Tim Geithner, will be announcing some very clear and specific plans for how we are going to start loosening up credit once again.
And that means having some transparency and oversight in the system. It means that we correct some of the mistakes with TARP that were made earlier, the lack of consistency, the lack of clarity, in terms of how the program was going to move forward.
It means that we condition taxpayer dollars that are being provided to banks on them showing some restraint when it comes to executive compensation, not using the money to charter corporate jets when they're not necessary.
It means that we focus on housing and how are we going to help homeowners that are suffering foreclosure or homeowners who are still making their mortgage payments, but are seeing their property values decline.
So there are going to be a whole range of approaches that we have to take for dealing with the economy.
My bottom line is to make sure that we are saving or creating 4 million jobs, we are making sure that the financial system is working again, that homeowners are getting some relief.
And I'm happy to get good ideas from across the political spectrum, from Democrats and Republicans. What I won't do is return to the failed theories of the last eight years that got us into this fix in the first place, because those theories have been tested, and they have failed. And that's what part of the election in November was all about.
OK. Caren Bohan of Reuters?
QUESTION: Thank you, Mr. President. I'd like to shift gears to foreign policy. What is your strategy for engaging Iran? And when will you start to implement it? Will your timetable be affected at all by the Iranian elections? And are you getting any indications that Iran is interested in a dialogue with the United States?
OBAMA: I said during the campaign that Iran is a country that has extraordinary people, extraordinary history and traditions, but that its actions over many years now have been unhelpful when it comes to promoting peace and prosperity both in the region and around the world, that their attacks — or their — their financing of terrorist organizations like Hezbollah and Hamas, the bellicose language that they've used towards Israel, their development of a nuclear weapon or their pursuit of a nuclear weapon, that all those things create the possibility of destabilizing the region and are not only contrary to our interests, but I think are contrary to the interests of international peace.
What I've also said is that we should take an approach with Iran that employs all of the resources at the United States' disposal, and that includes diplomacy.
And so my national security team is currently reviewing our existing Iran policy, looking at areas where we can have constructive dialogue, where we can directly engage with them.
And my expectation is, in the coming months, we will be looking for openings that can be created where we can start sitting across the table, face-to-face diplomatic overtures, that will allow us to move our policy in a new direction.
There's been a lot of mistrust built up over the years, so it's not going to happen overnight. And it's important that, even as we engage in this direct diplomacy, we are very clear about certain deep concerns that we have as a country, that Iran understands that we find the funding of terrorist organizations unacceptable, that we're clear about the fact that a nuclear Iran could set off a nuclear arms race in the region that would be profoundly destabilizing.
So there are going to be a set of objectives that we have in these conversations, but I think that there's the possibility at least of a relationship of mutual respect and progress.
And I think that, if you look at how we've approached the Middle East, my designation of George Mitchell as a special envoy to help deal with the Arab-Israeli situation, some of the interviews that I've given, it indicates the degree to which we want to do things differently in the region.
Now it's time for Iran to send some signals that it wants to act differently, as well, and recognize that, even as it has some rights as a member of the international community, with those rights come responsibilities.
OK. Chip Reid?
QUESTION: Thank you, Mr. President. You have often said that bipartisanship is extraordinarily important, overall and in this stimulus package, but now, when we ask your advisers about the lack of bipartisanship so far — zero votes in the House, three in the Senate — they say, Well, it's not the number of votes that matters; it's the number of jobs that will be created.
Is that a sign that you are moving away — your White House is moving away from this emphasis on bipartisanship? And what went wrong? Did you underestimate how hard it would be to change the way Washington works?
OBAMA: Well, I don't think — I don't think I underestimated it. I don't think the — the American people underestimated it. They understand that there have been a lot of bad habits built up here in Washington, and it's going to take time to break down some of those bad habits.
You know, when I made a series of overtures to the Republicans, going over to meet with both Republican caucuses, you know, putting three Republicans in my cabinet — something that is unprecedented — making sure that they were invited here to the White House to talk about the economic recovery plan, all those were not designed simply to get some short-term votes. They were designed to try to build up some trust over time.
And I think that, as I continue to make these overtures, over time, hopefully that will be reciprocated.
But understand the bottom line that I've got right now, which is what's happening to the people of Elkhart and what's happening across the country. I can't afford to see Congress play the usual political games. What we have to do right now is deliver for the American people.
So my bottom line when it comes to the recovery package is: Send me a bill that creates or saves 4 million jobs. Because everybody has to be possessed with a sense of urgency about putting people back to work, making sure that folks are staying in their homes, that they can send their kids to college.
That doesn't negate the continuing efforts that I'm going to make to listen and engage with my Republican colleagues. And hopefully the tone that I've taken, which has been consistently civil and respectful, will pay some dividends over the long term. There are going to be areas where we disagree, and there are going to be areas where we agree.
As I said, the one concern I've got on the stimulus package, in terms of the debate and listening to some of what's been said in Congress, is that there seems to be a set of folks who — I don't doubt their sincerity — who just believe that we should do nothing.
Now, if that's their opening position or their closing position in negotiations, then we're probably not going to make much progress, because I don't think that's economically sound and I don't think what — that's what the American people expect, is for us to stand by and do nothing.
There are others who recognize that we've got to do a significant recovery package, but they're concerned about the mix of what's in there. And if they're sincere about it, then I'm happy to have conversations about this tax cut versus that — that tax cut or this infrastructure project versus that infrastructure project.
But what I've — what I've been concerned about is some of the language that's been used suggesting that this is full of pork and this is wasteful government spending, so on and so forth.
First of all, when I hear that from folks who presided over a doubling of the national debt, then, you know, I just want them to not engage in some revisionist history. I inherited the deficit that we have right now and the economic crisis that we have right now.
Number two is that, although there are some programs in there that I think are good policy, some of them aren't job-creators. I think it's perfectly legitimate to say that those programs should be out of this particular recovery package and we can deal with them later.
But when they start characterizing this as pork, without acknowledging that there are no earmarks in this package — something, again, that was pretty rare over the last eight years — then you get a feeling that maybe we're playing politics instead of actually trying to solve problems for the American people.
So I'm going to keep on engaging. I hope that, as we get the Senate and the House bills together, that everybody is willing to give a little bit. I suspect that the package that emerges is not going to be 100 percent of what I want.
But my bottom line is, are we creating 4 million jobs? And are we laying the foundation for long-term economic growth?
This is another concern that I've had in some of the arguments that I'm hearing. When people suggest that, What a waste of money to make federal buildings more energy-efficient. Why would that be a waste of money?
We're creating jobs immediately by retrofitting these buildings or weatherizing 2 million Americans' homes, as was called for in the package, so that right there creates economic stimulus.
And we are saving taxpayers when it comes to federal buildings potentially $2 billion. In the case of homeowners, they will see more money in their pockets. And we're reducing our dependence on foreign oil in the Middle East. Why wouldn't we want to make that kind of investment?
Now, maybe philosophically you just don't think that the federal government should be involved in energy policy. I happen to disagree with that; I think that's the reason why we find ourselves importing more foreign oil now than we did back in the early '70s when OPEC first formed.
And we can have a respectful debate about whether or not we should be involved in energy policymaking, but don't suggest that somehow that's wasteful spending. That's exactly what this country needs.
The same applies when it comes to information technologies in health care. We know that health care is crippling businesses and making us less competitive, as well as breaking the banks of families all across America. And part of the reason is, we've got the most inefficient health care system imaginable.
We're still using paper. We're still filing things in triplicate. Nurses can't read the prescriptions that doctors — that doctors have written out. Why wouldn't we want to put that on — put that on an electronic medical record that will reduce error rates, reduce our long-term costs of health care, and create jobs right now?
Education, yet another example. The suggestion is, why should the federal government be involved in school construction?
Well, I visited a school down in South Carolina that was built in the 1850s. Kids are still learning in that school, as best they can, when the — when the railroad — when the — it's right next to a railroad. And when the train runs by, the whole building shakes and the teacher has to stop teaching for a while. The — the auditorium is completely broken down; they can't use it.
So why wouldn't we want to build state-of-the-art schools with science labs that are teaching our kids the skills they need for the 21st century, that will enhance our economy, and, by the way, right now, will create jobs?
So, you know, we — we can differ on some of the particulars, but, again, the question I think the American people are asking is, do you just want government to do nothing, or do you want it to do something? If you want it to do something, then we can have a conversation. But doing nothing, that's not an option from my perspective.
All right, Chuck Todd. Where's Chuck?
QUESTION: Thank you, Mr. President. In your opening remarks, you talked about that, if your plan works the way you want it to work, it's going to increase consumer spending. But isn't consumer spending, or overspending, how we got into this mess? And if people get money back into their pockets, do you not want them saving it or paying down debt first before they start spending money into the economy?
OBAMA: Well, first of all, I don't think it's accurate to say that consumer spending got us into this mess. What got us into this mess initially were banks taking exorbitant, wild risks with other people's monies based on shaky assets and because of the enormous leverage, where they had one dollar's worth of assets and they were betting thirty dollars on that one dollar, what we had was a crisis in the financial system.
That led to a contraction of credit, which, in turn, meant businesses couldn't make payroll or make inventories, which meant that everybody became uncertain about the future of the economy, so people started making decisions accordingly, reducing investment, initiating layoffs, which, in turn, made things worse.
Now, you are making a legitimate point, Chuck, about the fact that our savings rate has declined and this economy has been driven by consumer spending for a very long time. And that's not going to be sustainable.
You know, if — if all we're doing is spending and we're not making things, then over time other countries are going to get tired of lending us money and eventually the party's going to be over. Well, in fact, the party now is over.
And so the — the sequence of how we're approaching this is as follows. Our immediate job is to stop the downward spiral, and that means putting money into consumer's pockets. It means loosening up credit.
It means putting forward investments that not only employ people immediately, but also lay the groundwork for long-term economic growth.
And — and that, by the way, is important, even if you're a fiscal conservative, because the biggest problem we're going to have with our federal budget is if we continue a situation in which there are no tax revenues because economic growth is plummeting at the same time as we've got more demands for unemployment insurance, we've got more demands for people who have lost their health care, more demand for food stamps. That will put enormous strains on the federal budget, as well as the state budget.
So the most important thing we can do for our budget crisis right now is to make sure that the economy doesn't continue to tank. And that's why passing the economic recovery plan is the right thing to do, even though I recognize that it's expensive.
Look, I — I would love not to have to spend money right now. I'd love — you know, this notion that somehow I came in here just ginned up to spend $800 billion, you know, I mean, that wasn't — that wasn't — that wasn't how I envisioned my presidency beginning. But we have to adapt to existing circumstances.
Now, what we are going to also have to do is to make sure that, as soon as the economy stabilizes, investment begins again, we're no longer contracting but we're growing, that our mid-term and long-term budget is dealt with, and I think the same is true for individual consumers.
Right now, they're — they're just trying to figure out, how do I make sure that, if I lose my job, you know, I'm still going to be able to make my mortgage payments? Or they're worried about, how am I going to pay next month's bills? So they're not engaging in a lot of long-term financial planning.
Once the economy stabilizes and people are less fearful, then I do think that we're going to have to start thinking about, how do we operate more prudently? Because there's no such thing as a free lunch.
So if — if you want to get — if you want to buy a house, then putting zero down and buying a house that is probably not affordable for you in case something goes wrong, that's something that has to be reconsidered. So we're going to have to change our — our bad habits.
But right now, the key is making sure that we pull ourselves out of the economic slump that we're in.
All right, Julianna Goldman, Bloomberg?
QUESTION: Thank you, Mr. President. Many experts, from Nouriel Roubini to Senator Schumer, have said that it will cost the government more than $1 trillion to really fix the financial system. During the campaign, you promised the American people that you won't just tell them what they want to hear, but what they need to hear.
Won't the government need far more than the $350 billion that's remaining in the financial rescue funds to really solve the credit crisis?
OBAMA: Well, the credit crisis is real, and it's not over. We averted catastrophe by passing the TARP legislation. But, as I said before, because of a lack of clarity and consistency in how it was applied, a lack of oversight in — in how the money went out, we didn't get as big of a bang for the buck as we should have.
My immediate task is making sure that the second half of that money, $350 billion, is spent properly. That's my first job. Before I even think about what else I've got to do, my first task is to make sure that my secretary of the treasury, Tim Geithner, working with Larry Summers, my national economic adviser, and others are coming up with the best possible plan to use this money wisely in a way that's transparent, in a way that provides clear oversight, that we are conditioning any money that we give to banks on them reducing executive compensation to reasonable levels and to make sure that they're not wasting that money.
We are going to have to work with the banks in an effective way to clean up their balance sheets so that some trust is restored within the marketplace, because right now part of the problem is that nobody really knows what's on the bank's books. Any given bank, they're not sure what kinds of losses are there. We've got to open things up and restore some trust.
We also have to deal with the housing issue in a clear and consistent way.
I don't want to pre-empt my secretary of the treasury. He's going to be laying out these principles in great detail tomorrow.