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Presidential Statements

Barack H. Obama - 2009




President Obama


Opening Remarks by President at The Fiscal Responsibility Summit- February 23, 2009

Closing Remarks by President at Fiscal Responsibility Summit - February 23, 2009




Remarks of President Barack Obama Weekly Radio Address, Saturday, August 15th, 2009   


Remarks by the President during Town Hall Meeting in Elyria, Ohio, January 22, 2010

Remarks by the President in State of the Union Address, January 27, 2010



Monday, February 23rd, 2009 at 2:15 pm


Remarks by the President and the Vice President at Opening of Fiscal Responsibility Summit, 2-23-09

East Room

1:03 P.M. EST

THE VICE PRESIDENT:  Mr. President, I want to begin by thanking all of you for being here today.  Represented in this room -- with notable exception is some of my old friends -- what's represented here in this room are the finest minds in the country, representing a wide range of views across the political, ideological and academic spectrum.  And today we're asking you to help us begin to tackle the challenges of our nation's long-term fiscal situation.

We explore -- we are going to explore how we got where we are and begin to debate where we need to head.  We hope this summit will generate a healthy debate, because we truly believe that the best course is -- to arrive at the best answers is to have that debate.  It won't be easy, to state the obvious.

I think we all know that we have inherited unprecedented budget deficits.  And this has made all the more difficult the nearly unprecedented economic challenges the country is facing today.

So the problem will not be solved overnight -- that's news to no one in this room.  But we want to be clear:  As we take the steps that we must to get through the crisis we're in now, we will not lose sight of the long term.  We will not lose sight of the need to tackle unmet needs for health care reform, to deal with the energy policy that we need, and so many other challenges that are going to determine what the 21st century looks like.  We must be direct with the American people about the budget difficulties and the choices we have to make.  And we should be straightforward with them throughout this whole process.

I have always believed that in the toughest moments we are presented with the greatest opportunities as a nation.  There's no question this is a very tough moment.  But it's also a real opportunity to both put our economy back on track and restore fiscal responsibility -- and that's why we need all of you.

Our first speaker will be Dr. Mark Zandi.  Dr. Zandi is the chief economist and cofounder of Moody's Economic -- excuse me -- Moody's, where he directs the company's research and consulting activities.  He's one of the best big picture guys in the business.  His most recent book, "Financial Shock," was widely praised for its lucid explanation of the housing bust.  What's less well known about Mark is that he donated the royalties from that book to a fund to invest in low-wealth neighborhoods.  He was also an economic advisor to John McCain's campaign.  And I'm glad he's here with us today.

Following Mark will be Robert Greenstein, founder and executive director of the invaluable Center on Budget and Policy Priorities.  Bob and the Center are very well known to us, as they have been the go-to resource for consistently reliable analysis on matters of budgets and fiscal policy at every level of government.  Bob was awarded the MacArthur Fellowship in 1996, and last year he received both the John W. Gardner Award for independence -- from Independent Sector and Heinz Award for Public Policy in recognition of his work to improve the economic outlook for many Americans -- of many of America's poorer citizens.

And as I understand it, we're going to -- I'm now turning the program over to Mark, if I'm not mistaken.  Mark, welcome.  (Applause.)

* * * * *

THE PRESIDENT:  Thank you, everybody.  Please, have a seat.  Thank you very much.  Thank you to Mark and Bob and to Peter.  It is wonderful to see the Speaker here.  And we've got our -- I don't see Harry here, but we've got Dick Durbin in his stead.  Mitch, thank you for being here.  John Boehner, to all the congressional leadership, thank you.

My administration came into office one month ago in the depths of an economic crisis unlike any that we've seen in generations.  And we recognized that we needed to act boldly, decisively and quickly -- and that is precisely what we did.

Within our first 30 days in office, we passed the most sweeping economic recovery package in history to create or save 3.5 million new jobs, provide relief to struggling families, and lay the foundation for long-term growth and prosperity.  And I had an opportunity to talk to the nation's governors today -- both Republicans and Democrats have ideas about how they are going to use that money to make sure that people are put back to work and that we can stem some of the job loss that's taking place.

I also laid out my housing plan to break the cycle of falling home values and rising foreclosures that has devastated so many communities.  And we put forth a Financial Stability Plan to start shoring up our banks, so we can free up credit and jumpstart lending and restore confidence in our financial system.

These are all extraordinary -- but necessary -- measures to address this economic emergency, and as has already been noted, they will come at a cost.  This administration has inherited a $1.3 trillion deficit -- the largest in our nation's history -- and our investments to rescue our economy will add to that deficit in the short term.  We also have long-term challenges -- health care, energy, education and others -- that we can no longer afford to ignore.

But I want to be very clear, if the message was not effectively delivered by the three previous speakers:  We cannot, and will not, sustain deficits like these without end.  Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration, or the next generation.

We are paying the price for these deficits right now.  In 2008 alone, we paid $250 billion in interest on our debt -- one in every 10 taxpayer dollars.  That is more than three times what we spent on education that year; more than seven times what we spent on VA health care.

So if we confront this crisis without also confronting the deficits that helped cause it, we risk sinking into another crisis down the road as our interest payments rise, our obligations come due, confidence in our economy erodes, and our children and our grandchildren are unable to pursue their dreams because they're saddled with our debts.

And that's why today I'm pledging to cut the deficit we inherited in half by the end of my first term in office.  This will not be easy.  It will require us to make difficult decisions and face challenges we've long neglected.  But I refuse to leave our children with a debt that they cannot repay -- and that means taking responsibility right now, in this administration, for getting our spending under control.

We'll start by being honest with ourselves about the magnitude of our deficits.  For too long, our budget process in Washington has been an exercise in deception -- a series of accounting tricks to hide the extent of our spending and the shortfalls in our revenue and hope that the American people won't notice:  budgeting certain expenditures for just one year, when we know we'll incur them every year for five or 10; budgeting zero dollars for the Iraq war -- zero -- for future years, even when we knew the war would continue; budgeting no money for natural disasters, as if we would ever go 12 months without a single flood, fire, hurricane or earthquake.

We do ourselves no favors by hiding the truth about what we spend.  In order to address our fiscal crisis, we're going to have to be candid about its scope.  And that's why the budget I will introduce later this week will look ahead 10 years, and will include a full and honest accounting of the money we plan to spend and the deficits we will likely incur. 

To start reducing these deficits, I've committed to going through our budget line by line to root out waste and inefficiency -- a process that Peter and our administration, our team, has already begun.  And I'll soon be instructing each member of my Cabinet to go through every item in their budgets, as well.  And already we've seen how much money we can save, just in the last 30 days.

Take one example -- the Department of Agriculture has moved some of its training programs online, saving an estimated $1.3 million a year.  They're modernizing their financial management system, saving an estimated $17.5 million.  They're saving tens of thousands of dollars by cutting back on conferences and travel and other small expenses that add up over time.

So we will replicate these efforts throughout the federal government, eliminating programs that don't work to make room for ones that do -- and making the ones that we keep work better.  We'll end the payments to agribusiness that don't need them and eliminate the no-bid contracts that have wasted billions in Iraq.  We'll end the tax breaks for companies shipping jobs overseas and we'll stop the fraud and abuse in our Medicare program.

And we will reinstate the pay-as-you-go rule that we followed during the 1990s -- the rule that helped us start this new century with a $236 billion surplus.  In recent years, we've strayed from this rule -- and the results speak for themselves.  The pay-go approach is based on a very simple concept:  You don't spend what you don't have.  So if we want to spend, we'll need to find somewhere else to cut.  This is the rule that families across this country follow every single day -- and there's no reason why their government shouldn't do the same.

Now, I want to be very clear:  While we are making important progress towards fiscal responsibility this year in this budget, this is just the beginning.  In the coming years, we'll be forced to make more tough choices and do much more to address our long-term challenges, from the rising cost of health care that Peter described, which is the single most pressing fiscal challenge we face by far, to the long-term solvency of Social Security.

In the end, however, if we want to rebuild our economy and restore discipline and honesty to our budget, we will need to change the way we do business here in Washington.  We're not going to be able to fall back into the same old habits, and make the same inexcusable mistakes:  the repeated failure to act as our economy spiraled deeper into crisis; the casual dishonesty of hiding irresponsible spending with clever accounting tricks; the costly overruns, the fraud and abuse, the endless excuses.  This is exactly what the American people rejected when they went to the polls.

They sent us here to usher in a new era of responsibility in Washington -- to start living within our means again, and being straight with them about where their tax dollars are going, and empowering them with the information they need to hold all of us, their representatives, accountable.

So that's why I have called this summit today, and why I have invited leaders from both sides of the aisle -- because we all have a role to play in this work.  I believe it is time for a frank conversation about the fiscal challenges we face.  They're challenges that concern every single one of us, no matter where we are on this political spectrum.

So today I want to -- I hope that all of you will start talking with each other and exchanging ideas.  I want you to question each other, challenge each other, question me and my team, challenge us, and work together not just to identify problems but to identify solutions.

And that's the purpose of the breakout sessions that are starting right now.  I know that each of you bring a wealth of experience and expertise on a broad range of topics.  I appreciate your willingness to participate in these sessions.  I expect that this process will be engaging and productive, and I look forward to hearing the results when you report back later this afternoon.

So thank you very much, all of you, for participating.  (Applause.)

                           END                     1:32 P.M. EST

Center on Budget and Policy Priorities Executive Director Bob Greenstein, Moody's Economy Chief Economist Mark Zandi, and President Obama

President Obama talks with Democratic House Majority Leader Steny Hoyer

White House photos 2/23/09 by Pete Souza

Monday, February 23rd, 2009

Remarks by the President in question and answer session at the closing of the Fiscal Responsibility Summit
Dwight D. Eisenhower Executive Office Building
Room 450

4:04 P.M. EST

THE PRESIDENT:  Thank you, everybody.  Thank you.  Please have a seat.  Well, this says something -- I don't know what -- about all of you, that I hear you really enjoyed this fiscal responsibility summit.  (Laughter.)  I mean, it's a sign of a -- (laughter) -- something.  (Laughter.)  Illness, right.

I understand you guys had great breakout sessions, and my advisors just filled me in on some of the issues that came up.  I want to -- I want to just provide a few opening remarks, and then we'll just open it up for questions and comments.

The idea here was to bring everybody together because it's been a long time since we had this conversation.  And over the last eight years, I think we've seen a continued deterioration in the government's balance sheets.

My sense is that, despite partisan differences, despite regional differences and different priorities, everybody is concerned about the legacy we're leaving to our children.  And the hope was, is that if we had a forum like this to start talking about these issues that it would turn out that there are real opportunities for progress -- there are going to be some areas where we can't make progress -- but that we have more in common that we expect.  And I appreciate that while we may have different opinions, there's a renewed willingness to put some concrete ideas on the table, even on those issues that are politically tough, and that's real progress.

A couple of takeaways that my staff indicated to me.  There was a healthy debate on Social Security, but also a healthy consensus among some participants, including Congressmen Boehner and Hoyer as well as Senator Graham and Senator Durbin, that this was a moment to work in a bipartisan way to make progress on ensuring Americans' retirement security.  And I think one of the things we want to do is to figure out how do we capture that momentum.

Over the longer run, putting America on a sustainable fiscal course will require addressing health care.  That seemed to be an issue that there was a lot of consensus around.  Many of you said what I believe, that the biggest source of our deficits is the rising cost of health care.  It's a challenge that impacts businesses, workers and families alike.  And voices as varied as Senator Alexander, Douglas Holtz-Eakin to Senator Baucus and Senator Dodd and Representative Waxman, all agreed to try to tackle health care this year, which I think that offers extraordinary promise, although peril, as well.

The tax reform discussion underscored clear agreement that the tax process has to be simplified for all Americans.  The task force on the budget process yielded some unanimous agreement that the existing -- existing process wasn't working.  The question is whether we'll have the commitment and discipline to do what we know needs to be done and whether we need to create some new mechanisms to deal with these challenges.

Now, I want to make sure that the conversation doesn't end when we go home today.  We've got a lot of hard choices to make.  We need to build off this afternoon's conversation and work together to forge a consensus. 

So one of the things that I'm hoping to do is that my team, each of whom were taking copious notes during the course of these respective breakout sessions, will issue a report or a summary of the conversation.  It will be distributed to each of the participants in those respective discussions.  We will then ask for concrete ideas, either about substance or process, and we will ask that you get those back so that we can then issue a final report coming out of this conversation in 30 days.

And we're -- I think somebody just dubbed this the "fiscal sustainability project," so that's as good of a name as any.  And the idea then is, is that there will be a constant loop between the White House and all of you about how we should move forward on this, and hopefully this will start breaking down into some concrete takeaways and tasks.  Some of the recommendations that have been made are already reflected in the budget that we're proposing.  Some new ideas may have arisen that we did not think of and that can be incorporated as the budget process moves forward in Congress.

And so we are very much looking forward to hearing from your ideas, both about process and about substance.  And then we will in 30 days' time be able to come out with a series of recommendations.  In some cases there may be some things that we can do by executive order that don't require legislation, but there seems to be some consensus they are smart things to do.  In other cases, it's going to require a legislative -- some legislative decisions, and we're going to collaborate closely with the relevant chairs and committees that have jurisdiction.

So, with that, let me just stop.  And what I want to do is just get some comments.  A lot of you have been working hard on this, but I'm going to use my presidential prerogative and call on a couple of people first, and then if other people have comments that they want to offer, please raise your hands.

And I'm going to start with John McCain because -- you know, he and I had some good debates about these issues -- (laughter) -- and I mean what I say here, I think John has also been extraordinarily consistent and sincere about these issues and I want to see if, John, you've got some thoughts about where we need to go and some priority areas.  I know you were in procurement, for example, which is an area I know we would like to work on together with you.

SENATOR McCAIN:  Well, thank you, Mr. President, and thank you for doing this.  I think it's very important.  This particular breakout session is -- we had our -- the Secretary of Homeland Security was our leader.  And so I think it was a very fruitful discussion.

Just one area that I wanted to mention that I think consumed a lot of our conversation on procurement was the issue of cost overruns in the Defense Department.  We all know how large the defense budget is.  We all know that the cost overruns -- your helicopter is now going to cost as much as Air Force One.  I don't think that there's any more graphic demonstration of how good ideas have cost taxpayers an enormous amount of money.

So we will -- and I know that you've already made plans to try to curb some of the excesses in procurement.  We really have to do that.  We're going to have to pay for Afghanistan, as you well know, and we're not done in Iraq.  But most importantly, we have to make some tough decisions -- you, Mr. President, have to make some tough decisions about not only what we procure, but how we procure it.

And I thank you for the opportunity and sharing your thoughts with a lot of very smart people.

THE PRESIDENT:  Well, John, let me -- this is going to be one of our highest priorities.  By the way, I've already talked to Gates about a thorough review of the helicopter situation.  The helicopter I have now seems perfectly adequate to me.  (Laughter.)  Of course, I've never had a helicopter before -- (laughter) -- maybe I've been deprived and I didn't know it.  (Laughter.)

But I think it is a -- it is a -- an example of the procurement process gone amuck.  And we're going to have to fix it.  Our hope is, is that you, Senator Levin, and others, can really take some leadership on this.

And one of the promising things is I think Secretary Gates shares our concern and he recognizes that simply adding more and more does not necessarily mean better and better, or safer and more secure.  Those two things are not -- they don't always move in parallel tracks, and we've got to think that through.

Steny, you participated in the Social Security panel.

REPRESENTATIVE HOYER:  First off, I think that the Social Security section was a very, very productive section.  I think that there's some honest, as you would think, disagreements, but as was indicated earlier, John Boehner, myself in particular, Lindsey Thomas --

THE PRESIDENT:  Lindsey Graham.  I don't know about Lindsey Thomas, but I know Lindsey Graham.  (Laughter.)

REPRESENTATIVE HOYER:  Lindsey Graham.  (Laughter.)  South Carolina is not Louisiana, right?  I got you.  That'll work.  (Laughter.)  But Lindsey Graham.  Everybody gave some very solid recommendations.  And I think there was in fact a consensus, an understanding of the different perspectives and ways and means to get to an objective was essentially that getting to an objective serves a number of purposes.  Obviously, from a fiscal standpoint it served a purpose, but also in giving both seniors and young people confidence that benefits would be available to them in the short term, and from a young people's standpoint, in the long term.

THE PRESIDENT:  Thank you.



REPRESENTATIVE HOYER:  I think your comment that follow-through is going to be essential; that if we come together and have a good discussion, (inaudible) -- a lot of bright people who have some very good information from various, different (inaudible) -- interest groups who represent large constituencies.  If it just stops there, then it won't have been as useful as you want it to be and as the country wants it to be.

THE PRESIDENT:  Good.  Speaking of bright people with large constituencies -- Bill Novelli.  Where's Bill?  Is he still here?  There you are.

I know you participated in the health care panel.  Bill, your thoughts on Medicare and the interest of your membership in getting an equitable solution to what is an unsustainable situation.

MR. NOVELLI:  The whole entitlement thing is as you characterized it.  We have a real sustainability problem.  But I think you put the right frame on this, Mr. President, by saying that the path to sustainability is health care reform.  And our group I think had tremendously good ideas.  Most of the policy ideas that we all know and share were on the table today.

There's a lot of hard policy work that's going to have to go on, but I think we have some momentum.  But I think one of the things that also came out of the session was, we need to engage the American people.  Yes, we have to think of them as patients,  we have to think of them as insured or uninsured -- but we also have to think of them as taxpayers and as voters who need to understand what the tradeoffs are, what they might lose, what they might gain.  We can all do that, but nobody could do it as well as you can.  You've got the bully pulpit to really carry your message to the public.

THE PRESIDENT:  I appreciate that.  This is the only area where we had done a little prejudging of what needs to be done.  We have scheduled a health care summit next week.  It's not that I've got summititis here -- (laughter) -- but rather, it's actually exactly the point that you're making, Bill, which is everybody here understands a lot of the tradeoffs involved in health care and that there are no perfect solutions.

But in the sound bite, political culture that we got, it's very hard to communicate that.  And we think that it's very important to have some forums -- and I talked about this during -- way back in the primary campaign, that there is a process that the public can listen to about what these tradeoffs are, because I think that some of us get on our high horse and say we've got the answer to health care.  Well, it turns out that, you know, there are costs involved on the front end even if the benefits accrue in the out years.  There are situations in terms of people, if they've got health insurance, sort of liking what they've got now, they just want it for cheaper.  There are issues in terms of providers and them feeling like they're getting squeezed.

And so making sure that all that stuff is surfaced in public and we're educating the public on some of these issues can be very important if we're going to make progress because -- you know, some of these things will ultimately involve some tough decisions and some tough votes.

So, budget process -- Kent, you participated and I want to get both your views and John Spratt's views on -- I don't know if John is still here; there he is -- on budget process and how you think we're going to need to clean this stuff up.

SENATOR CONRAD:  Well, first of all, thank you for doing this.  I thought it was a terrific start in the White House.  I think Bob Greenstein said it very well when he talked about us being on an unsustainable course -- the debt being the threat, because we've doubled the debt in the last eight years; tripled foreign holdings of the debt -- last year when we went out to finance this debt, 68 percent came from foreign enemies.  So that creates a vulnerability.

How do we address it?  That is the $64,000 question.  And that's what we addressed in our group.  I think it's fair to say there were different views.  Many of us believe it's going to take some special process to bring all of the players together to write a plan so that we see the tradeoffs between what's available for health care reform, which without question is the 800-pound gorilla; Social Security, which also has to be addressed for the long term; and revenue.

Revenue is the thing almost nobody wants to talk about, but I think if we're going to be honest with each other, we better recognize that is part of the solution, as well.  And it's very hard to know what you are going to do with Medicare unless you know what revenue is going to be.  Very hard to know what you're going to do with Social Security without knowing what revenue is going to be.  So somehow we've got to come together around a plan, and of course that depends on presidential leadership, which you certainly provided here today.

THE PRESIDENT:  All right.  Thank you.


REPRESENTATIVE SPRATT:  I got a bum leg, Mr. President -- you'll have to excuse me, sir.  Thank you for holding this.

I participated in the 1997 balanced budget negotiations; that was the last time we were at the White House to discuss -- in common, Democrats and Republicans -- some common ground that we could both take up (inaudible) issues.  Thank you for doing this again -- (inaudible).

I would agree with Kent that we agree we need a special process.  We didn't come to final agreement on exactly what that process would be -- would it be a task force or a steering committee within the Congress, or a commission from without Congress?  That's still an issue to be resolved.  But I don't think it's an issue we can't resolve.  And we moved towards discussion of some sort of hybrid of the two.

Clearly that's important.  I think everyone in that room would agree that if we're to succeed at what we're setting out to do, we need a special process that we can -- by which we can accomplish it.  (Inaudible) -- you need to have some assurance that whatever we agree upon can indeed be brought to the floor of each House and brought to a vote.

Many of us think it's too draconian to compare this to the BRAC process where you get an up or down vote, no amendments.  But there needs to be some sort of fast track and special procedure to ensure that whatever the entities come up with it will be viewed and considered.

THE PRESIDENT:  Thank you, Jack.

Since I see her right -- sitting right next to you, Susan, you were in the procurement task force?


THE PRESIDENT:  Did you have any thoughts on --

SENATOR COLLINS:  Yes.  If you look across the federal government, there are problems in IT contracts no matter where you look.  And one recommendation that our group talked about is establishing some kind of (inaudible) law to apply to IT contracts.

In general, we also talked about the need for more competition in contracts, for justification for a cost-plus contract.  My favorite pet peeve is we don't have enough skilled contracting officers.  We've had an enormous increase in the volume of contracts at a time when the acquisition work force has actually declined by 22 percent.  So those were some of the issues that we discussed in addition to what Senator McCain said.

THE PRESIDENT:  Charlie, you're right here in front of -- Kent talked about revenue.  You were participating in the tax reform panel.

REPRESENTATIVE RANGEL:  First let me thank you for bringing us together.  The Secretary of Treasury provided a lot of leadership -- (inaudible) -- certainly recognize what (inaudible) -- that we do something.  (Inaudible) -- thought of the tax structure, people thought it was relatively easy to dramatically reduce the rates that make us internationally competitive.  The problems, of course, was the different views they have in how you handle the individual raise.

I don't think there's any committee in the House that would be more anxious to bring forth a product, whether it's in health care, tax reform or Social Security, to bring forth something in a bipartisan way.  And I think this is a dramatic first step to see where we're going.  As I said, I don't want to seem to be corny, but it would appear as though that if America recognized the crisis, that they're not looking for a Democratic or Republican solution.  And in order for us to be politically successful, they're going have to believe that it was done in a bipartisan way.

So I think this initiative is a strong first step.  I only hope at the end of the day we can come out, maybe not in total agreement, but certainly in a bipartisan way.

THE PRESIDENT:  Just a quick thought on taxes, Charlie.  My instinct is, is that you're absolutely right that the individual tax rate is always the hardest thing.  There's some philosophical differences between the parties on this and I understand that.

On the corporate side, I at least have always maintained that if we try to think in the same ways that we thought about it in 1986, and if you closed loopholes, you could actually lower rates.

REPRESENTATIVE RANGEL:  No question about it.

THE PRESIDENT:  And that's an area where there should be the potential for some bipartisan agreement, because I think, on the books, the rates in the United States are high.  In practice, depending on who it is that you can -- what kind of accountant you can hire, they're not so high.  And that's an area where we can work on.  Simplification, same thing.  I don't think there's anybody out here who thinks that we are making it customer-friendly for the taxpayer.  And that's an area where we can make some great progress.

REPRESENTATIVE RANGEL:  Well, if you're looking for a fight and a partisan fight, any loophole you close is a tax increase.  We have to get over that and make certain that the vast majority of businesses recognize it's in their best interest to do the right thing as relates to those who've taken unfair advantage of the government.

THE PRESIDENT:  Well, you were here in '86 -- it's been done before.  We might be able to get it done this time.

REPRESENTATIVE RANGEL:  Well, under your leadership, I'm looking forward to it.  (Laughter.)

THE PRESIDENT:  Eric, you got some thoughts?

REPRESENTATIVE CANTOR:  Mr. President, I want to thank you very much for having us.  It's a great opportunity I think for us to really come together on some of these very, very big issues.

You said before when we were in discussions on the stimulus debate that we're going to have some very tough choices to make.  And we look forward to your address tomorrow night and working through some of these very big issues, as well as trying to address what's on Secretary Geithner's plate in the immediate, as far as the bank fix, the housing fix and others.  Thank you.


Max, you were on the health care panel, but obviously you've got jurisdiction over everything.  (Laughter.)  I know how the Finance Committee works.  (Laughter.)

SENATOR BAUCUS:  Well, Mr. President, first, all of us are enormously grateful for what you're doing here -- not on the specific issues, but also our fiscal problems.  It needs to be done, and we deeply appreciate you taking this on together.

I'd like to just make a little bit of a pitch, if you will, on health care reform.  I think it's very symbolic and very interesting that the first person you called upon was John McCain.  And that's the approach I think we need to take here generally, and specifically with health care reform.  You had a different view during the campaign on health care reform.  John McCain had a different view during the campaign on health care reform.  Here's an opportunity for us to come up with something that's uniquely American, that's public and private.  And I do believe if we just keep that working-together approach and keep at it -- all opinions, et cetera -- and take advantage of this opportunity where the stars are now aligned as to health care, and we'll get it done.

Because I was very pleased that you called on John first because I think it's this tone that we have to take here to make sure we're working together.  Thank you.

THE PRESIDENT:  Thank you, Max.

Jim, you got any thoughts on this?

REPRESENTATIVE CLYBURN:  Well, I just wanted to thank you very much, Mr. President, for doing this.  I was thinking when you called on Senator McCain -- I came to this Congress (inaudible), two Democrats and two Republicans.  It is remarkable the things we were able to do in South Carolina with Jim Edwards, (inaudible); Carroll Campbell, John West, Dick Riley -- simply because he started thinking about what we needed to do for the people of our state.

I think that what we're doing here today provides a framework for us to really get some things done for the people of our great nation.  And we can do this.  And I'm so pleased that you've set this tone here today.  And I -- (inaudible).

THE PRESIDENT:  Mike, were you in the -- were you in the health care panel?  Do you want to just add some thoughts?

SENATOR ENZI:  Mr. President, I, too, appreciate the effort to bring these people together.  We had both a number of associations, as well as the House and Senate.  One of the things I want to emphasize was the (inaudible) that Senator Baucus pointed out to be bipartisan started at the beginning of the process rather than at the end of the process.  And we do have a task force set up in the Senate that's under Baucus's heading up, that has had several meetings already that brought out the issues that -- all of the issues to be put on the table.  And the words not to use, because there are some words that send us right into (inaudible) and debate --

THE PRESIDENT:  Socialized medicine.  (Laughter and applause.)

PARTICIPANT:  Both sides of the aisle.  (Laughter.)

SENATOR ENZI:   -- and get the principals together, and then talk to the stakeholders and then take them through the regular Senate processes as soon as possible, to do that sort of thing.  Senator Kennedy and I, and Senators Baucus and Grassley were in the pensions debate.  And that took an hour of time on the floor plus two amendments to get that result, because it went through that very difficult process.  So I appreciate you including that.

THE PRESIDENT:  Did we have some representatives from the Chamber of Business participating?

MR. CASTELLANI:  Mr. President, I'm John Castellani --

THE PRESIDENT:  We saw each other the other day.

MR. CASTELLANI:  Yes.  I was in the health care discussion.  And the one thing that we all agreed on was that it is absolutely imperative for both fiscal reasons, as well as personal reasons and competitive reasons, to move forward on health care.  We simply cannot afford as a nation, and we certainly cannot afford as businesses to maintain the status quo, because it is unsustainable.

And I think as Bill pointed out, and has certainly been pointed out by the people that were participating in it all -- the Senators and members -- there are a lot of good ideas out there.  The time is now to put those good ideas down on a piece of legislation and move forward so we have something that delivers quality health care to everybody in this country in a way that everybody can afford.

THE PRESIDENT:  Business leadership I think is going to be critical.  Andy Stern is sitting right to next to you.  Andy, you've been working on this front for a long time.  You got some thoughts?

MR. STERN:  I mean, I just want to say that I am sitting next to John, because he and I and Bill Novelli and others really have built a relationship over a long period of time, because we don't see this as a Democratic problem or a Republican problem -- it's just an American problem.  And it's time to solve it.  And (inaudible) and I and business and labor and others can come together outside the Congress, it really is time for the Congress to get this job done, because the American people need it.

THE PRESIDENT:  Nice scarf, by the way.  (Laughter.)

David Walker.  Where's David?

MR. WALKER:  Mr. President, it's an honor to be here.  Thank you for your leadership.

You touched in your remarks on our balance sheet.  As a former comptroller general of the United States I can tell you we're $11 trillion in the hole on the balance sheet.  And the problem is not the balance sheet, it's off the balance sheet -- $45 trillion in unfunded obligations.

You mentioned in January about the need to achieve a grand bargain involving budget process, Social Security, taxes, health care reform.  You are 110 percent right.  We need to do that.  The question is, how do we do it?  Candidly, I think it's going to take some type of an extraordinary process that engages the American people, that provides for fast-track consideration.  And with your leadership, that can happen.  But that's what it's going to take, Mr. President.

THE PRESIDENT:  Well, I appreciate that.  And again, when we distribute the notes coming out of these task forces, I want to make sure that people are responding -- both in terms of substance, but also in terms of process, because we're going to need both in order to make some progress on this one.

Q    Mr. President, it was kind of a surprise in the procurement group that was together, we had almost universal recognition that over the last decade or so, we've overdone, in some cases, outsourcing of critical federal requirements, and that means that in many cases we spend more to hire a contractor or a non-federal worker than we would pay to invest in federal workers.

And so there was universal -- Republican, Democrat, House and Senate, even -- (laughter) -- that during this administration we need to assess where we can re-federalize some parts of the workforce, particularly when it came to people who do get procurement and oversee the procurement.

Also, that we do have a system which is disadvantageous to someone remaining in the federal workforce.  Our retirement system pays you less and less the longer you stay.  Yours is (inaudible), by the way, one day when you get your retirement.  (Laughter.)  But the accrual system in fact causes people to leave the federal workforce to double-dip, rather than being encouraged, either during their working time or if we ask them to stay on past their retirement.

So those areas were areas I think we had good common -- your folks, Janet took a lot of notes, so I think you're going to see that we have areas where our committees could work with you to make those changes.  And they are legislative changes that could save us money.

THE PRESIDENT:  Which I think would be terrific.  I mean, that's the kind of stuff -- it's not sexy, but it ends up, over time, making enormous progress.

Anybody else that just wants to -- go ahead.

Q    Thank you.  Thank you, Mr. President.  I just want to bring up that in the health care, we talked a lot about individuals and the systems of health care that we have, and looking for places that we can cut.  But as a community organizer I know that you know that investing in the community -- we look at the models across the world and the models in our country where health care prevails to be the strongest and where people live the longest, it's because they have a community that has -- of support, and a community (inaudible) of health care.

And I think if we look at access issues for those from Native American communities like mine, or rural America or other places that create that access with community support and have the right mid-level service providers and others that can reach to the smaller communities across America.

THE PRESIDENT:  That's important.  Yes, go ahead.

Q    Mr. President, thank you for having us here at the White House.  I'm going to take a little bit different approach.  Senator Baucus mentioned it and Chairman Rangel mentioned it --the need for bipartisanship, and I think the House Republicans have shown that when we're not included in the decision-making, we're disinclined to sign off on the solution.

And it's very easy in the House -- it's set up to get things done quickly if the majority is united -- to forget about the minority.  But if you really want consensus, I would encourage you to encourage the Speaker to have a true open process.  This is a good first step, but if this is all we do, it's a sterile step.

On the other hand, if you really follow up and include everybody in the process, you're more than likely to get a solution that everybody signs off on.  And I have said or stood behind every President since Reagan in this room at bill signing ceremonies that were the result of consensus.  So I commend you for doing this.

THE PRESIDENT:  Well, I think you're making an important point.  And, you know, my response, first of all is, I'm not in Congress so I don't want to interject myself too much into congressional politics.  But I do want to make this point, and I think it's important -- on the one hand, the majority has to be inclusive.  On the other hand, the minority has to be constructive.

And so to the extent that on many of these issues we are able to break out of sort of the rigid day-to-day politics and think long term, then what you should see, I think, is the majority saying, what are your ideas; the minority has got to then come up with those ideas and not just want to blow the thing up.  And I think that on some of these issues, we're going to have some very real differences and, you know, presumably the majority will prevail unless the minority can block it.  But you're just going to have different philosophical approaches to some of these problems.

But on the issue that was just raised here on procurement, on the issues -- some of the issues surrounding health care, the way it cuts isn't even going to be Democratic/Republican.  It's going to be -- you know, there may be regional differences, there may be a whole host of other differences.  And if that's -- if we can stay focused on solving problems, then I will do what I can, through my good offices, to encourage the kind of cooperation you're encouraging.

Way back there, and then I'll -- we'll go right here to Tom, and then -- and then probably that's going to be it, because I think I'm already over time.

Go ahead.

DR. HARTMANN:  Thank you, Mr. President.  Heidi Hartmann, Institute for Women's Policy Research.  I just wanted to point out that in the Social Security group, I think there was a fair amount of concession that, given the demographic trends, we're actually going to need to do some benefit increases for those at the bottom, where we may see poverty increase because we're going to have more older unmarried women, more older minority people.  And there was even, I think, a fair amount of consensus that therefore we will need to see revenue increases going into the system.  So I thought there was a surprising amount of consensus in the Social Security group.


A PARTICIPANT:  (Inaudible) -- thanks very, very much for bringing us together.

A couple of people have said to me, coming into the meeting, that why is the President continuing to reach out to the minority?  And I think the answer lies in part -- a couple weeks ago the minister in our church gave a sermon that was based on the parable of the sower, the sower of the seeds.  As you may recall, some of the seeds were sown in stony ground and rough ground, and some of the seeds were sown in places that had thorns, some of the seeds were sown in the -- in shallow soil, and nothing much came out of it.  But some of the seeds were sown in fertile soil, and multiplied tons in fold.

I urge you to continue to reach out not just to Democrats in the House and Senate, but to continue to reach out to Republicans in both chambers, as well, because some of that will fall in fertile soil.  And when it does, the minority has a responsibility --

THE PRESIDENT:  Well, I will certainly do that, Tom, because I'm just a glutton for punishment.  (Laughter.)  I'm going to keep on talking to Eric Cantor.  Some day, sooner or later, he is going to say, boy, Obama had a good idea.  (Laughter.)  It's going to happen.  You watch, you watch.  (Laughter.)

Well, look, just in closing, again, the sooner everybody can respond to our report coming out of each of these groups, the sooner then we can circulate a summary of everything that happened, and then start speaking with you individually and in groups about moving the process forward.

One last point I want to make, just because I think that from the press perspective, there -- I was reading some of the newspapers today and there was this sense of -- that maybe we were doing a pivot because we had just moved forward on the recovery package, now we're talking about fiscal responsibility; how did those two things match up?

I just want to be very clear about this.  I've said it to the governors this morning and I've said it to my staff in the past:  We chose to move forward on a recovery package because there was a strong sense among the vast majority of economists that if we did not try to fill a $1 trillion-a-year hole in demand, because of the drastic pulling back of businesses and consumers, that the recession would get worse, unemployment would increase, and as a consequence, tax revenues would go down, and the long-term deficit and debt projections would be even higher.  That was the basis for the decision.

It was not ideologically driven.  I have no interest in making government bigger for the sake of it.  I've got more than enough on my plate, as Lindsey knows, between Afghanistan and Iraq and issues of terrorism, that if the private sector was just humming along and we could just make government more efficient and not have to worry about this financial crisis, I would love that.  But that's not the circumstance we find ourselves in.  So I made the best judgment about the need for us to move forward on a recovery package.

There were some differences, significant differences between the parties about this.  I would suggest that if you look at the differences, they amounted to maybe 10, maybe 15 percent of the total package.  There wasn't a lot of argument about countercyclical payments to states to make sure that people had extended unemployment insurance or food stamps.  There wasn't a lot of disagreement about some of the infrastructure that needs to be repaired, and there wasn't a lot of disagreement on the tax cut front -- 15, 20 percent of it, there were some disagreements about.

But the reason I make this point is that if we're going to be successful moving forward, it's important for us to distinguish between legitimate policy differences and our politics.  And the reason that there is no contradiction, from my perspective, in doing the recovery package first but now focusing on the medium and long term, is because our hope is that this economy starts recovering.  We will have taken a hit, in terms of our debt and our deficit.  But as Bob Greenstein said, the recovery package will account for about one-tenth of 1 percent of our long-term debt.  The real problems are the structural deficits and the structural debt that we've been accumulating and all of us are complicit in.

So we've got to get that taken care of.  We would have had to get it taken care of whether or not there was a recession; this just underscores the urgency of it.  And I'm hopeful that we move forward in that spirit in the days and weeks and months to come.

So thank you, everybody.  Appreciate it.  (Applause.)

                             END                    4:43 P.M. EST

                                                        April 29, 2009


Fox Senior High School
Arnold, Missouri

10:25 A.M. CDT

THE PRESIDENT:  Thank you so much.  Thank you.  Everybody please have a seat.  Have a seat.  Thank you so much.  What a wonderful introduction.  It's good to be out of Washington, good to be back in the Midwest. 

AUDIENCE MEMBER:  We love you!

THE PRESIDENT:  Love you back.  (Applause.)

Let me, first of all, ask everybody to give a huge round of applause to Linda for the great introduction and everything that she's been doing in the community.  Thank you so much.  (Applause.)

I've got a few other friends who are here -- you may know them, I want to make sure that I acknowledge them.  One of, I think, the finest members of Congress that we have and somebody who's just been a great friend of mine, she is somebody you want in the foxhole with you when you got a tough fight -- please give a huge round of applause to Claire McCaskill.  (Applause.)

We've got one of the finest new governors in the country, Jay Nixon.  (Applause.)  Where did Jay go?  There he is.  An outstanding Secretary of State and somebody who I think may turn out to be pretty good in Washington if she just so decides -- Robin Carnahan.  (Applause.)  We've got Attorney General Chris Koster here.  (Applause.)  State Treasurer Clint Zweifel.  (Applause.)  A great friend who was with me from the start -- Susan Montee, your State Auditor.  (Applause.)  We have our outstanding host today, Mayor Ron Counts, of Arnold.  (Applause.)

We've got Congressman Russ Carnahan, who is voting on the budget today, but I want everybody to give him a big round of applause anyway.  (Applause.)

I want to thank everybody here at Fox High School for their hospitality.  (Applause.)  I want to thank your lovely school superintendent, who is just doing an outstanding job. Please stand up.  (Applause.)  I want to thank the Warriors for the basketball jersey -- (applause) -- which I will wear with pride -- yeah!  (Applause.)  If I ever get to play basketball again -- (laughter) -- they've been keeping me a little busy.

It is great to be back in the middle of America, where common sense often reigns.  (Applause.)  And this reminds me of why I like to get out of Washington now and again.      

The last time I was in Missouri was just under six months ago, at a high school a lot like this one.  We were in Springfield; it was two days before the election, and I was making my final case to the American people.  And it was just an unbelievable crowd, bigger than anything anybody had expected.  And so we're here in Missouri to -- we were here in Missouri at the end of a long journey to the White House, and so now I want to come back and speak to you at the beginning of another long journey.  Today marks 100 days since I took the oath of office to be your President.  (Applause.)  One hundred days.  It's a good thing.  Thank you.  Thank you.  (Applause.)

Now, back in November, some folks were surprised that we showed up in Springfield at the end of our campaign.  But then again, some folks were surprised that we even started our campaign in the first place.  (Laughter.)  They didn't give us much of a chance.  They didn't think we could do things differently.  They didn't know if this country was ready to move in a new direction.

But here's the thing -- my campaign wasn't born in Washington.  My campaign was rooted in neighborhoods just like this one, in towns and cities all across America; rooted in folks who work hard and look after their families and seek a brighter children -- future for their children and for their communities and for their country.

It was driven by workers who were tired of seeing their jobs shipped overseas, their health care costs go up, their dreams slip out of reach.  (Applause.)  It was grounded in a sense of unity and common purpose with every single American, whether they voted for me on Election Day or voted for somebody else.  It was energized by every citizen who believed that the size of our challenges had outgrown the smallness of our politics.  My campaign was possible because the American people wanted change.

I ran for President because I wanted to carry those voices -- your voices -- with me to Washington.  (Applause.)  And so I just want everybody to understand:  You're who I'm working for every single day in the White House.  I've heard your stories; I know you sent me to Washington because you believed in the promise of a better day.  And I don't want to let you down.

You believed that after an era of selfishness and greed, that we could reclaim a sense of responsibility on Wall Street and in Washington, as well as on Main Street.  You believed that instead of huge inequalities and an economy that's built on a bubble, we could restore a sense of fairness to our economy and build a new foundation for lasting growth and prosperity.  You believed that at a time of war, we could stand strong against our enemies and stand firmly for our ideals, and show a new face of American leadership to the world. 

That's the change that you believed in.  That's the trust you placed in me.  It's something I will never forget, the fact that you made this possible.

So today, on my 100th day in office, I've come to report to you, the American people, that we have begun to pick ourselves up and dust ourselves off, and we've begun the work of remaking America.  (Applause.)  We're working to remake America. 

Now, we've got a lot of work to do, because on our first day in office we found challenges of unprecedented size and scope.  Our economy was in the midst of the most serious downturn since the Great Depression.  Banks had stopped lending.  The housing market was crippled.  The deficit was at $1.3 trillion.  And meanwhile, families continued to struggle with health care costs, too many of our kids couldn't get the education they needed, the nation remained trapped by our dangerous dependence on foreign oil.

Now, these challenges could not be met with half-measures.  They couldn't be met with the same old formulas. They couldn't be confronted in isolation.  They demanded action that was bold and sustained.  They demand action that is bold and sustained.  They call on us to clear away the wreckage of a painful recession, but also, at the same time, lay the building blocks for a new prosperity.  And that's the work that we've begun over these first 100 days.

To jumpstart job creation and get our economy moving again, we passed the most ambitious economic recovery plan in our nation's history.  And already, we're beginning to see this change take hold.  In Jefferson City, over 2,500 jobs will be created on Missouri's largest wind farm, so that American workers are harnessing clean, American energy. (Applause.)  Across the state, roughly 20,000 transportation jobs will be supported by the Recovery Act, so that Missourians are rebuilding your roads, your bridges, your rails.

To restore fairness to our economy, we've taken several steps with Congress to strengthen the middle class.  We cut taxes for 95 percent of American households through a tax cut that will put $120 billion directly into your pockets.  (Applause.)  We finally signed a law long overdue that will protect equal pay for equal work for American women.  (Applause.)  We extended health care to millions of children across this country.  (Applause.)

We launched a housing plan that has already contributed to a spike in the number of homeowners who are refinancing their mortgages, which is the equivalent of another tax cut for them.  And if you haven't refinanced, you might want to take a look and see if it's possible, because that can save people a lot of money.  We've taken steps to unfreeze the market for auto loans and student loans and small business loans.  And we're acting with the full force of the federal government to ensure that our banks have the capital and the confidence to lend money to the families and business owners who keep this economy running.

Now, even as we cleared away the wreckage, I've also said that we can't go back to an economy that's built on a pile of sand -- on inflated home prices and maxed-out credit cards; on over-leveraged banks and outdated regulations that allowed the recklessness of just a few people to threaten the prosperity of all of us.

So that's why I introduced a budget and other measures that build on the Recovery Act to lay a new foundation for growth -- a foundation that's built on five pillars that will strengthen our economy and help us compete in the 21st century:  number one, new investments in education that will equip our workers with the right skills and training; number two, new investments in renewable energy that will create millions of jobs and new industries; number three, new investments in health care that will cut costs for families and businesses; number four, new savings that will bring down our deficit; and number five, new rules for Wall Street that reward drive and innovation.  (Applause.)

Now, I've got to say that some of the people in Washington have been surprised -- they said, boy, he's so ambitious; he's been trying to do so much.  Now, maybe they're not accustomed to this, but there's no mystery to what we've done.  The priorities that we've acted upon were the things that we said we'd do during the campaign.  (Applause.)  I mean, it's not like anybody should be surprised.  The policies we've proposed were plans we talked about for two years, in places like this, all across the country with ordinary Americans.  The changes that we've made are the changes we promised.  That's what you should expect from a President.  You may not always agree with me, but if you take a look at what I said I was going to do when I was running for office, and you now look at what we are in the middle of doing -- we're doing what we said we'd do.  (Applause.)

Now, after 100 days, I'm pleased with the progress we've made, but I'm not satisfied.  I'm confident in the future, but I'm not content with the present -- not when there are workers who are still out of jobs, families who still can't pay their bills; not when there are too many Americans who can't afford their health care, so many of our children being left behind and our nation is not leading the world in developing 21st century energy.  I'm not satisfied. And I know you aren't either.  The crisis that we're confronting was many years in the making; it will take us time to overcome it.  We've come a long way, we can see the light on the horizon, but we've got a much longer journey ahead.

And one of the encouraging things for me is the fact that the American people know this.  You know that our progress has to be measured in the results that we achieve over many months and years, not the minute-by-minute talk in the media.  And you know that progress comes from hard choices and hard work, not miracles.  I'm not a miracle worker.  We've got a lot of tough choices and hard decisions and hard work ahead of us.  The 100th day might be a good time to reflect on where we are, but it's more important to where we're going that we focus on the future, because we can't rest until our economy is growing and we've built that new foundation for our prosperity.

We can't rest until we reform those outdated rules and regulations that allowed this crisis to happen in the first place.  And that's why I've called for tough, new, common-sense rules of the road that punish abuse and reward drive and innovation in the financial sector.  I expect a bill to arrive on my desk for signature before this year is out.  We are going to make sure this kind of crisis does not happen again.  (Applause.)

We can't rest until we have schools that prepare our children for the challenges of the 21st century.  And we've already made historic investments in education and college affordability.  I was talking to your superintendent about all the wonderful things that she's going to be able to do with some of the money that came out of the recovery package.  We're going to continue to help our schools meet high standards and close achievement gaps.  And we're going to reward teachers for performance and give them new pathways for advancement.  (Applause.)  We are going to seek the goal of once again having the highest proportion of college graduates in the world -- we're going to do it by 2020.  (Applause.)

We can't rest until we harness the renewable energy that can create millions of new jobs and new industries.  The Recovery Act will double the supply of renewable energy, but the only way to truly spark an energy transformation is through a gradual, market-based cap on carbon pollution so that energy, clean energy is the profitable kind of energy. And we can do this in a way that creates jobs.  That's how we can grow our economy, enhance our security, and protect our planet at the same time.

I don't think we can rest until we have a 21st century health care system that makes sense -- (applause) -- one that cuts costs for families and businesses across America. That's why we invested in preventative care, we've invested in electronic records; that's why my budget makes a down payment on reform that will finally make quality health care affordable for every American.  And I look forward to working with both parties in Congress to make this reform a reality in the months to come.

And we can't rest until we restore the fiscal discipline that will keep us from leaving our children with a mountain of debt.  And working with people like Claire McCaskill, we have already put forward a budget that will cut the deficit in half by the end of my first term.  We've launched a procurement reform effort that will greatly reduce no-bid contracts and will save $40 billion.  We're going through the budget line by line, page by page; we've already identified more than 100 programs to reduce or eliminate because they don't work.  And I've personally asked the leadership in Congress to pass into law rules that follow the simple principle:  You pay for what you spend -- so that government acts the same way any responsible family does.  If you want a tax cut, you got to pay for it; if you want a new program, you got to pay for it.  Tell the American people the truth -- how are you going to pay for it?  (Applause.)

And finally, we can't rest until America is secure and our leadership is restored.  And that's why I've begun to end the war in Iraq through a responsible transition to Iraqi control.  It is their country, they need to take control.  (Applause.)  That's why we have a new strategy to disrupt and dismantle and defeat al Qaeda in Afghanistan and Pakistan.  That's why we've renewed our diplomacy to reduce the spread of nuclear weapons, to speak directly to our adversaries, and strengthen relations in the hemisphere. 

And that's why we have rejected the false choice between our security and our ideals.  That's why I ordered the closing of the detention center at Guantanamo; that's why I prohibited the use of torture -- (applause) -- because America is stronger than any enemy -- and we always have been -- precisely because we do what's right not just when it's easy, but when it's hard.  That's what sets us apart.

We're living through extraordinary times.  We didn't ask for all the challenges that we face, but we're determined to answer the call to meet them.  That's that spirit I see everywhere I go. That's the spirit we need to sustain, because the answer to our problems will ultimately be found in the character of the American people.  We need soldiers and diplomats, scientists, teachers, workers, entrepreneurs.  We need your service; we need your active citizenship.  That's why I recently signed a bill that will create hundreds of thousands of opportunities for the American people to serve.  That's why I will continue to ask for your help and your ideas and your support to make the changes that we need.

I want to warn you, there will be setbacks.  It will take time.  But I promise you I will always tell you the truth about the challenges that we face and the steps that we are taking to meet them.  I will continue to measure my progress by the progress that you see in your own lives.  And I believe that years from now we are going to be able to look back at this time as the moment when the American people once again came together to reclaim their future.  (Applause.)  That's what this is about.

Thank you, everybody.  Thank you.  (Applause.)

All right, this is the fun part.  Everybody sit back down.  I'm going to take questions.  There are no rules, nobody has been pre-screened.  And we're not going to be able to get through all of the questions that people want to ask, so if you can raise your hand I will try to call on you.  We're going to go girl-boy-girl-boy, so nobody thinks I'm biased.  (Laughter.)  I'll try to just go around the gym and we'll get to as many as we can.  If you can stand up, introduce yourself when the question has been asked, and we should have some microphones in the audience -- right?  Where are microphone people?  Raise up your mics.  Okay, so we've got a few here.  So wait for the microphone so everybody can hear your question.

All right, this gentleman right here -- right there.  Yes, you.  I guess we're going boy-girl.  (Laughter.)  You can go ahead and hand him the mic.

Q    I'm a retired auto worker from General Motors.  And I was just curious, with all the -- what's going on in the news and with the contracts and everything, where is this all eventually going to leave the retirees' pensions and our health care?  I mean, we also are considered middle class -

THE PRESIDENT:  Keep the mic near you.

Q    Oh, I'm sorry.  We're also considered middle class and it seems like they keep constantly wanting to take it away from the auto worker and prosecuting us, instead of the corporate that brought us to this. 

THE PRESIDENT:  Well, it's a good question.  Let me talk about what's happening with autos, because obviously this is a big concern for everybody.  I believe that the U.S. should have a strong auto industry.  I believe that.  (Applause.)  One of the things, one of the transitions I want to make, I want us to get back to making things, not just shuffling paper around.  (Applause.)  And so the auto industry is a major part of that.

Now, what is also true is that the decisions that were made over decades put the U.S. auto industry in a bad spot. We used to build the cars that consumers wanted, and at a certain point those weren’t the cars that were being designed.  Now, in fairness to the auto industry, a lot of the cars that are coming out of Detroit have gotten really good; they are on par with foreign imports.  But the problem is, is that because of a lot of those bad decisions catching up, even though there's some very good products out there, overall the companies were in really bad shape.

Now, the Bush administration had already given several billions of dollars worth of aid, and GM and Chrysler were told to come up with a plan.  When they presented the plan to us, my responsibility to taxpayers is to look at those plans in a realistic way and figure are these plans going to work in order to put these auto companies on a firm, solid footing where they can operate without government subsidies and succeed, and compete in the marketplace.  Because we've got the best workers; we just need the best plans.  Right?  (Applause.)

Unfortunately, the plan that they presented just weren’t realistic.  I mean, we did a pretty thoroughgoing analysis of this thing and you couldn't -- what they were doing wasn’t painting a picture of how they could be viable over the long term -- without being wards of the state.  And, frankly, there's no way that we were going to get taxpayers to just, every few months, just give a few more billion dollars, because there are a lot of other industries that would love to have those kinds of subsidies.

So we are now at the point where Chrysler is supposed to report back to us in the next day or two about their plans for a potential merger with Fiat -- and the Fiat management has actually done a good job transforming their industry.  We're hoping that you can get a merger where the taxpayers will put in some money to sweeten the deal, but ultimately the goal is we get out of the business of building cars, and Chrysler goes and starts creating the cars that consumers want.  And one of the potential advantages of a merger is new technologies where Chrysler starts making fuel-efficient clean-energy cars that will meet the needs of the future market.

We don't know yet whether the deal is going to get done.  I will tell you that the workers at Chrysler have made enormous sacrifices -- enormous sacrifices -- to try to keep the company going.  One of the key questions now is, are the bond holders, the lenders, the money people, are they willing to make sacrifices, as well?  We don't know yet, so there's still a series of negotiations that are taking place.

I can tell you that no matter what happens, we want to provide certain protections to retirees for their health care and their pensions.  That will also be expensive for taxpayers.  But my attitude is we got here not because our workers didn't do a great job trying to build a great product; it was because management decisions betrayed workers. 

There are going to be some long-term adjustments that have to be made, though, both for Chrysler and GM.  GM, by the way, has 30 more days, because their restructuring is more thoroughgoing than what was required with Chrysler.  But I can guarantee you I will -- I look at this from the perspective of how can I create a strong, viable, competitive auto industry that is giving workers an opportunity to build a great product, take pride in that product, and continue to support their families and build communities that are strong. 

That's my entire orientation, and how do I do that in a way that doesn't waste taxpayer money -- because, as I said, people in other industries would love help, as well, and I've got to be fair to people who aren't in the auto industry.  If we're going to do it, it's got to be because we think that we've got a long-term plan that actually makes sense.  I think we can get there, but we've still got a little more work to do.  (Applause.)  

`All right.  Young lady up there in the pink, right there.  There we go.

Q    I'm a school counselor in the Fox T6 district.  President Obama, what do you feel is the biggest challenge facing our educational system today, and how do you plan on meeting those challenges?

THE PRESIDENT:  Okay, excellent question.  I believe that we've got a multitude of challenges.  So rather than just isolate on one, let me talk about several. 

Our children are coming out of high school -- in some cases, they're not even graduating high school, but even if they graduate from high school -- ranked lower on math and science scores than many other advanced industrialized countries.  Nations like China and India are starting to turn out more engineers, more scientists.  If we aren’t able to compete technologically we're not going to be able to compete, because this is a knowledge-based economy.  We can have some people who are really willing to work hard, but if the technology is coming from overseas and all we're competing for is just our labor, then over time those countries will get richer, our countries will get poorer.

So we've got to upgrade across the board -- not just in poor, underprivileged schools, but across the board -- we've got to upgrade the performance levels of our young people.  Now, in order to do that, the single-biggest ingredient is the quality of our teachers; single most important factor -- (applause) -- single most important factor in the classroom is the quality of the person standing at the front of the classroom.  And that's why our recovery package put a lot of emphasis on teacher training, teacher recruitment, teacher retention, professional development. 

And I've got a terrific young Secretary of Education, Arne Duncan, who is -- (applause) -- and he is so passionate, but he's tough, and he wants to push school districts to really do what it takes to give teachers the support that they need.

Now, that involves a whole range of things.  It means that how we train and recruit teachers in the first place, how do we match them up with master teachers so that they learn best practices; how do we make sure that if they're coming in and they don't have all the professional background they need in something -- a subject area like science, that we give them the training they need; and how do we recruit people who might be great teachers but didn’t go through the conventional channels.  If there's a chemist out there somewhere who wants to teach, we should be able to get him into the classroom in an expedited way, because he or she is bringing skills that we need.

I just gave an award to the Teacher of the Year, who was a police officer, a cop -- had gone to the -- had become a captain in the New York City Police Department and then decided that he wanted to pursue his lifelong love of learning and went back to teach -- and asked for the toughest-to-teach kids.  Well, we want to encourage people like that who have a passion for teaching.

Now, I also want to increase teacher pay so that a lot more people want to go into teaching.  (Applause.)

The deal I've got to strike with teachers, though -- I may not get as much applause on this -- (laughter) -- is I would like to work with teachers and the teachers unions, because I'm a union guy, but I do believe -- (applause) -- but I do believe that it's important for the unions to work flexibly with school districts in a consensual fashion to find ways so that if you've got a really excellent teacher, after 15, 20 years, they can get paid a little bit more -- right? -- if they're doing a really good job.  (Applause.) 

And now the flip side -- I'm telling you, I'm getting to the point where I'm not going to get applause.  (Laughter.)  If you've got a bad teacher who can't -- after given all the support and the training that they need is just not performing up to snuff, we've got to find that person a new job.  (Applause.)

Just a couple more comments on education generally.  A lot of schools still aren't using technology as well as they could in the classroom.  And one of the things we're trying to do with the Recovery Act is to help schools get broadband, get computers, but then also train people to use it properly.  I think we can do more with technology.  Once kids get out of high school, making college affordable is absolutely critical.  (Applause.)  We have to redesign the college experience so that -- not everybody is going to go to school for four years right in a row when they're 18.  Some people are going to work for two years, then go back to school for two years once they figure out something they're interested in; go back to work, maybe five years down the road they need to retrain.

We've got to create a pathway for lifelong learning for young people -- and not-so-young people -- so that all American workers are continually upgrading their skills.  (Applause.)  So we want to put a lot more emphasis on community colleges and how they are working effectively together.

Let me make a last point because I don't want to -- I could talk about this stuff forever.  One last point which I always have to remind people of -- I said that the biggest ingredient in school performance is the teacher.  That's the biggest ingredient within a school.  But the single biggest ingredient is the parent.  (Applause.)  So this is an example where, people are always trying to say, oh, Obama, is he liberal?  Is he conservative?  Well, I want government to do what it should do, but there's some things government can't do.  That's where I'm conservative.  Government can't force parents to turn off the TV set and tell your kid to sit down and do their homework.  I can't do that.  (Applause.)  That's not my job.  That's your job.  Well, it is my job with Sasha and Malia.  (Laughter.)  Those two, I'm responsible for.

But the other part of it is it's not just making sure your kids are doing their homework, it's also instilling a thirst for knowledge and excellence.  It's been noted widely that there are a lot of immigrant students who come from very modest backgrounds economically that end up doing very well.  And why is that?  Well, the difference is, is that in their families and in their communities a lot of times they've got that attitude that used to be prevalent, but sometimes we're losing -- sometimes I worry we're losing -- and that is, boy, it is a privilege to learn,  it's a privilege to discover new things, it's cool to be smart.  (Applause.)  We want to reward kids for doing well in school.  (Applause.)

And the community can help the parents.  Listen, I love basketball.  But the smartest kid in the school, the National Science Award winner should be getting as much attention as the basketball star.  (Applause.)  That's a change that we've got to initiate in our community. 

All right, gentleman in the tie there, since he wore a tie. That was really nice of him.  (Laughter.)  We appreciate that.  Thank you.

Q    I'm the junior class vice president of Fox High School.  (Applause.)

THE PRESIDENT:  All right. 

Q    I was just curious to what policies you're going to put into place in order to protect Social Security for the upcoming generations.

THE PRESIDENT:  That's a good question.  (Applause.)  Let me, first of all -- a lot of people know this, but I always want to try to explain how Social Security works so that you have a better sense of what we have to do, going forward.

Social Security is not an individual account.  When you pay your payroll tax, it doesn't go into -- I'm sorry, what was your name?  Jay?  It doesn't go into Jay's account.  Your Social Security tax goes to pay for current retirees.  And hopefully when you retire, young people who are working then, their money will go to pay for your retirement. 

So it's an intergenerational commitment that we make to each other.  What we say is, look, all of us are going to grow old, so we're going to make sure that there's enough money in there for your retirement; and those of us who are currently working, we pay into the kitty to make sure that that happens, and then we expect that the next generation is going to do the same.  All right?

Now, here's the problem that we confront -- and this is a solvable problem.  I've got -- there are some problems that are really hard to solve; this is actually one that we can solve.  And that is -- the problem is that the baby boomers -- there were a lot of them, and they're getting older.  Even though they deny it, they're getting older.  (Laughter.)  So what's happening is you're getting a big bulge of people who are retiring and you've got fewer workers supporting more retirees.  That means you got more money going out, less money coming in -- and so you get a mismatch.

Now, what's been happening is, up until very recently we've been running a surplus in the Social Security account. So there should be enough money -- and if we were wise then all that money would be there and then we -- we're going to start running a deficit as the baby boomers start retiring, but we would have accumulated all this money and everything would be fine.

But a couple of things have happened.  Number one is that the Social Security trust fund -- there wasn't a fence around it so people started borrowing out of it for other things.  That's not helpful.  But the other part of it is, is that there's still going to be a gap if we don't do anything -- even if we repay all the money into the trust fund, there's still a gap because there are too many retirees.

So it's not that Social Security would go away, Jay; the problem would be that by the time you retire, you'd be getting 75 cents for every dollar that was promised to you. So you'd get cheated out of a little bit of your Social Security.  That's why -- when people say Social Security is going bankrupt, that's not true.  The problem is not that it's going bankrupt; the problem is just that your benefit -- it would be the equivalent of a benefit cut of about 25 percent if we don't start making some changes.

Now, there are only a handful of ways to make these changes. Number one, you could just keep on trying to borrow a trillion dollars, or a couple trillion, or however much it takes from China.  But that's not such a good solution, because you'd end up having to pay interest on it and at some point they're just going to be tired of lending to us because they've got their own senior citizens that they want to take care off.

Second option is to gradually raise the retirement age.  Now, I don't think this is the best option just because we just talked to an auto worker over here -- that's hard work. And if people's -- if the retirement age is already 67, and now you want to get it up to 68 or 69, if you're working on an assembly line, and you've been doing that for 50 years, or 40 years, that's some tough stuff.  If you're a senator, you can work until, you know -- (laughter) -- but if you're doing real work -- (laughter and applause) -- now that's -- except for Claire.  Claire does some real work.  Claire is a hard worker.  Claire is a hard worker.   (Applause.)

You could cut benefits.  You could raise the tax on everybody, so everybody's payroll tax goes up a little bit. Or you can do what I think is probably the best solution, which is you can raise the cap on the payroll tax.  (Applause.)

Now, let me explain one last point about this.  Whether you are Bill Gates, or you are Jay, a junior at Fox High School, you pay the same rate on your payroll tax, but what happens is, is that it gets capped out at $102,000.  Now, the majority of people here, for almost everybody here, what that means is, is that you pay a payroll tax on every dime that you earn.  But if you're Bill Gates, that means you're only paying payroll tax on 1/10th of 1 percent of what you earn, because you earn so much more -- $100,000, that's just the first fraction of what you earn, and then you stop paying it.

So what I've said is look, for wealthier people why don't we raise the cap?  (Applause.)  Make them pay a little more payroll tax.  (Applause.)  Not everybody is wild about this idea, not surprisingly.  (Laughter.)  And so what I would like to do -- I had a fiscal responsibility summit where I brought together Republicans, Democrats, experts on all these issues -- how do we start dealing with our long-term deficits, our long-term debt.  I actually think that we could get all those folks together, and we could come up with a solution that would ensure stability of the Social Security system for a long, long time to come.

Let me just make this last point though.  The big problem we have with entitlements is not Social Security, it's Medicare.  Medicare and Medicaid, the two health care programs that the federal government helps support, those are the things that are really breaking the bank. 

I know you’ve been hearing all these arguments about, oh, Obama is just spending crazy, look at these huge trillion-dollar deficits, blah, blah, blah.  Well, let me make a point.  Number one, we inherited a $1.3 trillion deficit -- that wasn’t from my -- that wasn’t me.  (Applause.)  That wasn’t me.  Number two, there is almost uniform consensus among economists that in the middle of the biggest crisis -- financial crisis since the Great Depression, we had to take extraordinary steps.  So you’ve got a lot of Republican economists who agree that we had to do a stimulus package and we had to do something about the banks.  Those are one-time charges, and they're big, and they'll make our deficits go up over the next two years.  But those aren’t the problem that we face long term.

What we face long term, the biggest problem we have is that Medicare and Medicaid -- health care costs are sky-rocketing, and at the same time as the population is getting older, which means we're using more health care -- you combine those two things, and if we aren’t careful, health care will consume so much of our budget that ultimately we won't be able to do anything else.  We won't be able to provide financial assistance to students; we won't be able to help build green energy; we won't be able to help industries that get into trouble; we won't have a national park system; we won't be able to do what we're supposed to do on our veterans.  Everything else will be pushed aside because of Medicare and Medicaid.  That's the problem that we really confront.

That's why I've said we've got to have health reform this year -- (applause) -- to drive down costs and make health care affordable for American families, businesses and for our government.  (Applause.) 

So, you know, when you see -- those of you who are watching certain news channels that -- on which I'm not very popular -- (laughter) -- and you see folks waving tea bags around -- (laughter) -- let me just remind them that I am happy to have a serious conversation about how we are going to cut our health care costs down over the long term, how we're going to stabilize Social Security.  Claire and I are working diligently to do basically a thorough audit of federal spending.  But let's not play games and pretend that the reason is because of the Recovery Act, because that's just a fraction of the overall problem that we've got. 

We are going to have to tighten our belts, but we're going to have to do it in an intelligent way, and we've got to make sure that the people who are helped are working American families.  And we're not suddenly saying that the way to do this is to eliminate programs that help ordinary people and give more tax cuts to the wealthy.  We tried that formula for eight years. It did not work, and I don't intend to go back to it.  (Applause.)

All right, it's a young lady's turn.  It's your turn? (Laughter.)  No, I'm going to call on her.  I might call on you later, though.

All right, go ahead.  

Q    I'm a licensed acupuncturist and licensed massage therapist in Florissant.  And so --

THE PRESIDENT:  I could use one right now.  (Laughter.)  My back is stiff.  I've been working hard.

Q    I'll be happy to help you.  (Laughter.)  And this kind of fits into what you were just talking about as far as health care.  I'm wondering, as a practitioner of Oriental medicine, knowing that the National Institutes of Health and the World Health Organization has discovered through their studies that alternative medicine often is more cost-effective and very effective, how will alternative medicine fit in your new health care program?

THE PRESIDENT:  Well, look, my attitude is that we should -- we should do what works.  So I think it is pretty well documented through scientific studies that acupuncture, for example, can be very helpful in relieving certain things like migraines and other ailments -- or at least as effective as more intrusive interventions.

I will let the science guide me.  We just swore in an outstanding new Secretary of Health and Human Service, Kathleen Sebelius, former governor of Kansas.  (Applause.)  It's good to see that a Jay Hawk got applause on this side of the border here. (Laughter.)  But she's going to do an outstanding job.  And my charge to her is, as we're going through health care reform let's find out what works.

I think one basic principle that we know is that the more we do on the prevention side, the more we can obtain serious savings down the road.  So giving children early checkups, making sure that they get immunized, making sure that they are diagnosed if they've got eyesight problems, making sure that they're taught proper nutrition to avoid a life of obesity -- those are all issues that we have some control over.  And if we're making those investments, we will save huge amounts of money in the long-term.

Unfortunately, the hardest thing to do in politics -- and certainly in health care reform -- has been to get policymakers to make investments early that will have long-term payoffs.  Because people -- their attitude is, well, I'll be out of office by the time that kid grows up; and, the fact that they're healthy, that doesn't help me.  And in the private sector insurance system, oftentimes insurers make the same calculation. Their attitude is, well, people change jobs enough for us to pay for the preventive medicine now when the problem may not crop up for another 20 years and they'll be long out of our system, so we don't want to reimburse it because it will make things more costly.  That's the logic of our health care system that we're going to have to change.

The recovery package put a huge amount in prevention.  We are, in our budget, calling for significant increases in prevention.  And my hope is, is that working in a bipartisan fashion we are going to be able to get a health care reform bill on my desk before the end of the year that will start seeing the kinds of investments that will make everybody healthier.  All right?  (Applause.)

Okay, it's a man's turn.  It's a guy's turn, it's a guy's turn.  This gentleman right here, he raised his hand. Go ahead. Yes, sir -- hold on, wait for your -- now, are you an elected official, by the way?

Q    No, sir.

THE PRESIDENT:  Okay, good.  Because elected officials, you guys can't hog the mic right now.

Q    No, sir.  I'm a pastor.

THE PRESIDENT:  Oh, God bless you.  (Laughter.)

Q    Mt. Sinai Baptist Church in the City of St. Louis.  My question has to do with foreign policy.  While we spend so much money with Afghanistan and in other parts of the world, fighting and what have you, on the continent of Africa -- Sudan, Darfur and other places -- the poverty level is so high, so many people are dying.  Is there a chance in your administration that we would be able to build in that area?  (Applause.)

THE PRESIDENT:  It's a good question.  Let me, first of all, say that whatever arguments we had about Iraq, I think we've been able to build a consensus that it is time for us to bring our troops home and give responsibility over to the Iraqis.  (Applause.)

We are doing it in a careful way, because we don't want the country to collapse -- that would not be in our strategic interests.  There's been recent flare-ups of violence in Iraq that are highly sensationalized, and that indicates the degree to which this is a ramp-down that is conducted over the course of 18 months.  I think that's the right thing to do.

In Afghanistan and neighboring Pakistan, we do have real problems with the Taliban and al Qaeda.  They are the single most direct threat to our national security interests.  And I had some grumblings and complaints from certain factions in the Democratic Party when I made a decision to send 17,000 additional troops there.  I understand people's concerns.  But as Commander-in-Chief it is my responsibility to make sure that bin Laden and his cronies are not able to create a safe haven within which they can kill another 3,000 Americans or more.  That's an obligation that I have.  (Applause.)

Now, having said that both on Iraq and Afghanistan I think we're doing the right thing, I think it's difficult; it's going to require a new strategy that mixes not just military action, but also includes diplomacy and development.  We can't neglect these other parts of the world.  So I've appointed a special envoy, a Major General Scott Gration, a very close friend of mine, was one of the top fighter pilots in our military, in our Armed Forces, and somebody who's also an expert on development issues.  He just returned from Sudan.  We are trying to find a way to create peace and stability that will allow the kind of humanitarian assistance that's needed to take effect in that country.

But you're making a broader point, which is there are a lot of countries, not just in Africa, but in Asia, and Eastern Europe, et cetera, that need our help.  And sometimes people ask me, why should we help other countries when we've got so much to do here at home?  I mean, foreign aid is very unpopular.  I'm telling you, it's probably the single most unpopular thing.  If you just ask the average American, they'll say, why should we be giving money to other countries?

And people usually grossly overestimate how much our foreign aid budget is.  If you ask people, they'll say, well, we give 10 percent of our federal budget away in foreign aid.  Actually, it's 1 percent.  We give less in foreign aid than any other wealthy country as a percentage of our GDP.

Here is the reason why it's important.  The reason why it's important is that a lot of times we can advance our national interests more effectively by showing that we are interested in the well-being of the people of other countries.  That makes those countries more predisposed to work with us on a whole range of issues that are very important to us.  It's an important tool for us to be able to meet our national security interests.

So, for example -- let me just give you one very specific example.  If in Latin America, where I just returned, people see that we are sending doctors and teachers and Peace Corps workers into these communities, then that's the face of America; when it come time for them to help us on drug interdiction, it's a lot easier for the President of a Colombia or a Mexico to ally themselves with us because we're known to the Mexican people or the Colombian people as good friends, as people who care about them.  And that may actually then ultimately save us money in the long term because we don't end up having to send troops in and do some things ourselves, because we've got allies to work with us.

So not only is it the right thing to do from a ethical and moral perspective, but it is also good strategy.  And so I have said to the Congress, even in these difficult times we need to do some additional work in terms of foreign assistance, because it will save money for us -- and lives, blood and treasure for us -- in the long term. 

I mean, right now everybody is concerned about the swine flu, and properly so.  This is a potentially serious issue, and we've got to monitor it very carefully.  But think about it.  If Mexico has a good strong public health system that is catching these things early, ultimately that's going to save us money, because flu gets contained.  And a lot of the threats that we're going to be facing, whether it's international terrorism, cyber terrorism, nuclear proliferation, pandemic, climate change  -- a lot of these issues, they cross borders.  So it's not like we can just draw a moat around America, and say, I'm sorry, don't bother us; keep your problems outside.  It just doesn't work that way.

People get on planes from Africa, and will bring a disease right here to our doorstep, because we weren't concerned about whether or not they had a public health system that could catch these diseases early.  So this is all part of our interests, and not just other people's.

All right.  Okay.  I was told that I have time for one more question.  I want to -- I'm sorry guys, but I'm going to go with a student -- (applause) -- because young people, this is their school.  But I want a young lady, because it's a young lady's turn.  This young lady right here, this is the one, the one with the lei on here.

All right, there you go.  She looks ready with a good question.  (Applause.)

Q    It's an honor to meet you, President Obama.

THE PRESIDENT:  Thank you so much.  What is your name?

Q    I'm a fourth grader.  I was curious, how is your administration planning to be more environmentally friendly? (Applause.)

THE PRESIDENT:  Well, that is just a great question.  You're a very poised and articulate fourth grader.  (Applause.)  Yes, isn't she impressive?  (Applause.)  Yes, absolutely.  We might have to run you for President some day.  (Applause.)

Well, there are some short-term things we can do, and there are some long-term things we can do.  On the short-term list, we already, for example, passed a historic public lands bill that creates many more acres of public space that is environmentally protected -- (applause) -- from logging and from other -- from mining and from other uses.  And that I think is going to be very important.

Now, in some cases what we do is we balance the need for economic growth, but we do it in a sustainable way.  There doesn't have to be a contradiction between jobs and the environment, we just have to be thinking a little smarter.  So, for example, when it comes to forestry, there's nothing wrong with us cutting down some trees for timber, as long as you make sure that it's done in a sequence and is spaced properly so that the forest itself is sustained. 

Sometimes these debates become this all-or-nothing thing:  either commercial interests can do anything they want -- dump stuff in the oceans and tear down all the forests, and that's the only way we can get economic growth; or alternatively, everybody is hugging trees and you can't cut a tree.  You know, there's a balance that can be struck, and the key principle is sustainability.  Are what we are doing -- will it ensure that you have this incredible treasure we call America when you grow up, for your kids, so you can take them into a park, so sportsmen or fishermen can enjoy it.  That's the key.

Now, there is a long-term problem that we've got to deal with, and that's is a tough one.  And that is this issue of climate change.  I want to tell you the truth here because this is going to be a debate that we're going to be having over the course of the next year.  The average person probably thinks, yes, climate change, that's kind of a drag, but it's not one of my top priorities -- because you don't really see it or feel it, it doesn't hit your pocketbook, it doesn't have to do with your job directly.  And so the tendency is just to kind of push it off.  People think, well, this just has to do with polar bears, and I feel bad about polar bears but I've got other things to worry about.

I don't think people fully appreciate the potential damage

-- economic damage, as well as environmental damage -- that could be done if we are not serious in dealing with this problem.  If the temperature goes up a couple of degrees, well, it will change weather patterns pretty significantly.  It could create droughts in places where we haven't had drought; it could bring insect-born diseases up into places like Missouri that we haven't seen before.  But we can probably manage.  If the temperature of the planet goes up 5 degrees, you're now looking at coastlines underwater.  You're now looking at huge, cataclysmic hurricanes, complete changes in weather patterns.  Some places will get hotter, some places will get colder.  Our economy would be disrupted by tens of trillions of dollars.

So this is no joke.  And the science shows that the planet is getting warmer faster than people expected.  Even the most dire warnings, it's gotten -- it's moved forward faster than anybody expected.  They're talking about, just in a few years, during the summer, there won't be any ice in the Arctic, something we have never seen before.  So we have to do something about it.

Now, the question, again, is how do you do it in an intelligent way?  There are some people who would say this is such a big problem that you just got to shut everything down.  Well, I'm sorry, that's not going to happen.  People have got to go to work, and we've got to drive, we've got to fly places.  Our economy has to grow.

But there are ways that we can do it that are intelligent and smart.  And I think one of the best ways to do it is to say, in a gradual way, let's set a cap, a ceiling, on the carbon pollution that comes out of all sorts of places:  our utilities, our cars, our industries.  Let's take a look at all the carbon that's being sent into the atmosphere that's causing climate change, and let's say that each year we're going to reduce the allowable amount in total that is released.

And what we'll do to each industry is we'll say we're going to make a deal with you:  Come up with ways to improve your processes and bring pollution down, and you can make money by sending out less pollution; on the other hand, if you have more pollution than you were allowed, then you're going to have to pay money.  You start creating a market for the clean energy, and you start making it less economical to produce harmful energy.

Now, if we do that in a smart, gradual way and in a way that protects consumers from the initial attempts of utilities, for example, to pass on those costs to consumers -- which is what they'll try to do, so we've got to rebate some of that money to make sure that people are held harmless -- then I actually think that we can get control of this problem, we can save the polar bears, but more importantly we can make sure that we are preserving our economy.

And here is the great opportunity.  Everybody knows that we're going to have to do this.  The country that gets there fastest, the country that's the first one to figure out really good battery technology for a plug-in hybrid car, the first country that perfects wind power and solar power and knows how to get it from one place to another in an efficient way, that country will dominate the economy of the 21st century the same way that America dominated the 20th century.  I want that to be America.  That's what we're fighting for.  (Applause.)

All right, everybody, I had a good time.  Thank you.  (Applause.)

11:36 A.M C

May 14, 2009


Rio Rancho High School
Rio Rancho, New Mexico

10:30 A.M. MDT

THE PRESIDENT:  Thank you so much.  What a wonderful welcome.  It's good to be back in New Mexico.  (Applause.)  It's always nice to get out of Washington for a while -- (applause) -- and come to places like Rio Rancho.  (Applause.)  The climate is nice, the conversation is nice, people are nice.  It is just wonderful to be here.

We've got a few special guests that I want to acknowledge here.  First of all, a great friend, one of the finest governors in the country -- please give it up for Bill Richardson.  (Applause.)  Lieutenant Governor, Diane Denish.  (Applause.)  Secretary of State, Mary Herrera.  (Applause.)  State Treasurer, James Lewis.  (Applause.)  State Auditor Hector Balderas.  (Applause.) 

We've also got Joe Garcia, President of the National Congress of American Indians.  (Applause.)  Got Rio Rancho Mayor, Tom Swisstack.  (Applause.)  We've got some members of Congress who couldn't be here today, but I just want to acknowledge them because they're doing a great job.  Senator Tom Udall -- (applause) -- Senator Jeff Bingaman -- (applause) -- and Representative Ben Luján.  (Applause.) 

And I want to thank Chris for the wonderful introduction and for her wonderful family who are here.  Please give her a big round of applause.  (Applause.)

Now, the last time I came here was 10 days before the election.  (Applause.)  We were over at the University of New Mexico.  (Applause.)  Tens of thousands of you showed up, it was a gorgeous night, stars were out.  And I told you then that if we wanted to steer ourselves out of our economic crisis, if we wanted to bring about the change we needed, then I needed your help.  I needed you to show up one more time.

And, New Mexico, you delivered.  (Applause.) 

Q    We love you!

THE PRESIDENT:  I love you back.  (Applause.)  You delivered because you believed that after an era of selfishness and greed, we could reclaim a sense of responsibility from Wall Street to Washington to Main Street.  You believed that in a time of great inequality, we could restore a sense of fairness to our economy.  You believed that rather than go back to the pursuit of short-term profits and a bubble-and-bust economy that led us to this point, we could build an economy based on sound ideas and solid investments, hard work, in order to secure a long-term prosperity.

So, New Mexico, I've come back today to tell you that's exactly what we've begun to do.  (Applause.)  Since the very first day that I took office, we have acted boldly and swiftly across all fronts to clear away the wreckage of this painful recession and to start laying a new foundation for prosperity.

We passed the most ambitious economic recovery plan in our nation's history to jumpstart job creation -- (applause) -- and get our economy moving again -- a plan that has kept teachers in the classroom and class sizes from increasing; a plan that will save or create 22,000 jobs just in New Mexico, mostly in the private sector; a plan that made good on the middle-class tax cut that we promised -- (applause) -- a tax cut that's already begun to appear in  paychecks for 700,000 working families across New Mexico.  (Applause.)

We made historic investments in the kind of clean energy that's led to an influx of cutting-edge companies creating new jobs and new opportunities right here in this state.

We've made productive strides towards fixing the health care crisis that I know has hit especially hard here -– strides towards reform that brings down costs; that give Americans the freedom to keep their doctor or plan that they already have, and choose a new doctor and a new plan if they want to; that finally gives every American access to quality, affordable health care.  (Applause.)

And already we've got millions of children across the country that have health care right now under the children's health care bill that we signed since I've taken office.  (Applause.)  So I believe we're moving in the right direction.  Step by step, we're making progress.  Now, we've got a long way to go before we can put this recession behind us.  And New Mexico is doing better than many states.  But it's tough out there.  But we do know that the gears of our economy, the economic engine, are slowly beginning to turn.

In the meantime, though, I know that there are so many Americans who are hurting right now.  You got hundreds of thousands who've lost their jobs just last month.  Millions are working jobs that don't pay enough to cover the bills.  Millions more see increasing portions of their income going towards paying down debt.  They're Americans struggling to cope with the rising cost of putting things like their mortgage, their tuition, their medical bills -- even their food and gas bills -- on their credit cards, because they feel like they're going underwater.  But they're quickly finding out that they can't dig their way out of debt because of unfair practices.  And that's what I want to talk about today briefly.

We're talking about folks like Chris Lardner.  She and her husband work hard; they're doing well.  They have a wonderful small business.  But she wrote to me last week and you just heard her story.  Her husband's business is in Albuquerque; two of their children are in college.  When one tuition payment that was mistakenly charged to a credit card put her over the limit, her credit card company more than tripled her rate to nearly 30 percent.  And she made a simple point in the letter that she wrote to me.  She said:  "If we conducted business this way, we'd have no business," she wrote.  "And if this is happening to us, I can only imagine what's going on in homes less fortunate than ours."

You all know what Chris is talking about.  I know.  I remember.  It hasn't been that long since I had my credit card, sometimes working that a little bit.  (Laughter.)  We're lured in by ads and mailings that hook us with the promise of low rates while keeping the right to raise those rates at any time for any reason -- even on old purchases; even when you make a late payment on a different card.  Right now credit card companies charge more than $15 billion a year in penalty fees.  One in five Americans carry a balance that has been charged interest rates above 20 percent.  Sometimes they even raise rates on outstanding balances even when you've paid your bills on time.

Now, I understand that many Americans are defaulting on their debt, and that's why these companies claim the need to raise rates.  One of the causes of this economic crisis was that too many people were living beyond their means with mortgages they couldn't afford, buying things they couldn't pay for, maxing out on credit cards that they couldn't pay down.  And in the last decade, Americans' credit card debt has increased by 25 percent. Nearly half of all Americans carry a balance on their cards, and those who do have an average balance over $7,000.

So we have been complicit in these problems.  We've contributed to our own problems.  We've got to change how we operate.  But these practices, they've only grown worse in the midst of this recession, when hardworking Americans can afford them least.  Now fees silently appear.  Payment deadlines suddenly move.  Millions of cardholders have seen their interest rates jump in the past six months.

You should not have to worry that when you sign up for a credit card, you're signing away all your rights.  You shouldn't need a magnifying glass or a law degree to read the fine print that sometimes don't even appear to be written in English -- or Spanish.  (Applause.)  And frankly, when you're trying to navigate your way through this economy, you shouldn't feel like you're getting ripped off by "any time, any reason" rate hikes, and payment deadlines that seem to move around every month.  That happen to anybody?  You think you're supposed to pay it this day, and suddenly -- and it's never on the end of the month where you're paying all the rest of your bills, right?  It's like on the 19th.  (Laughter.)  All kinds of harsh penalties and fees that you never knew about.

Enough is enough.  It's time for strong, reliable protections for our consumers.  It's time for reform -- (applause) -- it's time for reform that's built on transparency and accountability and mutual responsibility -- values fundamental to the new foundation we seek to build for our economy.

Now, this is not an issue I just discovered recently.  For years, I've been a proponent of strengthening consumer protections when it came to credit cards.  As a senator, I fought predatory lending and credit card abuse.  And I called for what I called a Credit Card Bill of Rights.  Last month, I met with the leaders of the major credit card companies to discuss these and other reforms that I believe will better protect the nearly 80 percent of American households that use credit cards.

And we didn't agree on anything -- everything as you might expect.  (Laughter.)  That was a slip of the tongue here.  (Laughter.)  We didn't agree on everything -- (laughter) -- but we did agree that any reforms we can shouldn't diminish consumers' access to credit.  I also think there's no doubt that people need to accept, as I said before, responsibility that comes with holding a credit card.  This is not free money.  It's debt.  And you shouldn't take on more than you can handle.  We expect consumers to make sound choices and live within their means and pay what they owe in a timely manner. 

Banks are a business, too, and so they have a right to insist that timely payments are made.  But what we also expect is that our institutions act with the same sense of responsibility that the American people aspire to in their own lives.  We expect that when we enter into an agreement, that agreement is reasonable and transparent.  We expect to pay what's fair, not just what fattens growing profits for some credit card company.  This is America, and we don't begrudge a company's success when that success is based on honest dealings with consumers.  But some of these dealings are not honest.  (Applause.)  That's why we need reform.

We need reform that restores some sense of balance.  We need a new equilibrium where credit is flowing, where lenders can succeed, where consumers don't find themselves in a bad situation that they didn't anticipate.  This kind of reform is especially needed during this economic crisis.  And as I've said all along, it should adhere to four basic principles:

First, there has to be strong, reliable protections for consumers –- protections that ban unfair rate increases and forbid abusive fees and penalties.  The days of "any time, any reason, anything goes" rate hikes and late fees, that must end.   That must end.  (Applause.)

Second, all forms and statements that credit card companies send out have to be in plain language, in plain sight.  (Applause.)  No more fine print, no more confusing terms, no more hiding the truth.  We're going to require clarity and transparency from now on.

Third, we have to give people the tools to shop for a credit card that meets their needs without being afraid of being taken advantage of.  So we're going to require firms to make all their contract terms easily accessible, and we're going to give consumers the information they need to do some comparison shopping.  And we'll require firms to offer at least one simple, straightforward card that offers the strongest protections along with the plainest terms and prices. 

And finally -- (applause) -- finally we need more accountability.  Instead of abuse that goes unpunished, we need to strengthen monitoring and enforcement and penalties for those who engage in deceptive practices that take advantage of families and consumers.  (Applause.)  And we also need to clean up practices at universities to protect students from getting stuck in debt before they even get started in life.  That's important.  (Applause.)

Now, the Federal Reserve has already issued some new rules that would change some of these practices, and I'm grateful to them for doing so.  But I'm also pleased that Congress has begun to act.  Two weeks ago, the House passed credit card reform legislation that follows these principles by a wide bipartisan majority, and I thank them for that.

And New Mexico, you should be proud that you've elected people, as I said before -- Ben Ray Luján, Martin Heinrich, Harry Teague -- (applause) -- who stood up for you by voting for that bill.  (Applause.)  Even as we speak, the Senate is debating its version of the bill, and I know your senators, Jeff Bingaman and Tom Udall, stand on your side, too.  (Applause.)

So I'm calling on Congress to take final action to pass a credit card reform bill that protects American consumers and send it to my desk so that I can sign it into law by Memorial Day.  There's no time for delay.  (Applause.)  It's time to get it done.  There's no time for delay.  We need durable and successful flows of credit in our economy, but we can't tolerate profits that depend on misleading working families.  Those days are over.

Because more than anything, this economic crisis has reminded us we're all in this together.  We can't prosper by putting off hard choices, or by protecting the profits of the few at the expense of the middle class.  We're making steady progress moving from recession to recovery, but we want lasting prosperity.  And that means that we have to ensure that the legacy of this moment is an American economy that rewards work and innovation, that's guided by fairness and responsibility, and that grows steadily into the future.  (Applause.)

So, New Mexico, I know there will be setbacks.  I know that this is going to take some time.  Some of you are going to continue to struggle for a while.  We're doing everything we can.  But here's what I also know -- if you're willing to do your part, if our companies are willing to do their part, if those of us in Washington are willing to do our part, if we all work together, then I promise you this:  Years from now, you will be able to look back at this moment as the time when the American people once again came together to reclaim their future and bring about a new and brighter day.  (Applause.)

Thank you, everybody.  Thank you.  (Applause.)

So I didn't come here -- I didn't come here just to make a speech.  Whenever we visit a community we want to do a little bit of a town hall, give people a chance to ask questions.  Obviously we've got a lot of people and I won't get through every question, but I'm going to try to get through as many as possible. 

And we're going to go boy, girl, boy, girl.  (Laughter.)  Or girl, boy, girl, boy.  And I'm going to go around the room.  If you can raise your hands when you have the question, and there are people with microphones in the audience, so wait until you get the microphone -- everybody can hear your question that way.  And introduce yourself so we know who you are.

And I'll start with this young lady over here.  Yes.

Q    Oh, thank you.  Thank you, Mr. President.  I work for one of the large corporations here.  But I talk to a lot of people about health care.  My question is, so many people go bankrupt using their credit cards to pay for health care.  Why have they taken single-payer off the plate?  (Applause.)  And why is Senator Baucus on the Finance Committee discussing health care when he has received so much money from the pharmaceutical companies?  Isn't it a conflict of interest?  (Applause.)

THE PRESIDENT:  Well, as you know, I campaigned vigorously on health care reform, and I think that we have a better chance of getting it done this year than we've had in decades.  I am optimistic about us getting health care reform done.

Now, health care is one-sixth of our economy, so it is a complicated, difficult task.  And Congress is going to have to work hard.  And everybody is going to have to come at this with a practical perspective, as opposed to trying to be ideologically pure in getting it done.

Here are my principles in terms of health care:  Number one, we've got to control costs across the system, because if we simply insured everybody under the current system, we couldn't afford it -- we'd go broke.  The fact of the matter is, is that families are seeing their premiums go up -- skyrocket each and every year.  Businesses are getting crushed by the rising costs of their employees' health care.  And the federal government -- Medicare and Medicaid -- is going broke.  That's the single biggest driver, by the way, of our deficits.

I want everybody to be clear about this, because driving in I saw some folks who were saying, what are you going to do about debt, et cetera.  Listen, by far the biggest contributor to our national debt and our annual deficit is the costs of Medicare and Medicaid -- as well as the other entitlement, Social Security -- defense, and interest on the national debt.  That's the lion's share of the federal budget.

The things you read about in the newspapers and you see on TV about earmarks -- I want to get rid of earmarks, but the truth of the matter, they're only 1 percent of the entire budget.  Most of what's driving us into debt is health care.  And so we've got to drive down costs.

Now, here is some good news.  There are ways that we can drive down costs, because we just have an inefficient system.  If we emphasize prevention and wellness programs; if we help -- (applause) -- if we -- so that we're reimbursing doctors and providers not just for treating people after they get sick but for helping people stay well if we use medical technology to reduce error rates and ensure electronic medical billing so when you go to the hospital, you don't have 15, 20 forms that you have to fill out over and over and over again.

There are simple things that we can do that will save us money, so we need to focus on cost, that's number one.

Number two, I think that it is very important that we provide coverage for all people, because if everybody's got coverage then they're not going to the emergency room for treatment.  (Applause.)  And right now, if you've got health insurance, the average family is paying about $900 a year in additional hidden costs because you're subsidizing the folks who are going to the emergency room.

And so you'd be better off with a system that might cost the federal government overall a little bit more -- and we do have to pay for that -- but that would lower your premiums so that you don't have these hidden costs, because it's cheaper to treat a child for asthma with an inhaler than it is to have them go to the emergency room and take up a hospital bed.  So that's the second principle.

Now, this brings to the last principle, and so this touches on your point, and that is, why not do a single-payer system.  (Applause.)  Got the little single-payer advocates up here.  (Applause.)  All right.  For those of you who don't know, a single-payer system is like -- Medicare is sort of a single-payer system, but it's only for people over 65, and the way it works is, the idea is that you don't have insurance companies as middlemen.  The government goes directly -- (applause) -- and pays doctors or nurses.

If I were starting a system from scratch, then I think that the idea of moving towards a single-payer system could very well make sense.  That's the kind of system that you have in most industrialized countries around the world.

The only problem is that we're not starting from scratch.  We have historically a tradition of employer-based health care.  And although there are a lot of people who are not satisfied with their health care, the truth is, is that the vast majority of people currently get health care from their employers and you've got this system that's already in place.  We don't want a huge disruption as we go into health care reform where suddenly we're trying to completely reinvent one-sixth of the economy.

So what I've said is, let's set up a system where if you already have health care through your employer and you're happy with it, you don't have to change doctors, you don't have to change plans -- nothing changes.  If you don't have health care or you're highly unsatisfied with your health care, then let's give you choices, let's give you options, including a public plan that you could enroll in and sign up for.  That's been my proposal.  (Applause.)

Now, obviously as President I've got to work with Congress to get this done and -- (laughter.)  There are folks in Congress who are doing terrific work, they're working hard.  They've been having a series of hearings.  I'm confident that both the House and the Senate are going to produce a bill before the August recess.  And it may not have everything I want in there or everything you want in there, but it will be a vast improvement over what we currently have. 

We'll then have to reconcile the two bills, but I'm confident that we are going to get health care reform this year and start putting us on a path that's sustainable over the long term.  (Applause.)  That's a commitment I made during the campaign; I intend to keep it.

All right.  We've got -- it's a man's turn.  This guy right here.  This guy right here -- big guy.  Yes, right here. 

Q    Hello, President Obama.  I work with AFT New Mexico, and also with the AFL-CIO.  (Applause.)  And I'd like to ask you, what would the Employee Free Choice Act do for New Mexicans and throughout the United States?  And mine is kind of like a two-question -- and the second one is, how can you help us get this bill passed?

THE PRESIDENT:  Okay, let me talk about the Employee Free Choice Act.  One of the things that I believe in -- and if you look at our history, I think it bears this out -- even if you're not a member of a union, you owe something to unions, because -- (applause) -- because a lot of the things that you take for granted as an employee of a company -- the idea of overtime and minimum wage and benefits -- a whole host of things that you, even if you're not a member of a union, now take for granted, that happened because unions fought and helped to make employers more accountable.  (Applause.)

The problem that we've seen is that union membership has declined significantly over the last 30 years.  And so the question is, why is that?  Now, part of it, the economy has changed and the culture has changed, and there hasn't been a very friendly politics in Washington when it comes to union membership.  But part of it just has to do with the fact that the scales have been tilted to make it really hard to form a union.  So a lot of companies, because they want maximum flexibility, they would rather spend a lot of money on consultants and lawyers to prevent a union from forming than they would just going ahead and having the union and then trying to work with -- and collectively -- allow workers to collectively bargain.

So there's a bill called the Employee Free Choice Act that would try to even out the playing field.  And what it would essentially say is, is that if a majority of workers at a company want a union then they can get a union without delay -- and some of the monkey business that's done right now to prevent them from having a union.  

Now, I want to give the other side of the argument.  Businesses object to some of the provisions in the Employee Free Choice Act, because one of the things that's in there is something called card check, where rather than have a secret ballot and organize a big election, you could simply have enough employees, a majority of employees, check a card and that would then form the union.  And the employers argue we need to have a secret ballot.

I think that there may be areas of compromise to get this bill done.  I'm supportive of it, but there aren't enough votes right now in the Senate to get it passed.  And what I think we have to do is to find ways in which the core idea of the Employee Free Choice Act is preserved, which is how do we make it easier for people who want to form a union to at least get a vote and have a even playing field -- how do we do that, but at the same time get enough votes to pass the bill.  That's what we're working on right now.  I think it's going to have a chance of passage, but there's still more work to be done.  (Applause.)

All right, it's a young lady's turn.  This young lady right there.  You, yes.  (Laughter.)

Q    Hello, President Obama.  Our family, we're small business owners, and we're seeing a marked decrease in revenue due to customers having less discretionary income.  Are there any plans to help small businesses ride out the storm?

THE PRESIDENT:  I'm sorry, can you repeat -- I missed just part of it.  No, not the whole thing.  You're a small business owner.  You were saying that you've seen something happen to your revenues, but I couldn't hear you.

Q    We've noticed a decrease --

THE PRESIDENT:  A decrease.

Q    Right.

THE PRESIDENT:  Well, look, this is part of why we passed the Recovery Act.  We passed a package of $787 billion over two years -- this is the largest economic recovery package ever been passed -- and it includes tax cuts.  So everybody should be seeing a slight increase in your paycheck.  It's not in a lump sum, it's spread out -- each paycheck you're getting a little bit money back that you weren't getting before.  So that's putting money in people's pockets.

We are rebuilding our infrastructure all across the country.  So Governor Richardson, I know he's put in a whole bunch of proposals to rebuild roads and bridges and infrastructure.  (Applause.)  The Mayor of Albuquerque is here, I know that he's working on it. 

The nice thing about infrastructure projects, it's a two-fer -- not only does it put to work -- people to work right now, especially a lot of folks who have been laid off from the construction industry, which has been weakened, but what it's also done is it creates the framework for long-term economic growth, because if we've got better mass transit, if we've got high-speed rail, if we are rebuilding our electricity grid to get clean energy from the places that produce it to the places that need it, all that will generate economic growth above and beyond the short term.  So that's another element of it.

Part of what we've done in the Recovery Act is just make sure that the economic damage is not worse.  So we've provided states additional resources to retain teachers and retain police officers -- (applause) -- and to make sure that if you do lose your job, you can keep your health care through COBRA, which prior to this bill was really hard for most folks to afford because you had to pay the full cost of your health care without employer subsidy, but now the government has picked up the subsidy and that allows a lot more people to keep health care.

So we've been doing a lot of things through the Recovery Act.  The other thing we're trying to do is to stabilize the housing market.  And so we have programs now in place that have helped boost refinancings, making millions of people who weren't eligible to get their homes refinanced, refinanced at lower rates.  That's like a tax cut.  That's like money in people's pockets because your monthly rate will be lower.  And if you have not recently refinanced, you should take a look at what banks are now offering because interest rates have gone down significantly and the programs that we've put in place have helped to spur on some of those refinancings.

We're also trying to stop the rate of foreclosure.  Now, this is hard to do because housing prices have gone down so far that some people, they're just, unfortunately, not going to be able to stay in their home -- they bought too much home given their incomes.  But people who are at the margins, what we've done is we've said to the banks, negotiate -- the banks will be better off and the consumer will be better off if you avoid foreclosure, and everybody takes a haircut. 

The bank has to lose a little bit of money on what they were expecting on principal and interest.  On the other hand, the homeowner, if they make this agreement with the bank, they've got to agree that when prices start going up again they give up a little bit of equity to repay the bank.  But either way, everybody is better off, including the community, if people stay in their homes.  (Applause.)

So there are a whole bunch of steps that we've been taking, and we're starting to see improvements in the housing market, we're starting to see slight improvements in some of these other areas.  But I have to tell you, this was a big, big, big economic problem that we had.  This is like nothing that we've seen since the Great Depression.  And as I said, New Mexico has been fortunate, partly because of some good administration from the New Mexican government -- (applause) -- but also because New Mexico wasn't overbuilt at the same pace, it did not have some of the same problems as some other states. 

But for the country as a whole, we took a big hit.  Wall Street just was gambling with a lot of people's money and they were taking risks they should have never taken.  So we've seen trillions of dollars of wealth removed and it's going to take some time to catch up.  And a lot of people are still paying off their credit cards and a lot of people are trying to get out from under the debts that they had accumulated when times were better. 

And so we're going to have to set what I'm calling a new foundation for growth, where people are less reliant on debt, they're living more within their means; businesses are engaging in more sensible business practices, they're investing in the future and the long term and not short-term profits; we are focusing on clean energy; we're reforming our health care system; we are boosting our education system to produce more engineers and more scientists; and retraining our workers so that we've got the most productive workers in the world.  (Applause.)  That's the strategy that we're going to be pursuing in the months and years to come.

All right.  It must be -- it's a guy's turn.  It's a guy's turn.  Let me go up here, because I don't want to feel -- I don't want folks up here feeling neglected.  That gentleman way up there right in the corner, way up there.  Look at that guy.  He's all standing right in front of him.  (Laughter.)

Q    Thank you, Mr. President.  And I'm just asking that -- you're saying all these wonderful things and it's really good to hear this, but whenever you say that we've got to get laws passed or the help to the people that we need, we chuckle about it having to go through Congress. 

Well, can you break those lines of bipartisanship, and get these laws and this help that we need to us, the people?  (Applause.)

THE PRESIDENT:  Well, first of all -- first of all, I think it's very important to understand that since I came into office, I have said to my Republican friends in Congress, I want to work with you.  I've had them over to the White House more than they were over in the White House during the Bush administration.  (Laughter.)  That's true.  (Applause.)  We have consulted with them extensively.

Now, there have been on two big issues some very fundamental disagreements with the Republican Party.  And I don't doubt their sincerity -- they just have a different view.  One is on the stimulus package, on the Recovery Act.  There were people who said we should not have government spend that much, especially when we're inheriting a $1.3 trillion deficit from the previous administration and we've already spent money on the TARP program and shoring up the banks, et cetera -- we shouldn't do this.  There are some people who made that argument.

Now, I will tell you that every serious Democratic and Republican, conservative and liberal economist that I spoke to believe very strongly that we needed a recovery package because what was happening was consumers, they had pulled back.  People weren't shopping as much, because they were worried about the state of the economy, and their debts had gotten too high.  Businesses were pulling back.

And so what you had was a crisis in demand where if everybody pulls back at the same time, nobody is going shopping.  If nobody is going shopping, then this young lady with her store, she doesn't have money.  She may have to lay off a worker, which means that worker is now spending less -- which means they're not buying groceries.  And now somebody else's store shuts down.  You start getting into a vicious cycle where everybody is pulling back all at the same time. 

In that circumstance, the only person -- or the only entity that can fill the gap is the government.  And so that's why we passed the Recovery Act.  It's not because we're not worried about deficits; it's because if we didn't do anything, this economy could have really gone into a tailspin. 

But I make that point only to say there's some Republicans who just philosophically were opposed to the idea of this recovery package.  I have to say they weren't as worried when the previous administration was running up and doubling our national debt, but -- (applause) -- but having said that, having said that, it's entirely legitimate for -- that's part of what our democracy is about, to disagree with us on this.

They also disagreed on our budget because they don't believe that we should, for example, reform our health care system in a way that includes more people.  They think that the free market can solve the problem.  Now, I'm a strong believer in the free market, but I think that when it comes to health care, the free market only takes you so far.  If your child is sick and you don't have health insurance, in a country this wealthy, we should be able to make sure that your child is cared for.  (Applause.)

And I actually think -- I actually think that long term we'll spend less money when we do that.  Because other countries like France and Japan and a whole host of other countries, they spend less a percentage of their GDP on health care than we do.  We spend more per capita than any nation on Earth, but we still have 45 million uninsured, and in some cases we've got worse outcomes.  We've got higher infant mortality rates; we've got higher rates of some deadly diseases.  That doesn't make sense.

But, again, there's a philosophical difference.  Having said all that, this credit card bill, when it passed in the House, we actually got 100 Republican votes.  (Applause.)  On our children's health insurance bill, we got some Republican votes.  So the media likes to focus on where we disagree; they don't tend to focus on the areas where we are actually working together.  And I think that we'll see more and more agreement over time as the Republican Party starts to realize that the American people want results right now; they don't want bickering.  (Applause.)  And when they realize that, they'll have an open, outstretched hand from me.  (Applause.)

All right?  Okay.  Guys, I hate to do this, but I've only got time for one question.  One more question.  It's got to be a young lady.  All the guys, sit down.  Why is everybody pointing at this young lady?  All right, go ahead.  Everybody was advocating for you.

Q    Thank you so much.  Thank you, President Obama.  I work for Congressman Ben Luján.  The limits on earnings for people on Social Security disability are so low that it discourages people from working.  For those who are hoping to be self-supporting and get off Social Security disability, like myself, would you consider raising the earning limit?

THE PRESIDENT:  You know, I think it's something that we should look at carefully.  We've got a wonderful advisory group relating to people with disabilities and how we expand opportunity, and let's examine what we can do. 

Now, I will tell you that Social Security disability has gone up significantly during this recession.  Some of you may have read in the last couple of days that Social Security -- the Social Security trust fund is worse off now because of the recession than it was.  We were already having some issues with Social Security, and so we're going to have to do some significant reforms of Social Security. 

So, in principle, the answer is, I would like to raise the income limits to encourage people to become more self-sufficient. In practice, it costs money on the front end, even though long term it may save money.  And what I'd like to do is examine this in the broader context of Social Security reform and Medicare/Medicaid reform. 

What I'd like to do is just shift off -- pivot off your question to talk about this issue of debt and deficits one more time.  During a recession of this severity it is important, as I explained, for the government to step in and fill the hole in demand that was created by consumers and by businesses, to get the economy kick-started. 

But the long-term deficit and debt that we have accumulated is unsustainable.  We can't keep on just borrowing from China, or borrowing from other countries -- (applause) -- because part of it is, we have to pay for -- we have to pay interest on that debt.  And that means that we're mortgaging our children's future with more and more debt, but what's also true is that at some point they're just going to get tired of buying our debt.  And when that happens, we will really have to raise interest rates to be able to borrow, and that will raise interest rates for everybody -- on your auto loan, on your mortgage, on -- so it will have a dampening effect on the economy.

So we are going to have to deal with our long-term debt.  As I said before, the biggest thing that we can do on that front is to deal with entitlements.  We are going through the budget, line by line, page by page, rooting out waste and abuse.  We've already found $40 billion in procurement practices and no-bid contracts on the defense side that we are going to eliminate.  (Applause.)  We found $17 billion in programs that don't work and we're going to stop those programs so that -- 120 programs so that we can put the money into programs that do work. 

We are going to go through -- and by the way, I just want to make a little commentary about the media here, if you don't mind.  When Congress included in last year's budget a whole bunch of earmarks, you remember there was a week worth of stories about how terrible these earmarks were.  You remember this, Chip -- a week worth of stories -- "oh, these earmarks, this is what's blowing up the deficit, this is terrible," blah, blah, blah.

And yet, as I said before, that was less than 1 percent of that entire budget that had been signed.  When we find $17 billion worth of cuts in programs, what do the same folks say?  They say, "Oh, that's nothing."  (Laughter.)  "Now, that's not even -- that's not even -- that's not significant.  That's not important."  Well, you can't have it both ways.  If those earmarks were important, then this money is important, too.

But what is true about the budget -- is absolutely true -- is that we can cut programs, we can eliminate waste, we can eliminate abuse, we can eliminate earmarks; we could do all that stuff, and we're still going to have a major problem, because Social Security, Medicare, Medicaid, interest on the national debt.

And so I have said before and I will repeat again that my administration is going to seek to work with Congress to execute serious entitlement reform that preserves a safety net for our seniors, for people with disabilities, but also puts it on a firmer, stable footing so that people's retirements are going to be secure not just for this generation, but also for the next generation.

And that's going to be hard work.  (Applause.)  It's going to require some tough choices, but I'm going to need support of the American people to get that done.  That's part of what this administration is about:  Let's make the tough choices now, so that we've got a better future for America.

Thank you everybody.  God bless you.  Thank you.  (Applause.)

11:19 A.M. MDT



                                                               July 1, 2009


Northern Virginia Community College
Annandale, Virginia

1:28 P.M. EDT

THE PRESIDENT:  Good to see you guys.  Thank you, everybody. Thank you.  (Applause.)  Thank you, Northern Virginia.  Thank you very much.  What a wonderful welcome.  And I'm so grateful to all of you for taking the time to be here. 

A couple of quick acknowledgments.  First of all, I want to thank President Templin and Chancellor DuBois for their wonderful hospitality.  We are grateful to both of them. 

We've got some extraordinary elected officials -- a few that I want to mention.  First of all, you've got one of the finest governors in the country, who also is doing a great job as DNC chair.  Please give Tim Kaine a big round of applause.  (Applause.)  Part of the reason Tim is such a good governor is because he took notes while being lieutenant governor to the former governor and now senator for the state of Virginia, an outstanding public servant, Mark Warner.  (Applause.)  And three outstanding members of Congress:  Bobby Scott, Jim Moran, and Gerry Connolly -- thank you so much, guys, for the great job you do every day.  (Applause.)

So I know there's all kinds of stuff Valerie was explaining. Don't worry, she's in charge, so she'll organize us.  I just want to give a few remarks at the outset, and then we'll save most of the time for questions.

First of all, it's wonderful to be here in Annandale, and I'm looking forward to answering questions about what is obviously one of the most important issues facing American families, American businesses, and the American government.  But before I begin, I just want to say a few words about where we are as a nation and where we need to go.

We're living through extraordinary times -- I don't need to tell you.  This generation of Americans -- our generation -- has been called to confront challenges of a magnitude that we have not seen in decades, perhaps unlike anything we've seen in recent history -- challenges that few generations of Americans are asked to face.  In addition to the immediate threats that we face -- we've got two wars going on and a very deep recession -- our economy has also been weakened by problems that have plagued us for decades:  the crushing cost of health care, the state of our schools, our continuing dependence on foreign oil. 

Now, I know there are some who say we can't tackle all of these problems; it's too much; Congress can't handle it; the President is juggling too many things; my administration is taking on too much too soon; we're moving too fast.

What I say is that America has waited long enough for action on these issues.  It's not too soon to fix our schools when we know that if our children are not prepared they are not going to compete in the 21st century.  It's not too soon to wean ourselves off of dirty sources of energy so that we can grab hold of a clean energy future.  We've been talking about clean energy since Richard Nixon.  And it's time for us to act.  And I congratulate, by the way, the House of Representatives for beginning action this past week on a historic clean energy bill. 

It's also not too soon to reform our health care system, which we've been talking about since Teddy Roosevelt was President.

We are at a defining moment for this nation.  If we act now, then we can rebuild our economy in a way that makes it strong, competitive, sustainable and prosperous once more.  We can lead this century the same way that we led the last century.  But if we don't act, if we let this moment pass, we could see this economy just sputter along for decades -- a slow, steady decline in which the chances for our children and our grandchildren are fewer than the opportunities that were given to us.  And that's contrary to the history of America.  One of our core ideas has always been that we leave the next generation better off than us.  And that's why we have to act right now. 

I know that people say the costs of fixing our problems are great -- and in some cases, they are.  The costs of inaction, of not doing anything, are even greater.  They're unacceptable.  And that's why this town hall and this debate that we're having around health care is so important.

     Let me just give a few statistics.  Many of you already know these.  In the last nine years, premiums have risen three times faster than wages for the average family.  I don't need to tell you this because you've seen it in your own lives.  Even if you've got health insurance -- and 46 million people don't -- if you've got health insurance, you have seen your costs double.  They've gone up three times faster than wages.  If we do nothing, then those costs are just going to keep on going higher and higher.

     In recent years, over one-third of small businesses have reduced benefits and many have dropped coverage altogether since the early '90s -- not because small business owners don't want to provide benefits to their workers, but they just simply can't afford it; they don't have the money.  If we don't act, that means that more people are going to lose coverage and more people are going to lose their jobs because those businesses are not going to be competitive.

     Unless we act, within a decade, one out of every $5 we earn will be spent on health care.  And for those who rightly worry about deficits, the amount our government spends on Medicare and Medicaid will eventually grow larger than what our government spends today on everything else combined -- everything else combined. 

     The Congressional Budget Office just did a study that showed that when you look at the rising costs of entitlement, 90 percent of it is Medicare and Medicaid -- it's not Social Security -- 90 percent of it comes from the federal share of health care costs. So if we want to control our deficits, the only way for us to do it is to control health care costs. 

Now, those are all abstractions, those are numbers.  But many of you know that this translates into pain and heartache in a very personal way for families all across America.  I know because during the two years that I campaigned for President every town hall meeting I had, people would raise horrible stories about their experiences in the medical system.  And now that I'm President, I'm hearing those same stories.  I get 10 letters a day -- out of the 40,000 or so that the White House receives, my staff selects 10 for me to read every single day.  And at least half of them relate to a story about somebody who has been denied coverage because of a preexisting condition, or somebody who finds out that what they thought was going to be a $500 bill ends up being a $25,000 bill.

I was at a town hall meeting in Green Bay, Wisconsin, met a young woman, 36 years old, has breast cancer that's metastasized. She's got two small children.  Her and her husband are both employed, both have health insurance, and yet she still has $50,000 worth of debt.  And all she's thinking about right now is, instead of thinking about how to get well, she's thinking, if I don't survive this, my main legacy to my children may be another $50,000 worth of debt.

Everybody here knows stories like that.  Some of you have experienced them personally.  So this is a problem that we can't wait to fix.  It's not something that we're going to keep on putting off indefinitely.  This is about who we are as a country. And that's why we are going to pass health care reform -- not 10 years from now, not five years from now; we are going to pass it this year.  (Applause.)  That is my commitment.  We're going to get it done.  (Applause.)

Now, we've already started to see some progress in Washington.  Those who said we couldn't do it, they're already being surprised, because as a consequence of us pushing, suddenly the drug companies and the insurance companies and the hospitals, all of them are starting to realize this train is leaving the station, we better get on board.  

So just a few weeks ago, the pharmaceutical industry agreed to $80 billion in spending reductions that we can use to close the so-called "doughnut hole."  Some of you know what the "doughnut hole" is, right, where senior citizens who are on the prescription drug plan under Medicaid, they get their drugs reimbursed up to a certain point, and then suddenly there's a gap until it reaches thousands of dollars in out-of-pocket costs.

And so we've struck a deal with the drug companies; they're willing to cut those costs for seniors in half.  Already we're seeing that when we put pressure to reform the system, then these industries are going to have to respond.  Last month, doctors and hospitals, labor and business, insurers and drug companies all came together and agreed to decrease the annual rate of health care growth by 1.5 percent -- that would translate into $2 trillion or more of savings over the next decade.  And that would mean lower costs for everybody, for ordinary families. 

     In the past two weeks, the committee in the Senate, led by Senator Kennedy and Senator Dodd, have made tremendous progress on a plan to hold down costs, improve patient care, and ensure that you won't lose your coverage even if you lose your job, or if you change your job, or you've got a preexisting medical condition.  

     But now we need to finish the job.  There's no doubt that we have to preserve what's best in the health care system, and that means allowing Americans who like their doctor and their health care plan to keep their plan.  And that's going to be a priority for us.  (Applause.)  But we also have to fix what's broken about the system, and that means permanently bringing down costs and giving more choice for everyone. 

     And to do this, we've got to do a couple of things.  We have to build on the investments that we've made in electronic medical records.  We already made those investments in the Recovery Act  -- because when everything is digitalized, all your records -- your privacy is protected, but all your records on a digital form -- that reduces medical errors.  It means that nurses don't have to read the scrawl of doctors when they are trying to figure out what treatments to apply.  That saves lives; that saves money; and it will still ensure privacy. 

     We need to invest in prevention and wellness that help Americans live longer, healthier lives.  We know this saves money.  If we can help somebody control obesity, they are less likely to get diabetes.  And if they are less likely to get diabetes that means that we are going to be saving a whole lot of money in hospital costs.

     The biggest thing we can do to hold down costs is to change the incentives of the health care system that automatically equates expensive care with good care.  Now, this is an important concept, so I want everybody to really focus on this.  We are -- we've been under the illusion that the more health care we get, the healthier we become.  And it turns out that every study shows that the question is, are you getting the right care, are you getting the best care, the high-quality care, rather than are you having a whole bunch of tests ordered that are unnecessary, getting a bunch of treatments that are unnecessary, staying in hospitals longer than may be necessary -- all of which drives up your costs, but doesn't make you better.

     We have to ask ourselves why there are places like Geisinger Health Care Systems in rural Pennsylvania, or Intermountain Health in Salt Lake City, that offer high-quality health care at costs that are well below average, in some cases 30 percent lower than in other communities.  If they can do it, there's no reason why all of America shouldn't do that.  We've got to identify the best practices across the country; we've got to learn from those successes, and then we've got to replicate those successes elsewhere. 

And we should change the warped incentives that reward doctors and hospitals based on how many tests or procedures they prescribe, even if those tests and procedures aren't shown to actually make people better, or if they result in medical mistakes.  Doctors across this country did not get into the profession just to be bean-counters or paper-pushers, but more and more time that doctors should be spending with patients are spent on administration and worrying how do they deal with how they're reimbursed.  We've got to create a simplified, more effective system where they are reimbursed for quality care, as opposed to having to distort their practices in ways that don't actually make their patients better. 

It's also time to provide Americans who can't afford health insurance with more affordable options.  I believe this is a moral imperative and it is an economic imperative.  (Applause.)  It's a moral imperative because in a country as wealthy as ours, if people are working and holding up their responsibilities, they shouldn't be bankrupted just because they get sick.  On the other hand, it's an economic imperative because every single one of us who do have health insurance, our families, on average, are paying an extra $1,000 in premiums for uncompensated care. 

Hospitals and doctors are adding those costs to your premiums -- insurance companies are adding those costs to your premiums, even if you don't know it.  And if we can get a system in which people are getting regular checkups, mammograms, all the things that we know prevent disease from occurring over the long term, or at least allow us to catch those diseases early, that's going to allow us to drive down costs for everybody.

So what we have been working on is the creation of something called the Health Insurance Exchange.  And this is going to be a marketplace which would allow you to one-stop-shop for health care plans and compare benefits and prices in simple, easy-to- understand language, and then choose the best plan for you.  None of these plans would be able to deny coverage on the basis of a preexisting condition.  All of them would include an affordable, basic benefit package.  If you couldn't afford these plans, then we could provide you a little bit of help so that you can afford these plans. 

I also strongly believe that one of the options in the exchange should be a public option, in order for us to create some competition for the private insurers to keep them honest.  If they are in fact giving good service and providing high-quality coverage, then that's where people will want to go.  But there should be a benchmark there of a public plan, non-for-profit plan, that keeps administrative costs low and is focused on providing good service.  And that way you can make the decision which deal is going to be better for you and your family.

Now, I know one of the biggest questions on everybody's mind is how do we pay for all this, how do we finance reform?  And I have made a commitment, because our deficit is a genuine problem, that whatever we do we have to pay for it.  This can't add to our deficits.  It's got to be deficit-neutral over the next 10 years. 
Here's the good news:  About two-thirds of the costs of the reforms that we are proposing will come from reallocating money that is already being spent in the health care system but isn’t being spent wisely.  So it doesn’t involve more spending; it just involves smarter spending.  A lot of the money that's being spent in the health care system right now adds nothing to the quality of patient care. 

And I'll just give you one example.  We spend right now about -- over the next 10 years, we will spend $177 billion -- $177 billion over the next decade -- in unwarranted subsidies to insurance companies under something called Medicaid Advantage -- Medicare Advantage.  Now, this does not make seniors healthier.  People who are signed up for this private insurance subsidized program don't get any better care than those who aren’t.  The subsidies don't go to the patients; they go to the insurance companies.  Now, think if we took that $177 billion and helped families so that they could have insurance, and that we could have preventive care. 

So about two-thirds of the cost of the reform we're proposing is just reallocating money that's already in the system you, the taxpayers, are already paying for.

Now, one-third of it we're going to have to pay for by increased revenues.  And what I've proposed is, is that if we capped the itemized deductions that very wealthy people do -- the top 2 percent use on their income tax -- so that they're getting the same tax breaks as everybody else, as opposed to getting higher tax breaks because they've got a bigger house, then we can pay for the rest of reform.

We've already identified $950 billion over 10 years -- a little less than $100 billion a year -- in order to pay for reform; two-thirds of it reallocating money, one-third of it with increased revenues.  That's a sensible investment for us to make in solving an intractable problem that has been dragging down family finances, businesses, and the federal government for far too long.

Now, keep in mind, by the way, what we've identified as paying for the system, that doesn’t even include the savings that we're going to get from prevention, or the savings that we're going to get from health IT -- because in using congressional jargon, which I'm never supposed to do because nobody understands it -- it's not scorable.  And what that means is, is that the Congressional Budget Office can't identify exactly how much you would save -- even though everybody believes that it will end up saving a lot of money, we can't put a hard number on it.

So we will get additional savings that will drive down costs.  In the meantime, the costs of reform will be paid for with hard dollars that we've identified.

So here's the bottom line.  Now we're going to -- I'm almost done here, but this is a big, complicated topic, so I hope you forgive me.  We're starting to make progress on Capitol Hill.  We're identifying ways not only to reform the system, to make it smarter and more efficient, more user-friendly, better for American families, but also ways to pay for it in a way that doesn’t bloat our deficit. 

But the hardest part is yet to come -- because everybody here knows that the easiest thing to do when you're looking at big policy questions like health care is just to be saying it can't be done.  And the naysayers are already starting to line up and finding every excuse and scare tactic in the book for why reform is not going to happen.  This is going on as we speak.  And what I say to these critics is, well, what's your alternative?  Is your alternative just to stand pat and keep on watching more and more families lose their health care, more and more families with higher out-of-pocket costs for less insurance; businesses who are not able to compete internationally; a Medicare and a Medicaid system that is run amok?  Is that your alternative?

What do you say to all those families who can't pay their medical bills?  What do we tell those businesses that are having to choose between closing their doors or eliminating benefits for their workers?  What do you say to every taxpayer whose dollars are propping up a system that doesn’t work and that's driving us into debt?

This isn't just about those Americans without health care.  It's about every American -- because if we do not act to bring down costs, everybody's health care will be in jeopardy.  If you lose your job, or if you've got a preexisting condition, you don't know that your family is going to be secure.  All of us are in this together. 

So when it comes to energy, when it comes to improving our schools, and when it comes to health care, I don't accept the status quo.  And you shouldn’t either.  And I don't think that the American people want to just stand pat.  They know that change isn’t easy.  They know there are going to be setbacks and false starts.  But they also know this -- that we're in one of those rare moments where everybody is ready to move into the future.  We just can't be scared.  We've got to stop clinging to a broken system that doesn’t work, and we've got to have the courage to reach out for a future that's going to be better for our children and our grandchildren.

I believe we can accomplish it this year.  But in order to make it happen, I'm going to need ordinary Americans to stand up and say, "Now is the time."  You are what are going to drive this process forward -- because if Congress thinks that the American people don't want to see change, frankly, the lobbyists and the special interests will end up winning the day.  But when the American people decide that something needs to happen, nothing can stop us.

So I hope you'll join me.  Thank you very much, everybody.  (Applause.)

Thank you.  Now, all right.  Now, if I'm not mistaken, the way this is going to work -- Valerie, you are going to be in charge of directing -- you're traffic cop.

MS. JARRETT:  I'm going to be in charge.  Thank you very much, Mr. President.

So in my opening remarks, Mr. President, I mentioned that when you released your YouTube video over the weekend, we received literally hundreds of video questions from all across the country.  Your staff looked through all those questions and have selected a cross-section that represents a broad cross-section of the kinds of questions that came up.

I want to emphasize that the President has not seen the questions ahead of time.  (Laughter.)  Absolutely not. 

And so we're going to begin with a video question, Mr. President, if you look at the screen.

THE PRESIDENT:  All right.

     VIDEO Q   Hi, my name is Steve White.  I'm in Spring Valley, New York.  And my question for the President is:  Why are we considering a health care plan which maintains the private insurance companies with their high overhead costs, instead of a single-payer plan, which would eliminate the high overhead costs, saving the American taxpayer hundreds of billions of dollars, while covering everyone in our country?  Thank you.

     THE PRESIDENT:  Sure.  Well, it's a terrific question.  I'm not sure if everybody could hear it, but the gist of the question is, why have we not been looking at a single-payer plan as the way to go?

     As many of you know, in many countries, most industrialized advanced countries, they have some version of what's called a single-payer plan.  And what that means is essentially that the government is the insurer.  The government may not necessarily hire the doctors or the hospitals -- a lot of those may still be privately operated -- but the government is the insurer for everybody.  And Medicare is actually a single-payer plan that we have in place, but we only have it in place for our older Americans.

     Now, in a lot of those countries, a single-payer plan works pretty well and you eliminate, as Scott, I think it was, said, you eliminate private insurers, you don't have the administrative costs and the bureaucracy and so forth. 

     Here's the problem, is that the way our health care system evolved in the United States, it evolved based on employers providing health insurance to their employees through private insurers.  And so that's still the way that the vast majority of you get your insurance.  And for us to transition completely from an employer-based system of private insurance to a single-payer system could be hugely disruptive.  And my attitude has been that we should be able to find a way to create a uniquely American solution to this problem that controls costs but preserves the innovation that is introduced in part with a free market system.

     I think that we can regulate the insurance companies effectively; make sure that they're not playing games with people because of preexisting conditions; that they're not charging wildly different rates to people based on where they live or what their age is; that they're not dropping people for coverage unnecessarily; that we have a public option that's available to provide competition and choice to the American people, and to keep the insurers honest; and that we can provide a system in which we are, over the long term, driving down administrative costs, and making sure that people are getting the best possible care at a lower price.

     But I recognize that there are lot of people who are passionate -- they look at France or some of these other systems and they say, well, why can't we just do that?  Well, the answer is, is that this is one-sixth of our economy, and we're not suddenly just going to completely upend the system.  We want to build on what works about the system and fix what's broken about the system.  And that's what I think Congress is committed to doing, and I'm committed to working with them to make it happen. Okay?

     MS. JARRETT:  Now, how about a question from the audience.

     THE PRESIDENT:  All right.

     MS. JARRETT:  Please, show of hands.

     THE PRESIDENT:  What I always do here is I go girl, boy, girl, boy, so that I don't get into trouble here.  (Laughter.)   All right, this young lady right here -- since somebody was pointing at you, so I figured -- do we have a microphone for folks in the audience, so that everybody can hear the question?  Okay.  I think there's somebody coming from this direction.  You can just hand her the mic.

     Q    Good afternoon, Mr. President.  I'll try not to cry.  I'm trying to figure out what I can do currently.  My situation is I had renal cell carcinoma in '98 that was radiated, because my dad was dying of colon cancer at the time, and I was his health care server on his living will, so I could not be tied up having my kidney removed.  So they did radiation procedures to kill the tumor then.  And I had insurance and everything was taken out. 

     But basically because of the damage that the radiation did in things, I'm no longer able to work and I have no health insurance.  Now I have a new tumor.  I have no way to pay for it. Doctors will not see you without paying $100 or $150 to come into their office.  I can get checked into a hospital -- under their program, they will run tests and release me, but that costs a lot of money.

     So currently I basically -- Social Security will not give me disability because renal failure is no longer a qualifying factor under Social Security currently.  I cannot get Medicaid from the state of Virginia because you have to be considered disabled through Social Security to qualify for Medicaid in the state of Virginia because I have no dependent children at home -- it's just me.  I get food stamps, but that's it.  And I'm just trying to figure out how I'm going to make it in nine years until I'm qualified to get my regular Social Security -- now that I have a new tumor and I have nowhere to turn.
     THE PRESIDENT:  Well, here, come on over here.  First of all, we're going to find out what -- we'll get your information and we'll see what we can do to help you.  I don't want you to feel all -- like you're alone.  (Applause.)

     You know, without knowing all the details I'm not going to give you an answer right now about exactly how we can help.  We're going to find out what we can do within existing law.  But -- what was your name again?

     Q    My name is Debbie. 

     THE PRESIDENT:  Debbie.  Debbie is a perfect example of somebody who we should, in a country this wealthy, be able to provide coverage for her health care problems.  And what we don't want is a situation where Debbie gets worse and worse because she's not getting treatment, and then ends up having to go to the emergency room.  As I said before, all of you will pay for it anyway; it's just you'll pay for it in terms of a hidden subsidy. And she's not getting the best care, and we're actually paying more than we would have if Debbie right now was getting treated on a regular basis by a physician who knew her history.

     So, Debbie, you are Exhibit A.  And we appreciate you sharing your story.  We are going to try to find ways to help you immediately.  But the long-term problem here is going to be how do we create a system in which Debbie is getting the preventive care that she needs and is able to get regular checkups, is able to get treatment in a way that is much more cost-efficient than the one that we've got right now.  And I'm going to make a commitment that we're going to get that done this year.

     All right?  (Applause.)

     Q    Sir, July 24th through the 26th, there's a thing in Wise County, Virginia, called RAM Ear and Medical, and that is -- Rural Area Medical is where anybody who needs medical treatment can get free treatment for those three days -- the 24th, 25th, and 26th  --

     THE PRESIDENT:  The 24th, 25th, and 26th --

     Q    -- of July.

     THE PRESIDENT:  Well, we will help advertise that --

     Q    If you would like to showcase why there's a need.  I think they treated -- Governor Warner and Kaine can say how long -- but I think it's 7,000 people get treatment there every day of those days that it's free.

     THE PRESIDENT:  Which is a wonderful program.  But I think, as Senator Warner and Governor Kaine would agree, we can't have a system that's reliant on three days of free care and 362 days in which people don't have health care.  That doesn't make any sense. 

Debbie, thank you for sharing your story.  We appreciate you.  Thank you.  (Applause.)

     All right.
MS. JARRETT:  Thank you, Debbie. 

So many of the questions that are put to on the videos, Mr. President, are also very personal.  So now we're going to take another from a video.

     (Video is shown.)  SMALL CHILD:  My mommy and daddy have small businesses and we need health care.

     MOTHER:  I actually have to work for a company so that we can get coverage because my older daughter is an automatic decline and we're just too small of a business to be able to absorb the cost.  How can health care reform help us? 

     THE PRESIDENT:  As somebody with two daughters, I'm a sucker for anybody who uses their daughter in their video.  (Laughter.) So my staff probably knew that.  They figured, well, he's going to be a soft touch after that one.

Small business owners are those who are being, in some cases, hardest hit by the rising cost of health care.  And in some cases, they just can't afford to provide health insurance to their employees, and that's frustrating, but they're operating on too small a margin, or they don't have enough employees so they've got no leverage to negotiate with the insurance companies.  And so the offers that insurance companies give them for the cost of coverage per person end up being way higher than they would be for big companies that have more consumer power. 

In some cases, though, it's gotten so bad that small businesses, they can't even afford to provide health insurance for themselves, small business owners.  And a lot of small businesses, a huge percentage of small businesses are sole proprietorships.  Maybe it's a family business -- they've got one or two people working for them.  And so they're like consultants out there or self-employed individuals -- they just can't get a good deal.

This is an example of where this health care exchange could be so helpful, because by creating a health care exchange, part of what we want to do is to allow small businesses, as well as people who are self-employed, individuals whose companies don't provide coverage, to come to this exchange, take a look at a menu of plans that are available, join one of these plans -- you may qualify for a subsidy from the federal government -- and you then become part of a big pool that gives you some leverage over the drug companies and the insurance companies to drive down costs.   

And that's part of the way that health care reform can provide direct savings to American families right now, by giving them more leverage.

Look, I am very pleased that the drug companies decided to cough up $80 billion to help close this "doughnut hole."  I have to be honest with you, though:  Were it not for the prospect of serious health care reform, I don't think they would have given up that money.  That's just my guess.  (Applause.)  And so these same principles apply when it comes to setting up this health care exchange.  If we do it effectively, then not only will families be able to make some very clear choices, and small business owners make some clear choices, about here's the best plan available for us that fits our particular needs, but they're also going to be part of a broader group that can apply some leverage in the system.

And that's essentially what federal health care employees do.  Mark Warner has a plan that all members of Congress and federal employees have, and it's not Cadillac care, but it's good, solid, decent care with a range of options.  Part of the reason that it is a good program is because there's so many federal employees.  Well, we should provide that same kind of leverage for the small business owner who right now is too small on their own to be able to get the best possible deal on the insurance market, and that's what we want to provide in this health care reform package.  All right?  Good.

MS. JARRETT:  All right, I think we're ready to go back to the audience.

THE PRESIDENT:  All right, it's a guy's turn now, all right, so, ladies, keep your hands down.  (Laughter.)  All right, this young man right here.

Q    Thank you.  I've been hearing a lot --

THE PRESIDENT:  What's your name?

Q    Jason Rosenbaum.

THE PRESIDENT:  Hey, Jason.  What do you do, Jason?

Q    I work for a group called Health Care for America NOW.  (Applause.)

THE PRESIDENT:  I think he knows something about health care.  This is like --

Q    I've been -- obviously I read the news a lot, and I've been hearing a lot about the price tag of health reform and how people are very concerned that it's going to cost a trillion dollars, and we're trying to keep it under a certain number.  I'm most concerned about making it affordable, folks like me, the American people.  So what do you -- and like you said, you're committed to making this deficit-neutral.  So I hope you could talk a little bit about affordability and what your plans are for that. 

THE PRESIDENT:  Good.  Well, look, the first thing that I think is very important for people to do is to understand the costs of doing nothing, because sometimes opponents of health care reform pretend as if we've got this great thing going here and the Obama administration wants to completely upend it just because I don't have enough to do.  (Laughter.)  And I keep on trying to explain to people, look, I've got a war in Afghanistan; we haven't gotten the troops out of Iraq yet; I've got North Korea and Iran; and H1N1 flu.  So if the health care system was really working well, I would be happy to leave it alone.

     So understand where we're at.  If we don't do anything, the costs are going to keep on rising.  I mean, some employers see their costs going up 8, 9, 10 percent a year.  As I said, families have seen their health care costs double over the last nine years.  So you just project out nine years from now -- your wages or incomes aren't going up that fast, which means that a bigger, bigger bite is being taken out of your paycheck, even if you've got health insurance.  More and more employers are saying in this very competitive atmosphere, we can't afford to do more.

     So what's happened if you've got health insurance?  Your employer has basically done what?  They've increased deductibles; they've increased premiums.  Your out-of-pocket costs have gone up by about 62 percent, and they're just going to keep on rising. And the cost of Medicare and Medicaid, because they track all these other costs, they're going to keep on skyrocketing.  So our deficit will be completely out of control.

     Don't let people fool you with this notion that somehow the reason for our deficit has to do with, for example, the Recovery Act.  The Recovery Act was designed to make sure that local school districts didn't lay off teachers and firefighters and police officers -- and it's done its job, and it's building the kind of infrastructure that we need to be competitive in the future.  But it is a tiny fraction of our long-term deficit projections.  Almost all of the long-term deficit projections come from increases in Medicare and Medicaid.
     So the reason I say all this is because the costs are going to be there if we don't do anything.  The deficit will grow if we don't do anything.  Our debt will grow if we don't do anything.  What I'm trying to do is figure out how do we bend the curve of costs so that we're getting more and more efficient care, higher-quality care, at less cost per person?  How do we eliminate the $1,000 per family that's coming out of your pocket in subsidized care, uncompensated care at hospitals that's going on right now?

     And if we can do that, then, A, we can cover more people with the savings; and, B, we have more leverage over the insurance companies and the drug companies so that they give a better deal.  That's what we're trying to do.

     Now, I do think that we can't add to the deficit; we should find ways to honestly pay for whatever reforms we're proposing.  And I already gave you an indication of how we would do it.  About two-thirds of it would come from reallocating money that's currently in the system -- taxpayers, you're already paying for it, so this isn't new money coming out of your pocket; this is money that's right now being spent by the federal government but not spent wisely in a way that makes you healthier.  That's two-thirds of it.

     One-third of it, because we've got to make some initial investments up front and a lot of the savings -- remember what I told you -- aren't scorable, we're going to have to raise some additional revenue to make sure that people are adequately covered and we're providing some help to families who may have health insurance but are really starting to struggle right now.

     And I think the best way for us to pay for it is, as I said, capping the itemized deductions that people making over $250,000 a year, people like myself -- used to be Valerie was making that, but now she's working for the federal government so -- (laughter) -- she wouldn't be affected by this -- capping those itemized deductions.  Then we can raise enough money to pay for a good, high-quality health care reform proposal that will provide health care security for everybody.

     And as I said before, many of you may be satisfied with your health care now.  What you've got to do is project, if current trends continue, are you still going to be happy with your health care five years from now?  Will you have health care five years from now? 

     A lot of people here, if you change jobs right now but you've got a preexisting condition -- and just about anything these days can be called a preexisting condition -- you may have trouble signing up for health care the next time around -- just because you changed a job, set aside the situation where you lose a job. 

     One of the things that we did in the Recovery Act was to help people with COBRA.  Everybody knows what COBRA is?  That's the program that allows you to get health insurance -- to continue your health insurance even when you lose your job.  The problem is premiums are so high that most people, when you lose your job, you can't afford it.  The last thing you can do is afford suddenly a $1,000 or $1,500 in premiums.  So what we did was we subsidized people being able to keep their health insurance longer, cutting those COBRA costs. 

I think that was a pretty smart thing to do.  That was the right thing to do.  But we can't just do that indefinitely.  We can't do patchwork, piecemeal fixes through a Recovery Act.  What we need is a permanent solution that ensures that when you lose your job or change jobs, you can still have health care; if you're self-employed, you've still got health care. 

     Every nation on Earth that is as wealthy as ours is able to do that.  And they don't do it perfectly -- that's why I say we've got to find a uniquely American solution -- but don't tell me that we can't get this done.  And for those who say, well, you know what, this is something that is very complicated so we shouldn't rush into it -- that's what happens in Congress all the time.  They have hearings, they write white papers, and then suddenly the lobbyists and the special interests start going at it, and the next thing you know, another 10 years has gone by and we still haven't done anything. 

That's not what's going to happen this time.  I am going to keep on pressing until we get it done this year.  All right.  (Applause.)

     MS. JARRETT:  All right, Mr. President.  So Macon just slipped me a note, and he said, right now on Facebook and on Twitter, a lot of people are talking about the proposal to tax health care benefits.  For example, Rob on Twitter said, "Does it really make sense, Mr. President, to tax me on my health care coverage?"

     THE PRESIDENT:  Well, here's -- let me describe for you how this argument has evolved and where I've stood on it in the past and what's being debated in Congress. 

     Part of the reason that employers provide health care to most American is because they get a big tax exclusion.  They don't pay taxes on -- and you don't pay taxes on the health care benefits that you receive.  So it's a huge subsidy that's provided through the tax code for employers to provide you coverage. 

     Now, up until, let's say, a generation ago, this worked reasonably well.  It's starting to break down because even with the tax exclusion, the cost for employers, just out of pocket, paying the insurers, is getting more and more expensive.

     Some people have said that what we should do is just eliminate this tax exclusion so that the federal government isn't indirectly subsidizing employers providing care, and that we could take that money and then just give everybody a tax break individually and then they could go out and shop for their own health care.  This was essentially John McCain's proposal during the campaign.  I mean, I want to be fair to it.  The idea was, you eliminate the exclusion; the billions of dollars that come back into the Treasury are then given out to each person in the form of a $5,000 or a $7,000 tax credit, and then you go out and you buy your own insurance. 

And the thinking is that if you do it that way, then each of you are going to be more discriminating consumers, and you are going to go out and get the best possible deal, and you won't be overusing the health care system.  You won't be going to the doctor unnecessarily or taking drugs that you don't really need. And you will be the -- you will essentially engage in self-rationing.  That's really the concept behind this idea.

Now, in fairness, the other notion is, is that if you don't have your health care tied to employers, then you're not going to be as worried about losing your health insurance if you change your job because the money follows you as opposed to being with the employer.  So that's the concept.

Now, I opposed this during the campaign, and I opposed it for a couple of reasons:  Number one, if you completely eliminated the exclusion, there is no doubt that what would happen is, is that a lot of employers would stop providing health care.  And so a lot of people who currently get health care through their employers wouldn't be able to get it.

The second thing -- remember what I told you earlier about how if you are on your own shopping for health care you've got no leverage with the insurance company.  Well, the problem is, is that if suddenly now you get a tax credit for $5,000 or $7,000, you try to go buy some health insurance for your family, and it costs $14,000, you're a lot worse off than you would have been.  You're out of luck.  And you've got no leverage; they've got no incentive to give you a lower price because you're on your own.

The other problem is that when you're not part of a pool, the insurance companies have every incentive to make sure that if you are older or you are sicker, that they do not cover you.  They want to cover the young, healthy folks like Mark Warner.  (Laughter.)  That's who they want.  But if you're older or sicker, you are more likely to be excluded from coverage, or they really jack up the rates.  When you're part of a pool, then the insurers say, well, I guess we'll take the older, sicker folks because we're also getting the younger, healthier folks at the same time.

So, for all those reasons, I opposed the proposal that was put forward, because essentially it would be, for the first time, taxing the health care benefits that are provided by employers.

Now, nobody at this point is -- or not many folks are talking about taxing benefits or completely eliminating the exclusion.  What they are calling for now in Congress is to cap the exclusion so that people who have very high-priced health care, at a certain point they can only get a deduction up to a certain point, right?  So let's say that the average health care cost for families -- a good health care plan costs $13,000.  What they would say is the employer and the employee get an exclusion up to $13,000, but if you get some Cadillac plan that costs $17,000, then what we're going to do is you're going to have to pay taxes on that last $4,000.  And the idea that is being debated in Congress right now is, is that a good way to ensure that people don't have these big Cadillac plans but instead have more sensible plans?

     Now, I don't think -- and by the way, that also raises some money.  So this has been offered as an alternative way to pay for that extra one-third of health care that we're not able to pay for through simply reallocating money.

     I think the better way to do it remains the proposal I have to cap itemized deductions.  I think that is a way that we can ensure that people who currently have health care aren't suddenly seeing the costs go up to pay for other people's costs going down, but instead everybody's costs can go down effectively.

     But this is something that's going to be debated in the House and the Senate.  Mark Warner is going to have to weigh in on it.  We're all going to have to weigh in on it.  My bottom line, though, is that if you've got health insurance right now, you shouldn't suddenly see your costs go up as part of health care reform. 

Okay?  Good.

     MS. JARRETT:  All right, Mr. President, I think we're teed up for another video question.

     THE PRESIDENT:  All right.

     VIDEO Q   Mr. President, as a physician, I know the cost of defensive medicine drives medical costs upward.  Now, at your health care forum you said that you wanted to find out what works.  In my home state of Texas, we know what works, and our Medical Justice Act has done just that. 

     Now, unfortunately, you recently told the AMA you were opposed to capping non-economic damages, even though a state like mine has proven that it does work.  Now, will you reaffirm your commitment to find out what works and then ask Congress for its implementation?

     THE PRESIDENT:  Okay.  I want to make sure everybody understands the question here.  A lot of doctors have argued -- and in some cases they're justified -- that their costs for medical malpractice insurance, the threat of a lawsuit if something goes wrong with a patient, even if it's not their fault, is so high that not only is it increasing their out-of-pocket cost, but they're also engaging in what's called defensive medicine; that they've got to order five tests when one is enough just to make sure that they're covered so that if something goes wrong that's not their fault later, they can say, look, I did everything possible -- even if a lot of that isn't required.

     And so the argument is if you can cap the pain and suffering or the liability that is awarded as a consequence of you being hurt in the hospital or by a doctor, that that would drive down everybody's costs.

Now, what I've said is that I don't like the idea of an artificial cap on somebody if the doctor or the hospital really was negligent.  And in some cases, I've got to tell you, they are.  I mean, there are cases where folks leave a sponge in your gut and sew you back up, and after a while you're feeling worse than when you went in.  And in some cases, obviously that can cause very severe damage, and I want to make sure that people's pain, suffering, out-of-pocket expenses, that those are covered. 
So I don't like the idea of just an artificial cap.  I do want to work with doctors to find ways that we can reduce their liabilities where they haven't done anything wrong, where they've performed effectively.  I want to see, are there ways that we can reduce the constant threat of lawsuits that doctors and hospitals experience, because I do think that that causes defensive medicine.  And so I've committed to working with the AMA to see ways that we can reduce some of these litigation costs and malpractice rates.

One point that I've got to dispute, though, with the gentleman who asked me the question -- he says he's from Texas, and that we've got caps in Texas, and so we've seen what works.  Well, the fact is, is that there was just recently an article about a town called McAllen, Texas, where they have the highest health care costs in the country.  It's down by the border.  And even though they have caps there, in McAllen, Texas, they spend about three times as much per person as -- or not -- they spend about 30 percent more per person than they do in El Paso, Texas, which also is operating under caps.  So what that tells me is the problem of rising costs doesn't simply have to do with whether or not liability is capped.  What it really has to do with is the incentives that are operating in various communities.

There are some places, like the Mayo Clinic, many of you have heard of, provides outstanding care, some of the best in the world.  People fly in from everywhere to go to Mayo Clinic to get treated.  Turns out Mayo provides care much more cheaply than a lot of other health systems, even though it's better care.  And part of the reason is they do some things that are commonsensical, but unfortunately we don't do in the health care system. 

For example, instead of you going to one -- your primary care physician, who has you do a bunch of tests, then refers you to a specialist who has you do a bunch of tests, then maybe you go to a third specialist, another bunch of tests; go to the hospital, they retest you.  What they do is, at Mayo Clinic, when you meet with the -- your primary physician, he calls in all the specialists all at the same time, and as a team they evaluate you, do all the tests right there, so you're not duplicating a whole bunch of stuff.  And that coordinated care drives down costs tremendously.

     That's the kind of common-sense approach that we're going to have to take.  And one of the things that we're going to need to do in the health reform that we're proposing is to incentivize those kinds of smart practices coordinating care, as opposed to what we do right now, which is we just pay you -- the more services you provide, the more we pay you, which gives doctors and hospitals a pretty strong incentive to test you five times instead of one time.  I'm not saying they do it consciously, but right now we're preventing them from coordinating in a smart fashion because of the ways that we reimburse.  That has to be part of the reform that we initiate.

     All right.

     MS. JARRETT:  All right, Mr. President, I'm getting the high sign, so how about one more question from our wonderful audience?

     THE PRESIDENT:  One more question from the audience.  Let's see.  It's a girl's turn, isn't it?  I think so.  This young lady right here.

     Q    Hi, Mr. President.  I'm a member of SEIU and I'm down here in Fairfax County working on Change That Works.  What can I do, as a member of the union, to help you with your reform bill?

     THE PRESIDENT:  Well, I appreciate the question.  The most important thing I think the American people can do right now is to just be informed.  Tell your friends, tell your neighbors to get informed about what's happening in the health care system right now.  It's very complicated and I don't expect everybody to be an expert, but I want everybody to be well enough informed that the scare tactics of those who would oppose reform don't work.

     So when you hear somebody say this is -- "Obama is proposing a government takeover of health care" -- that's an old argument that's been used for years.  I just want to be clear.  If you've got a health care plan that you get through your employer or some other private plan, I want you to keep it.  I actually think reforming the system is the most likely way for you to keep the health care that you've got.  I don't want to take it over.  I think it's great that you can keep the care that you've got.

     All I've said is I want to make sure that those things that taxpayers are paying for, that we're getting our money's worth.  I don't want to provide $177 billion in subsidies to insurance companies.  I don't want to reimburse for five tests when the evidence shows that you just getting one test is going to be better for you because that means that the taxpayers are saving money and I can use that to lower your costs, or to help somebody who doesn't have health care at all.

I do think we should have a public plan to compete with the private plans.   But these private insurance companies, they're always telling me what a great deal that they give to the American consumer; if it's such a great deal, why are they worried about competing against the public plan, especially when they say government can't do anything?  (Applause.)

So they'll tell you that we're trying to take over health care.  I don't want to take over health care. 

They'll tell you that we're going to try to ration the system.  We don't want to get between you and your doctor.  What we do believe is that if there's good evidence out there that shows that the best way to treat your illness is to give you the blue pill, and instead right now you're getting prescribed the red pill that costs twice as much, I think that you and your doctor, having that information, are probably going to decide to go with the cheaper pill that does just as good of a job, and that will save you money.  That's not rationing.  That's being sensible.

So whenever you start hearing these arguments about socialized medicine, government takeover, rationing, Canada-style health care, what I need you to do -- and I need everybody here to do and everybody who's watching to do -- is to actually pay attention to the argument, and don't let people scare you out of reforming a system that we know is not working.

America -- one of the great things about this country is we've got a system that's sometimes kind of hard to change.  Congress gets kind of bogged down, and part of that is because of the way the Constitution is designed -- it's served us well because it keeps us very stable.  We don't have coups and all kinds of governments collapsing all the time.  But the disadvantage sometimes is, is that it's hard for us to make big, bold steps.  But the great thing about the system is that, every once in a while, when we finally hit a point where things just aren't working at all, we are able to generate the political will to finally get things done. 

That's how we got Social Security.  After the Great Depression, nobody had any pensions or protection, and people started realizing, we can't have a country where suddenly older Americans are just on the streets, after working hard all their lives.  And finally we got Social Security.  And then people said, well, we can't have older Americans who don't have any health care, and we got Medicare.  At every juncture, when we finally need to make a change, we make a change.  This is one of those times. 

So don't be scared about the future.  Let's embrace the future.  Let's go after the future.  If we do, then I'm confident that we can create a health care system that gives you choice, allows you to keep your doctor, drives down costs, makes sure that every American doesn't have to worry if they lose or change their jobs.  That's our aim.  That's our goal.  We're going to make it happen this year. 

Thank you, everybody.  I appreciate you.  Thank you.  (Applause.)

2:31 P.M. EDT

Remarks of President Barack Obama Weekly Address
Saturday, August 15th, 2009


[The full audio of the address:]


This week, I’ve been traveling across our country to discuss health insurance reform and to hear directly from folks like you – your questions, your concerns, and your stories.

Now, I know there’s been a lot of attention paid to some of the town hall meetings that are going on around the country, especially those where tempers have flared. You know how TV loves a ruckus.

But what you haven’t seen – because it’s not as exciting – are the many constructive meetings going on all over the country where Americans are airing their hopes and concerns about this very important issue.

I’ve been holding some of my own, and the stories I’ve heard have really underscored why I believe so strongly that health insurance reform is a challenge we can't ignore.

They’re stories like Lori Hitchcock’s, who I met in New Hampshire this week. Lori’s got a pre-existing condition, so no insurance company will cover her. She’s self-employed, and in this economy, she can’t find a job that offers health care, so she’s been uninsured for two years.

Or they’re stories like Katie Gibson’s, who I met in Montana. When Katie tried to change insurance companies, she was sure to list her pre-existing conditions on the application and even called her new company to confirm she’d be covered. Two months later, she was dropped – after she’d already gone off her other insurance.

These are the stories that aren’t being told – stories of a health care system that works better for the insurance industry than it does for the American people. And that’s why we’re going to pass health insurance reform that finally holds the insurance companies accountable.

But now’s the hard part. Because the history is clear – every time we come close to passing health insurance reform, the special interests with a stake in the status quo use their influence and political allies to scare and mislead the American people.

As an example, let’s look at one of the scarier-sounding and more ridiculous rumors out there – that so-called "death panels" would decide whether senior citizens get to live or die. That rumor began with the distortion of one idea in a Congressional bill that would allow Medicare to cover voluntary visits with your doctor to discuss your end-of-life care – if and only if you decide to have those visits. It had nothing to do with putting government in control of your decisions; in fact, it would give you all the information you need – if you want it – to put you in control of your decisions. When a conservative Republican Senator who has long-fought for even more far-reaching proposals found out how folks were twisting the idea, he called their misrepresentation, and I quote, "nuts."

So when folks with a stake in the status quo keep inventing these boogeymen in an effort to scare people, it’s disappointing, but it’s not surprising. We’ve seen it before. When President Roosevelt was working to create Social Security, opponents warned it would open the door to "federal snooping" and force Americans to wear dog tags. When President Kennedy and President Johnson were working to create Medicare, opponents warned of "socialized medicine." Sound familiar? Not only were those fears never realized, but more importantly, those programs have saved the lives of tens of millions of seniors, the disabled, and the disadvantaged.

Those who would stand in the way of reform will say almost anything to scare you about the cost of action. But they won’t say much about the cost of inaction. If you’re worried about rationed care, higher costs, denied coverage, or bureaucrats getting between you and your doctor, then you should know that’s what’s happening right now. In the past three years, over 12 million Americans were discriminated against by insurance companies due to a preexisting condition, or saw their coverage denied or dropped just when they got sick and needed it most. Americans whose jobs and health care are secure today just don’t know if they’ll be next to join the 14,000 who lose their health insurance every single day. And if we don’t act, average family premiums will keep rising to more than $22,000 within a decade.

On the other hand, here’s what reform will mean for you.

First, no matter what you’ve heard, if you like your doctor or health care plan, you can keep it. If you don’t have insurance, you’ll finally be able to afford insurance. And everyone will have the security and stability that’s missing today.

Insurance companies will be prohibited from denying you coverage because of your medical history, dropping your coverage if you get sick, or watering down your coverage when it counts – because there’s no point in having health insurance if it’s not there when you need it.

Insurance companies will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or lifetime, and we will place a limit on how much you can be charged for out-of-pocket expenses – because no one in America should go broke just because they get sick.

Finally, we’ll require insurance companies to cover routine checkups and preventive care, like mammograms and colonoscopies – because there’s no reason we shouldn’t be saving lives and dollars by catching diseases like breast cancer and prostate cancer on the front end.

That’s what reform means. For all the chatter and the noise out there, what every American needs to know is this: If you don’t have health insurance, you will finally have quality, affordable options once we pass reform. If you do have health insurance, we will make sure that no insurance company or government bureaucrat gets between you and the care that you need. And we will deliver this in a fiscally responsible way.

I know there’s plenty of real concern and skepticism out there. I know that in a time of economic upheaval, the idea of change can be unsettling, and I know that there are folks who believe that government should have no role at all in solving our problems. These are legitimate differences worthy of the real discussion that America deserves – one where we lower our voices, listen to one another, and talk about differences that really exist. Because while there may be disagreements over how to go about it, there is widespread agreement on the urgent need to reform a broken system and finally hold insurance companies accountable.

Nearly fifty years ago, in the midst of the noisy early battles to create what would become Medicare, President Kennedy said, "I refuse to see us live on the accomplishments of another generation. I refuse to see this country, and all of us, shrink from these struggles which are our responsibility in our time." Now it falls to us to meet the challenges of our time. And if we can come together, and listen to one another; I believe, as I always have, that we will rise to this moment, we will build something better for our children, and we will secure America’s future in this new century.

         August 15, 2009


Central High school
Grand Junction, Colorado

3:44 P.M. MDT

THE PRESIDENT:  Thank you.  Thank you.  Hello, Grand Junction!  (Applause.)  Thank you so much.  Thank you.  Everybody please have a seat.  It is good to be back in Southwest Colorado.  (Applause.)  Last time I was here I had some really good peaches.  (Laughter.)  Somehow, though, Michelle and the girls got to go pick peaches -- and I'm hoping they bring some back for me.

It is nice to take a break from the back and forth in Washington.  I want to especially want to thank Nathan for his introduction and sharing his story.  (Applause.)  It's not easy to talk about an illness in the family.  It's not easy to talk about such a painful experience.  Because it's important that we understand what's at stake in this health care debate he's been willing to share it with us.  And so I'm very grateful to him.

We've got a couple of other special guests that I want to acknowledge.  First of all, I stole him from you to make him what I believe will be the best Secretary of the Interior in the history of the United States, Ken Salazar.  (Applause.)  But I left things in good hands with the outstanding congressman and brother of Ken, John Salazar.  (Applause.)

Your outstanding governor of this great state, Bill Ritter, is here.  (Applause.)  As well as the extraordinary First Lady of the state, Jeannie Ritter is here as well.  (Applause.)

Two of the finest young senators that we've got in Washington right now:  Senator Mark Udall.  (Applause.)  And Senator Michael Bennet.  (Applause.)

I want to thank the hospitality of Grand Junction Mayor Bruce Hill.  (Applause.)  And finally I want to thank Tillie Bishop for the invocation.  (Applause.)  And I want to thank the Central High students Elise Beckstead, Crystal Rossman, Axel Urie and Amelia LyBarger for their National Anthem and Pledge of Allegiance.  Thank you, guys.  (Applause.)

Oh, and Central High principal Jody Diers is here.  (Applause.)  And it turns out school starts in two days.  (Laughter.)  You know, when I was going to school we always had until Labor Day.  (Laughter.)  It's rough for kids these days.  But it's important for us to be able to compete internationally, so it's great to see dedicated educators like we have here at Central High.  (Applause.)

You know, Nathan's story is the kind of story that I've read in letters and heard in town halls all across America.  And on Tuesday I was in New Hampshire talking about people denied coverage because of preexisting conditions.  Yesterday, I was in Montana talking about people who've had their insurance policies suddenly revoked, even though they were paying their premiums, just because they got sick.  Today we're talking about people like Nathan and his family who have insurance but are still stuck with huge bills because they've hit a cap on their benefits or they're charged exorbitant out-of-pocket fees.

And when you hear about these experiences, when you think about the millions of people denied coverage because of preexisting conditions and the thousands who have their policies cancelled because of an illness, the countless people like Nathan, I want you to remember one thing:  There but for the grace of God go I.  (Applause.)  This is something that sometimes we've forgotten during the course of this health care debate.  These are ordinary Americans.  They're no different from anybody else.  They're working hard, they're meeting their responsibilities, but they're held hostage by health insurance companies that deny them coverage, or drop their coverage, or charge fees that they can't afford for care that they desperately need.

It's hurting too many families and businesses.  It's wrong.  And we're going to fix it when we pass health insurance reform this year.  (Applause.)

Now, this is obviously a tough time for the families in Colorado and all across America.  I just want to rewind the clock a little bit, because sometimes people have forgotten what's transpired over the last seven, eight months.  Just six months ago, we were in the middle of the worst recession of our lifetimes.  We were losing about 700,000 jobs each month.  Economists from the left and the right, liberals and conservatives, feared the second coming of the Great Depression.  I don't know if everybody remembers that.  That was six months ago.  That's why we acted as fast as we could to pass a recovery plan to stop the freefall.  And there's been a lot of misinformation about that, so let me just talk briefly about what it is that we did.

The recovery plan was divided into three parts.  One-third of the money -- one-third of the money in the Recovery Act, the stimulus plan -- went to tax cuts that are already showing up in the paychecks of nearly 2 million working families in Colorado, including right here in Grand Junction.  (Applause.)  So I just want everybody to be clear:  One-third of it, tax cuts -- not tax increases -- more money in your pockets to spend as you wish.

We also cut taxes for small businesses on the investments that they make, and hundreds of Colorado small businesses have qualified for new loans backed by the Recovery Act -- including 11 businesses in Grand Junction alone.  (Applause.)

So that was one-third of it.

Now, another third of the money in the Recovery Act is for emergency relief for folks who've borne the brunt of this recession.  So we've extended unemployment benefits for more than 150,000 Colorado citizens.  (Applause.)  We've made health insurance 65 percent cheaper for families who are having to use COBRA because they lost their jobs and they're out there looking for work.  (Applause.)  And for states facing historic budget shortfalls, we provided assistance that has saved the jobs of tens of thousands of workers who provide essential services, like teachers and police officers.  And Governor Ritter will tell you, if we had not had some of that money in, then Colorado would have had to make much more painful job cuts in vital services and might have had to put in place some very painful state and local tax increases.  So that was the second third of the Recovery Act.

Now, the last third of the Recovery Act is for investments that are already putting people back to work.  There are almost 100 shovel-ready transportation projects already approved in Colorado which are beginning to create jobs.  Not far from here, for example, there's a project to pave and add lanes to State Highway 92.  Most of the work is being done by local businesses, because that's how we're going to create jobs and grow this economy again.

And by next month, projects will be underway at more than 100 national parks all over America, including Colorado.  (Applause.)  Now these are -- these are projects restoring trails, improving infrastructure, making park facilities more energy efficient.  Earlier today, some of you may know, I toured Yellowstone with Michelle and the girls.  We saw Old Faithful -- I hadn't seen it since I was 11 years old.  It's still going strong.  (Laughter.)  Tomorrow we're going to be visiting the Grand Canyon.

And I recently signed into law a public lands bill that designates the Dominguez-Escalante Canyon as a National Conservation Area here in Colorado.  (Applause.)  These are national treasures -- symbols of how much we owe to those who came before us, and the fact that we're borrowing this earth from those who will follow us.  And I want to thank especially Ken Salazar, because he's been leading the way on these vital issues, especially in the West.  (Applause.)

As we grapple with enormous challenges -- like health care -- the work of generations past reminds us of our duty to generations yet to come.

So there is no doubt that the recovery plan is doing what we said it would:  putting us on the road to recovery.  It's not solving all problems.  Unemployment is still way too high.  But we just saw last week that the jobs picture is beginning to turn.  We're starting to see signs that business investment is coming back.  But that doesn't mean we're out of the woods.  Even before this extraordinary financial crisis we had an economy that was working pretty well for the wealthiest Americans -- working pretty well for Wall Street bankers, for big corporations -- but it wasn't working so well for everybody else.  It was an economy of bubbles and busts.  It was an economy in which the average worker, their wages and incomes had flatlined for a decade.  It was an economy that rewarded recklessness over responsibility.  So we can't go back to that kind of economy.

If we want this country to succeed in the 21st century, we've got to lay a new foundation for lasting prosperity.  And health insurance reform is a key pillar of this new foundation.  (Applause.)  Because this economy -- this economy won't work for everyone until folks like Nathan and his family aren't pushed to the brink of bankruptcy by medical expenses; until companies aren't slashing payrolls and losing profits to pay for health insurance; until every single American has the security and peace of mind of quality, affordable health care.

And health care touches us all in profound ways -- which by the way means that it's only natural this debate is going to be an emotional one.  There's a lot at stake.  And I know there's been a lot of attention paid to some of the town hall meetings that are going on around the country -- especially those where tempers have flared, and TV really likes that.  You can have 20 really great town hall meetings, and if there's one where somebody loses their temper, that's the one TV wants to cover.

What you haven't been seeing are the constructive meetings going on all over the country.  That doesn't mean people agree with me on every single issue, but it means that we've been trying to figure out how do we solve what we know is an unsustainable problem in our health care system.  (Applause.)

So just yesterday -- just yesterday I held a town hall in Belgrade, Montana, and we had a pretty good crowd.  Some were big supporters of reform.  Some had concerns and questions.  Some were completely skeptical.  And I got tough questions.  But even though Montanans have strong opinions, they didn't shout at one another.  They were there to listen.  And that reflects the American people and what our democracy is about, a lot more than what's been covered on TV these last few days.  And that's why I thank all of you, whether you're for or against health care reform, for being here today.  (Applause.)

Now, I'm going to take a bunch of questions, but before I do, I want to just talk about what health insurance reform will mean for you, because there's a lot of misunderstandings out there.

First of all, what we're proposing is a common-sense set of consumer protections for people with health insurance, people with private insurance.  I expect that after reform passes, the vast majority of Americans are still going to be getting their insurance from private insurers.  So we've got to have some protections in place for people like Nathan, people like you.

So insurance companies will no longer be able to place an arbitrary cap on the amount of coverage you can receive or charge outrageous out-of-pocket expenses on top of your premiums.  That's what happened to Nathan and his wife.  Their son was diagnosed with hemophilia when he was born.  The insurance company then raised the premiums for his family and for all his coworkers who were on the same policy.  The family was approaching their cap.

And so on top of worrying about taking care of their son, they had the added worry of trying to find insurance that would cover him -- plus thousands and thousands of dollars in out-of-pocket costs.  Nathan and his wife even considered getting a divorce so that she might possibly go on Medicaid.

Now thankfully, Colorado's law doesn't allow coverage for small businesses to permanently exclude preexisting conditions like his son's, so eventually they found insurance.  But they're paying increasing premiums and they still have to face the prospect of hitting their new cap in the next few years.

Those are the stories I hear all over the country.  I heard from a teenager in Indiana diagnosed with leukemia.  The chemotherapy and intensive care he received cost hundreds of thousands of dollars.  His family hit their lifetime cap in less than a year.  They had insurance.  So the insurance wouldn't cover a bone marrow transplant and the family couldn't afford all the money that was needed.  The family turned to the public for help, but the boy died before he could receive that transplant.

If you think that can't happen to you or your family, think again.  Almost 90 percent of individual health insurance policies have lifetime benefit limits.  And about a third of family plans in the individual insurance market have lifetime limits under $3 million.  If you or your spouse or your child gets sick and you hit that limit, it's suddenly like you have no insurance at all.

And this is part of a larger story, of folks with insurance, paying more and more out of pocket.  In the past few years, premiums have nearly doubled for the average American family.  Total out-of-pocket costs have increased by almost 50 percent -- that's more than $2,000 per person.  And nobody is holding these insurance companies accountable for these practices.  And by the way, your employer is paying even more, and you may not even see the costs of it except for the fact that's why you're not getting a raise -- (applause) -- because it's going into your health care instead of your salary and income.

So we're going to ban arbitrary caps on benefits.  We'll place limits on how much you can be charged for out-of-pocket expenses.  No one in America should go broke because they get sick.  (Applause.)

Now, insurance companies will also be stopped from cancelling your coverage because you get sick or denying coverage because of your medical history.  (Applause.)  Again, if you think this has nothing to do with you, think again.  A recent report found that in the past few years, more than 12 million Americans were discriminated against by insurance companies because of a preexisting condition.  When we get health insurance reform, those days will be over.  And we will require insurance companies to cover routine checkups and preventive care, like mammograms and colonoscopies.  That saves money; it saves lives.  (Applause.)

At the same time -- I just want to be completely clear about this; I keep on saying this but somehow folks aren't listening -- if you like your health care plan, you keep your health care plan.  Nobody is going to force you to leave your health care plan.  If you like your doctor, you keep seeing your doctor.  I don't want government bureaucrats meddling in your health care.  But the point is, I don't want insurance company bureaucrats meddling in your health care either.  (Applause.)

So just to recap here, if you're one of nearly 46 million people who don't have health insurance, you will finally have quality, affordable options.  If you do have health insurance, we will help make that insurance more affordable and more secure.  Under the reform proposals that we've put out there, roughly 700,000 middle-class Coloradans will get a health care tax credit.  More than a million Coloradans will have access to a new marketplace where you can easily compare health insurance options; 87,000 small businesses in Colorado will be aided by new tax benefits, so when they're doing the right thing for their employees, they're not penalized for it.  (Applause.)  And we will do all of this without adding to our deficit over the next decade, largely by cutting waste and ending sweetheart deals for insurance companies that don't make anybody any healthier.  (Applause.)

Now here -- if you don't -- I know there's some skepticism:  Well, how are you going to save money in the health care system?  You're doing it here in Grand Junction.  (Applause.)  You know -- you know that lowering costs is possible if you put in place smarter incentives; if you think about how to treat people, not just illnesses; if you look at problems facing not just one hospital or physician, but the many system-wide problems that are shared.  That's what the medical community in this city did, and now you're getting better results while wasting less money.  And I know that your senator, Michael Bennet, has been working hard on legislation that's based on putting the innovations that are here in Grand Junction into practice across the system, and there's no reason why we can't do that.  (Applause.)

So the fact is, we are closer to achieving reform than we've ever been.  We have the American Nurses Association, we have the American Medical Association on board, because America's doctors and nurses know how badly we need reform.  (Applause.)  We have -- we have broad agreement in Congress on about 80 percent of what we're trying to achieve.  We have an agreement from drug companies to make prescription drugs more affordable for seniors -- $80 billion that can cut the doughnut hole that seniors have to deal with on prescription drug plans in half.  (Applause.)  The AARP supports this policy, and agrees with us that reform must happen this year.

But look, because we're getting close, the fight is getting fierce.  And the history is clear:  Every time we're in sight of reform, the special interests start fighting back with everything they've got.  They use their influence.  They run their ads.  And let's face it, they get people scared.  And understandably -- I understand why people are nervous.  Health care is a big deal.  In fact, whenever America has set about solving our toughest problems, there have always been those who've sought to preserve the status quo by scaring the American people.

That's what happened when FDR tried to pass Social Security -- they said that was socialist.  They did -- verbatim.  That's what they said.  They said that everybody was going to have to wear dog tags and that this was a plot for the government to keep track of everybody.  When JFK and then Lyndon Johnson tried to pass Medicare, they said this was a government takeover of health care; they were going to get between you and your doctor -- the same argument that's being made today.

These struggles have always boiled down to a contest between hope and fear.  It was true when Social Security was born.  It was true when Medicare was created.  It's true in today's debate.  (Applause.)

But whether you have health insurance or you don't have health insurance, we all know we can't continue down this path.  Costs are rising far faster than wages.  Cuts -- the system works a lot better for insurance companies than it does for America's families.  To maintain what's best about our health care system, for you to keep what you've got if you're happy with it, is going to require change.

We've got to keep what's good about the system, especially the relationship between doctors, nurses, and their patients, while fixing what's broken -- because for all the scare tactics out there, what's truly scary is if we don't do anything.  We will continue to see 14,000 Americans lose their health insurance every day.  Premiums will continue to skyrocket, going up three times faster than your wages.  The deficit will continue to grow because most of it is Medicare and Medicaid.  Medicare will go into the red in less than a decade.  And insurance companies will continue to profit by discriminating against people just because they're sick.

So if you want a different future -- a brighter future -- I need your help.  (Applause.)  I need you to stand for hope.  I need you to knock on doors.  I need you to spread the word, because we are going to get this done this year.  Thank you, Grand Junction.  Thank you.  (Applause.)

Thank you.  Thank you.  All right.  Now, I've got time for a bunch of questions.  We've got a bunch of people in the audience with microphones.  Hold up your microphones, guys.  All right.  Now, the way we're going to do this is, I'm just going to go around the room.  Raise your hand.  To be fair I'm going to make sure it's girl, boy, girl, boy.  (Laughter.)  If you can introduce yourself and ask your question or make your comment, if you can keep your question or comment relatively brief, I will try to keep my answers relatively brief, and that way we can make sure that we get through more questions during the course of this event.  All right?  Okay.  Let's see hands.  And I'll start with this young lady right here in the pink blouse.  Oops, hold on, the mic doesn't -- can you check that mic?  Is it working?  Does it work?

Q    Good afternoon, Mr. President.  My name is Polly.  I work at Rocky Mountain Orthopedics here in Grand Junction.  On behalf of our CEO, I would like to extend an invitation for you to visit our successful practice to see how we provide excellent health care at a lower average cost to our patients.

My question is, the original health care House bill included funding for federally qualified health centers whose future budget would be based on expenses plus inflation.  If private physicians, hospitals, and other providers are going to be given incentives to reduce waste and cost, what will be done to ensure the government programs will do the same?

THE PRESIDENT:  Well, it's an excellent question.  Part of what's so important about reform is that right now the way Medicare and Medicaid operates, if it's starting to go over budget, we basically have two choices.  Either we raise taxes and just keep on paying more and more, and health care inflation is going up at least twice as fast as inflation on everything else, or what we do is we just tell the providers, we're going to give you less money -- period.  We'll reimburse you 80 cents or 90 cents for every dollar of services that you provide.  And then what happens is that the providers, they end up just charging people with private insurance to make up for the difference.  So that drives everybody's costs up.

Now what's been done here in Grand Junction, in other outstanding health programs like Mayo, is they started to change the delivery system so that you're actually getting more bang for your health care dollar.

Let me give you an example.  Right now if you go to your doctor and you get a test, a lot of times that test won't be forwarded to the next doctor or specialist that you have to see.  You have to take another test.  You might have to take three or four or five tests by the time your treatment is all completed.  That's a waste of money.  And if we can incentivize the provider to say, do one test and then e-mail the results to everybody who might be providing treatment, or the patient might be referred to, that right there saves a lot of money.

So what we want to do is to do this in Medicare and Medicaid, which will incentivize a lot of health systems around the country to start using some of the smart practices that you're using.  Frankly, Medicare and Medicaid is -- they provide a lot of care for a lot of patients, particularly seniors, and so if they hear from Medicare, can you start doing things smarter, they have an incentive to do it, and once they put a smarter system in place, the benefits spill over to the private insurance market, as well.  So we want to do it through Medicare and Medicaid, but we also want to see in the private insurance market that health providers start thinking smarter and providing better care, which often turns out to be lower-cost care.

Now, it's not going to happen overnight, because a lot of these systems have been put in place for a long time.  And if you're in Grand Junction or Mayo Clinic or Geisinger or other of these really good health care systems, what they've done is each year they are continually comparing notes, they've got a peer review process where doctors are exchanging ideas, and they're continually making the system better and better, smarter and smarter, and over time what we can do is bend the cost curve so that instead of having inflation go up a lot faster on health care than everything else, it matches everything else.

And if we could do that, if we could just get health care inflation to match the inflation on food and other items, all of our deficit -- long-term deficit problems would be solved.  Just that alone.  If we could just reduce the amount of health care inflation, our long-term debt and deficit problems would be solved.

So this is the most important thing we can do for deficit reduction.  And I want everybody to remember that, because in this debate you've heard a lot of people saying, "We can't afford to do this because our deficit and debt are too high."  The biggest driver of our deficit and debt is health care.  And if we don't change delivery systems and adapt some of the innovations that are being used where you work and in really good health care systems around the country, then we're going to be in red ink forever.

Okay.  Thank you so much for the question.  (Applause.)

All right.  Gentleman in the red shirt back there.  Wait for the mic so everybody can hear you.

Q    Thank you, Mr. President, for taking my question, for one.  I've got a bunch, but -- my name is Randy Piper (phonetic) and I have been in the health insurance business for over 25 years.  I'm also a big Steelers fan, as well.

THE PRESIDENT:  I like that in you.  (Applause.)  Are you allowed to confess that though here, where -- (laughter.)

Q    I can take it.  (Laughter.)

THE PRESIDENT:  All right, all right.  Go ahead.

Q    You have asked many times why insurance companies are so afraid of competing with a public plan option of coverage.  And I understand insurance companies need to get spanked every now and again for sure, but if the public plan option reimburses on average 55 cents by contract of every dollar of care to the provider, and the private insurance plans by contract reimburse an average of 85 cents per dollar of care, how can it be considered fair competition?  And thank you for being here today.  (Applause.)

THE PRESIDENT:  No, I think it's a good question.  Thank you.  For those of you who have not been following the debate as closely, let me just describe what this issue of the public plan is all about.  And to do so, I've got to describe how we're looking to provide health insurance for people who currently don't have it.  I spent most of my time talking about what we would do for folks who have health insurance, but we've still got 46 million uninsured and I think it is the right thing to provide them with some help.  Most of them work.  Most of them are responsible.  But their employer -- maybe they work for a small business -- their employer just can't afford it because they don't have the bargaining power to get low enough rates to cover all their employees.  That's a big category of the uninsured.

So what we've said is, let's set up what's called a health insurance exchange.  It's essentially a marketplace where you could go online and you'd have a menu of options, most of them private insurers -- Aetna, BlueCross BlueShield -- insurance companies that wanted to participate, and they would list a range of plans just like when Mike and Mark want to get health insurance as members of the Senate, they go on to this exchange for federal health care -- for federal employees, and they select which plan works best for their families.

So we want everybody to be able to access that and choose which plan works best for them.  And if they can't afford it, even though we'd have a lot of bargaining power, we'd be able to get the same kinds of rates that really big companies are able to get or the federal system is able to get, some people will still not be able to afford it, and then we would provide some subsidies.  And there would be certain rules governing any insurance company that's participating:  You couldn't exclude for preexisting conditions; you couldn't have a lifetime cap; you'd have to limit out-of-pocket expenses.  So all the insurance rules that I talked about, that would be part of the deal if you as an insurer wanted to sell insurance through this exchange.

So far, so good.  The argument around public option is, should one of the choices -- not the only choice -- but one of the choices on that exchange be a public option?  And the idea here would be that a government-run non-for-profit would have its own option that people could sign up for -- they wouldn't have to, but they could sign up for it -- and if it could keep its costs lower and provide a good-quality service and good benefits, then that would help keep the insurance companies honest -- (applause) -- because the idea being -- the idea being that as a non-for-profit, potentially with lower administrative costs, they could do a good job.

Now, the insurance companies have come back and said, well, that's not fair, because nobody can compete against the government.  They have a legitimate point if, if what's being done is the government is either subsidizing that government plan -- essentially taking taxpayer money and saying, here, we'll just keep on spending money regardless of whether you run a good operation or not, then it's hard for insurance companies to compete against that.  And by the way, it would be wildly expensive for taxpayers.

So I've already said a public option can only work if they have to collect premiums just like a private insurer and compete on a level playing field.  That's point number one.

The second argument that's been made is the one that you just made, which is, if public option is reimbursing at Medicaid rates that are substantially lower than what private insurers have to negotiate for, then eventually, over time, private insurers might be run out of business.  So that's the second argument.

Now, what's happened in the House bill, that as it's been modified, is they've actually said we're going to negotiate rates, they won't be Medicaid rates.  So that actually solves the problem that you're addressing, because now this would be a negotiated process and prices would not be set just to Medicaid.  All right?

Now, there's a third argument against the public option, and this is the one, really, that you've been hearing mostly about, and that is just this idea that we shouldn't have government involved at all, that government is part of the problem, not part of the solution, to quote Ronald Reagan.  (Applause.)  We've got some supporters of that view.  And I guess the only -- look, I think you can have a legitimate position just saying you don't want to see more government involvement.  I understand the argument.  The only thing I would point out is, is that Medicare is a government program that works really well for our seniors and has protected people -- (applause) -- hold on one second, let's not start yelling.

It's true that it's expensive, but the truth is that actually the cost of Medicare inflation has actually gone up at a slower rate than private insurance.  So it's not because it's mismanaged; it's because of what was referred to in the first question -- the whole health care system is out of whack and way too expensive.  It's not government, per se.  It has to do with the fact that the health care system itself, the delivery systems, are not working the way they should.

So if you just believe the government shouldn't be involved in anything, or shouldn't be involved in health care, period, then you're right that you can't support the kind of reform that we're proposing.  The only thing I want to make sure of, though, is you've got to -- you make an honest argument, because nobody is talking about government takeover of health care.  There's a difference between what we're proposing, which has some government involvement, versus this idea that somehow government is going to take over everything and get between your and doctor.  That's not what we're proposing.

So we can have an honest disagreement, but I just want to be clear on what the debate is about.  It's about this narrow issue of the public plan.  It's not about somehow eliminating private insurance.  Everybody who has currently private insurance that works for them will be able to keep private insurance under the proposals that have been made in Congress.  All right?  (Applause.)

Okay, it's a woman's turn.  It's a young lady's turn.  Let me -- right there with the vest.  Yes, that's you.  (Laughter.)

Q    Hello, Mr. President, and thanks for being here.

THE PRESIDENT:  Thank you.

Q    My name is Jamie and I am a nursing student at Mesa State.  (Applause.)

THE PRESIDENT:  Outstanding.

Q    Being as I am a potential health care provider in the health care system, there are a few things in the plan that I read about that I wanted to understand more --


Q    -- as far as providers being required to report -- what was the words -- preventable medical errors in the health care system.  Now, as far as health care systems are concerned, we are required to report every error we see.  So I kind of want a clarification of how much you're expecting from providers in this system.

THE PRESIDENT:  Well, different states have different rules.  So we got kind of a patchwork.  I don't -- I confess I don't know exactly what the rules are here in Colorado.  But about 100,000 people die every year from preventable diseases and illnesses in hospitals.  Some of the ways that we could solve this are so simple.  There's actually a doctor who's put together a protocol -- washing your hands, a lot of just basic stuff that costs no money -- that has been shown repeatedly to cut these preventable illnesses and deaths down drastically -- by a magnitude of 50 percent, 75 percent reductions in preventable deaths just by applying these things that don't cost any money.

So the question then becomes, how do we get more hospitals, more doctors, more health systems, to adopt these systems.  And the best way to do it is to make sure that not only are they reporting these preventable errors, but that they're also available to consumers -- the American people -- so that if they've got too many of them, after a while they start getting embarrassed.  Right?  I mean, if you found out that there are two hospitals here in this city and one hospital has half the preventable deaths of the other hospital, you'd want to know that, wouldn't you?

The problem is right now oftentimes it's very hard for consumers to get that information directly.  So the idea is simply to make sure that that information is packaged in a way where you can comparison shop, and your employer -- if you're getting health insurance from your employer -- could comparison shop.  So we're putting some competitive pressure to improve quality across the system.  That's what we're talking about.  (Applause.)

By the way, thank you for being a nurse, because we need more nurses.  That's important.  (Applause.)

All right, gentleman right here in the t-shirt.  Hold on one second, we got a mic coming.

Q    Thank you for coming to Colorado.  It's a great place.

THE PRESIDENT:  It's a great place.  (Applause.)

Q    You touched on this.  I would like you to expand a little more.  This problem with misinformation in our country, it seems to me that it's not only just hurting health care reform, health insurance reform, it's dividing our country.  (Applause.)  Is it not maybe time -- I think we all know where it's coming from.  Is it not time that something can be done -- okay, I got to watch what I'm saying, but --

THE PRESIDENT:  Well, look, let me -- let me just -- let me address this.  You know, health care is really hard.  I mean, this is not easy.  I'm a reasonably dedicated student to this issue.  I've got a lot of really smart people around me who have been working on this for months now.  We've got really fine public servants like Senators Bennet and Udall who are working on this and thinking about it a lot.

And the truth is -- I want to be completely honest here -- there is no perfect, painless silver bullet out there that solves every problem, gives everybody perfect health care for free.  There isn't.  I wish there was.  I wish I could just say, you know what, we're going to change the system, everybody will get as much care as they want any time they want, everybody will have it, and it won't cost anything.  And doctors will be happy and nurses will be happy, hospitals will be happy, insurance companies will still make a lot of profits, drug companies will be able to charge as much as they want.  I can't do it.  Nobody can.

What I can do is try to sort through what are all the options available, be realistic about where we're going on health care, say to myself, if we keep on doing what we're doing, we are in a world of hurt.  We can't afford what we're doing right now.  More people are going to lose health insurance.  More employers are going to drop coverage or push more coverage onto their employees with higher premiums and higher deductibles.  Medicare and Medicaid will go broke.  State budgets and federal budgets will be unsustainable.

And then we're going to have to make some really bad decisions where we had no good options -- even worse options than we have right now.  And what's going to end up happening is -- mark my words -- if we do nothing, at some point Medicare in about eight to nine years goes into the red.  Somebody mentioned it's going broke -- yes, it is going broke.

So here's what's going to happen if we don't change the delivery systems and change some of the incentives -- we'll have a choice.  We'll either have to cut Medicare, in which case seniors then will bear the brunt of it, or we'll have to raise taxes, which nobody likes.  And we still will be paying about $5,000 to $6,000 more than any other advanced country in the world and not get better health care for it.  Now that doesn't make sense.

So in terms of misinformation, there is -- because there's no perfect solution, we can have legitimate debates about the public option that we just had.  That was a good, serious debate, and you can make a plausible argument as to why we shouldn't have a public option.  Now, I believe that we should on balance.  It's not perfect.  It's not going to solve every problem, but I think it actually would keep the insurance companies more honest.  You can have a honest disagreement with me on that.

What you can't do -- or you can, but you shouldn't do -- is start saying things like, we want to set up death panels to pull the plug on grandma.  I mean, come on.  (Applause.)  I mean, I just -- first of all, when you make a comment like that -- I just lost my grandmother last year.  I know what it's like to watch somebody you love, who's aging, deteriorate, and have to struggle with that.  So the notion that somehow I ran for public office, or members of Congress are in this so that they can go around pulling the plug on grandma?  I mean, when you start making arguments like that, that's simply dishonest, especially when I hear the arguments coming from members of Congress in the other party who, turns out, sponsored similar provisions.

Here's what this was about.  Here was the genesis of this little piece of information.  We had a provision in the House bill that would give the option -- the option -- of somebody getting counseling on end-of-life care or hospice care, and have it reimbursed by Medicare; the option -- voluntary -- so you'd have more information about how to deal with these situations.

Turns out the biggest proponent of this was a Republican congressman who is now a senator and a colleague of Mr. Udall and Mr. Bennet.  Turns out in Medicare Part D, which was passed by a Republican Congress, they had the exact same provision.

So when I have people who just a couple of years ago thought this was a good idea now getting on television suggesting that it's a plot against grandma or to sneak euthanasia into our health care system, that feels dishonest to me.  And we've got enough stuff to deal with without having these kinds of arguments.  (Applause.)

All right, so it's -- all right, it's a woman's turn here.  Yes, I sort of neglected this area right here.  Young lady right there, blond hair, black blouse -- white dress.  Yes, right there.  Go ahead.

Q    Hi, my name is Julie, and I'm a small business owner from Colorado Springs.  I am also a Republican that voted for you.

THE PRESIDENT:  Thank you.

Q    You're welcome.  (Applause.)

THE PRESIDENT:  What's your business?

Q    We make software.

THE PRESIDENT:  Excellent.  We need that.

Q    I hope so.  (Laughter.)  So I grew up in a blue-collar family, and my husband and I work very hard at our small business.  We've always treated our employees like family, given them great benefits, any time off they need with their family.  I volunteer in my professional community.  I volunteer at my children's schools.  And that's still not enough, because us small business owners that are on that cusp between middle class and the rich are going to bear the brunt of a lot of what this is going to cost.  Why is what I do now not enough?  (Applause.)

THE PRESIDENT:  Let me -- I think it's a good question.  Let me talk about both cost and what this would mean for small businesses, because both issues would affect you.

First of all, remember what I said, I can't come up with a perfect solution that is completely free.  It is absolutely true that in order for us to provide help to those who have no insurance at all, that's going to cost some money.  It's going to cost some money.  We can't do it for free.  They've got no health insurance right now; we're going to help them.  It's 46 million people.  That's going to cost some money.

Now, what I've proposed is going to cost roughly $900 billion -- $800 billion to $900 billion.  That's a lot of money.  Keep in mind it's over 10 years.  So when you hear some of these figures thrown out there, this is not per year, this is over 10 years.  So let's assume it's about $80 billion a year.  It turns out that about two-thirds of that could be paid for by eliminating waste in the existing system.

So I'll give you -- let me give you one particular example.  We right now provide $177 billion over 10 years -- or about $17 billion, $18 billion a year -- to insurance companies in the forms of subsidies for something called Medicare Advantage where they basically run the Medicare program that everybody else has, except they get an extra bunch of money that they make a big profit off of.  And there's no proof, no evidence at all that seniors are better off using Medicare Advantage than regular Medicare.  If we could save that $18 billion a year, that is money that we can use to help people who right now need some help.

So about two-thirds of what we're talking about is paid for through the existing health care system, money that's already being paid by taxpayers -- does not require additional taxes.  But that still leaves one-third.

Now, in order to pay for that, there have been a lot of proposals out there.  One of them that I proposed, I still think is the best idea.  You may disagree, because I don't know what your income bracket is.  My proposal was that for people making more than $250,000 a year -- people like myself -- that we should, instead of getting the full itemized deduction of what our highest tax bracket is, we should just cap out our itemized deduction at 28 percent, which is what the average American gets.  So -- because my attitude is, I shouldn't get a bigger tax break if I write a check to my local church than if the janitor down the street writes a check to their local church.  We should get the same tax break.  If we were willing to do that, just that alone would pay for what we're talking about.  (Applause.)

Now, some members of Congress disagree with that and they've got other proposals, and that's going to be worked out in September.

I do want to make the point, though, that I have not proposed any plan that would put the burden on middle-class families in order to deal with this.  So when you hear people talking about I'm raising your taxes, the only tax policies I've implemented for middle-class families is a tax cut for 95 percent of working families.

Now, let me talk about small businesses.  I don't know your particular situation, whether you're providing health insurance right now to your employees.  If you are, then you stand to benefit from this plan because every proposal, both in the House and the Senate, that's been put forward, provides a huge number of subsidies to small business owners that are doing the right thing by their employees.  (Applause.)

So it is very likely -- you know, obviously we'd have to look at the calculation; I'd have to figure out how many employees you have, what kind of health insurance plan you had, et cetera -- but it is very likely that you would actually make money, gain from this plan, because you're already providing health insurance to your employees and we would give you some help.

The only category of folks who might not like this plan are employers who can afford to provide health insurance to their employees but aren't doing so, because what we would then say to them, what we'd say to them is, look, we're giving you affordable options; you are going to be able now to be part of a bigger pool.  You can buy your health insurance through that exchange that I was explaining to that gentleman there.  So you'll be able to get premiums and prices that are comparable to what big companies, Xerox or IBM, are getting for their employees, and we'll give you some help doing it.

But if you refuse to provide any health insurance for your employees at all, then we are going to ask you to make a contribution to help make sure those employees have health insurance, because by the way, it turns out if you as an employer are not providing that health insurance, the rest of us are, because those folks are going on Medicaid, or they're going to the hospitals for uncompensated care, and that's not fair.  (Applause.)

So the bottom line is this:  If you are a small business person who is providing health insurance for your employees, I am very sure that you would actually benefit from this.  But the problem is -- again, this is where the information has not been going out in as clear a fashion as possible, which is why I'm glad you asked the question.

All right?  Okay.  (Applause.)

All right, I'm going to call on this gentleman because he's been waving -- and he's shouted at me a couple of times, so I just want to -- I just want proof here that I'm happy to get a good debate going.
Q    How are you doing, Mr. President?

THE PRESIDENT:  I'm good.  What's your name?

Q    My name is Zack Lane (phonetic).  I'm a student at the University of Colorado in Boulder.

THE PRESIDENT:  Good to talk to you, Zack.  What do you study?

Q    Political science and business marketing.

THE PRESIDENT:  Fantastic.  All right, what's your question?

Q    My question is this.  And also, I'd love to have a debate, just all out, anytime, Oxford-style, if you'd like.  (Laughter.)  I understand -- I'm willing to do that.  But my question is this.  We all know the best way to reduce prices in this economy is to increase competition.  How in the world can a private corporation providing insurance compete with an entity that does not have to worry about making a profit, does not have to pay local property taxes -- (applause) -- they do not have to -- they're not subject to local regulations?  How can a company compete with that?  And I'm not looking for anything -- I don't want generalities.  I don't want philosophical arguments.  I'm just asking a question.

THE PRESIDENT:  That's a great question.  Thank you for the question.  (Applause.)

Now, I just want to point out that I partially answered the question earlier by explaining that certainly they can't compete if the taxpayer is standing behind the public option just shoveling more and more money at it, right?  That's certainly not fair.  And so I've already said I would not be in favor of a public option of that sort because that would just mean more expenses out of our pockets and we wouldn't be seeing much improvement in quality.

It is true that there are certain costs associated with a private business that a government would not have to worry about; you mentioned a couple of them.  It's not just, by the way, property taxes; it's also things like just the cost of capital.  In terms of the cost of borrowing, a public option -- insurance companies have to have a lot of money on hand and it's conceivable that a private entity that's having to pay a certain interest rate for their money would be really undermined if the government is able to get money much cheaper implicitly because Uncle Sam backs this operation.

So that's why I say, this is actually a legitimate debate.  I think that we can craft a system in which you've got a public option that has to operate independently, not subsidized by taxpayers -- it would be nonprofit, but we've already got nonprofits out there like BlueCross BlueShield -- that they would have to go on the market and get a market price for capital, so they wouldn't be able to just have the Federal Reserve write them a check.  I think there are ways that we can address those competitive issues.  And you're absolutely right, if they're not entirely addressed, then that raises a set of legitimate problems.

But the only point I wanted to make was the notion that somehow just by having a public option you have the entire private marketplace destroyed is just not borne out by the facts.  And in fact, right now you've got a lot of private companies who do very well competing against the government.  UPS and FedEx are doing a lot better than the post office.  (Applause.)  No, they are.  And so -- but the larger point I want to make -- and it's good to see a young person who's very engaged and confident challenging the President to a Oxford-style debate, I think this is good.  (Applause.)  You know, the -- this is good.  You know, I like that.  You got to have a little chutzpah, you know.

This is a legitimate debate to have.  All I'm saying is, though, that the public option, whether we have it or we don't have it, is not the entirety of health care reform.  This is just one sliver of it, one aspect of it.  And by the way, it's both the right and the left that have become so fixated on this that they forget everything else, like the fact that we can help Nathan make sure that he doesn't suddenly find himself -- (applause) -- completely broke in trying to treat his son.

So we are working on a series of proposals to address the questions that you're raising.  I believe that we can work them out.  But those are specific questions as opposed to broad, philosophical questions about whether government ever has a role to play or not.

Keep in mind, finally -- and this is the last point that I'll make -- that you have a bunch of countries that have systems in which government is involved but you still have a thriving private insurance market -- The Netherlands being a good example.  Everybody is covered.  Everybody has care.  The government has regulations in there.  But it does not somehow take over the entire private insurance market.  So I just want people to understand nobody is talking about a government takeover of health care.  I want to repeat that one last time.

All right.  I've got -- I've got one last -- I've got time for one last question.  I'm going to call on this young lady right here.  Oops, she just lost her question.  Go ahead.  Who's got a microphone?  Right here, right here.

Q    I cannot believe that we have the President of the United States of America in Grand Junction, Colorado!  (Applause.)

THE PRESIDENT:  Good to be here.

Q    We are so proud of you.

THE PRESIDENT:  Thank you.  (Applause.)

Q    My name is Marie Elena, and I live in the Western Slope in Montrose, Colorado.  And I am a naturalized citizen, and I am proud to be an American in this beautiful land.  (Applause.)

THE PRESIDENT:  Thank you.

Q    As a child I had polio, and I had a series of surgeries, 52 of them, to correct my poor structure of bones -- between here, Denver, Montrose, and the Mayo Clinic in Phoenix, Arizona.  I have been blessed with a good insurance, generally excellent doctors and care.  However, my major concern in cost, even with good -- even with a good insurance, the cost has been high, practically when I have been gone out of the network.  Why should our doctor treatment choice be limited by a geographic area or the state?  What kind of competition is this, Mr. President?  (Applause.)

THE PRESIDENT:  Okay, all right.

Q    Thank you.

THE PRESIDENT:  This raises an important question, because it goes to the overall debate that's taking place out there right now.  When we talk about reform, you hear some opponents of reform saying that somehow we are trying to ration care, or restrict the doctors that you can see, or you name it.  Well, that's what's going on right now.  It's just that the decisions are being made by the insurance companies.

Now, in fairness, we probably could not construct a system in which you could see any doctor anywhere in the world anytime, regardless of expense.  That would be a hard system to set up.  So if you live in Maine, you know, we're going to fly you into California, put you up.  I mean, you can see -- and I'm not trying to make light of it -- you can just see the difficulty.

So any system we design, there are going to have to be some choices that have to be made in terms of where you go to see your doctor, what's going on, et cetera.  That's being done currently in the private marketplace.

All we're trying to do is to make sure that those decisions that are being made in the private marketplace aren't discriminating against people because they're already sick; that they are making sure that people get a good deal from the health care dollars that they are spending.

So let's make sure, for example, that if you go to a hospital, you get one of those operations that you discussed, and it turns out that two weeks later you've got to be readmitted because they didn't do it right the first time, that the hospital has to pay some penalty for that, or at least they're not being reimbursed as much as a hospital who gets it right the first time.  That's an example of changing incentives that can save us money.

The more that we make those kinds of changes that improve quality, reduce cost, the more likely it is that more Americans have more options and that they are not being jerked around.  It doesn't mean that everything is going to be perfect, but it does mean that consumers will have more choices, better options, more security, more protection.

That's all we're trying to accomplish here and we're trying to do it in a way that over time reduces costs overall for families, whether you're getting Medicare or you're getting Medicaid or you've got private insurance through your employer or you're a small business owner.  That's what we're trying to accomplish.

And I am confident that we can accomplish it -- but we're going to have to work hard to do it, and we're going to have to overcome some of the wrong information, and we're going to have to have an honest debate.  Nothing is going to be perfect.  We're going to have to make sure -- this is something, by the way, that people need to understand:  Even if everything goes perfectly and we pass legislation, let's say, in October, we're still going to have another three months of debate about this, then we're still going to have several years of implementation.  It's not going to happen overnight.  We're going to have to set up these reforms and these processes, and we're going to have to give insurance companies the chance to adjust, because, for example, if we don't have everybody covered, we can't construct a system that prevents insurance companies from discriminating against preexisting conditions.  I hope everybody understands that.

We can't tell insurance to take everybody if, on the other hand, you've got a whole bunch of people who are healthy and young who choose not to get insurance at all, because what ends up happening is then insurance companies are just going to take the people when they get sick.  Somebody won't buy insurance until they find out that they're sick.  Then they go into the insurance office and they say, give me insurance so I can go pay my bill.  Insurance companies would lose money pretty quick that way.

So if we're going to eliminate the preexisting conditions problem, we've got to also -- have the coverage problem, and that's why this is going to have to be phased in over a number of years.

Last point I want to make, and this has to do with the budget issues, because we've got a huge deficit right now and a huge debt, and I think that that's coloring how people view the debate.  I hear a lot of people say, how can we afford this right now?  We've got to reduce our deficit.

First, I want everybody to understand the source of our deficit, because if you don't understand that, then my argument won't make sense.  When I walked into the White House, I had gift-wrapped, waiting for me at the door a $1.3 trillion deficit -- $1.3 trillion.  Now, I say that -- (applause) -- I just want to -- I just want to -- I just want to -- I say that -- this was not -- and this is not, by the way, entirely the previous administration's fault.  The financial crisis was so bad that revenues plummeted and all this money was spent in making sure that the banking system did not completely collapse.  So all the actions that have been taken -- the bank bailout, the auto bailout, all that stuff -- that did spike the deficit.

But the problem actually is not that -- you know, the extraordinary steps that we've taken over these last one or two years.  The real problem is much longer.  Even if we had had no fiscal crisis whatsoever, we have a structural deficit.  We're spending more money than we are taking in.  We've been doing it for the last eight years.  When we passed the prescription drug benefit for Medicare, by a Republican Congress, they didn't pay for it.  They didn't want to raise taxes, but they wanted to get the benefit.  That just was red ink.  That just went into our structural deficit.

When we fought the Iraq war, we made that decision.  We didn't pay for it.  When we cut taxes on some of the wealthiest Americans, we did not compensate by making cuts in programs that were comparable.  So what that has all added up to is, we've got a structural deficit that over the course of the next 10 years is about $9 trillion.

Now, I say that because I just want everybody to understand, if we're going to tackle that problem, the only way we can do it in an intelligent way is if we get control of Medicare and Medicaid spending in some realistic way.  If we don't do that -- if we don't do that, we can't simply cut our way out of the problem or tax our way out of the problem.

I ask sometimes, when I'm in audiences, what people think the amount of federal budget is devoted to foreign aid.  And people will say, 25 percent; if we could just cut that out, we could eliminate the deficit.  Foreign aid is 1 percent of our budget -- 1 percent.  People think, well, it's all these pork projects and earmarks that everybody is getting.  One percent.  Almost all of our spending is Social Security, Medicare, Medicaid, interest on the national debt, defense spending -- things that are very hard to cut.

Only about -- only about 30 percent of the overall budget, somewhere between 25 and 30 percent is non-defense discretionary spending.  That's everything for national parks, for education, you name it.  Every single program that you think of that you think of as a government program, that is only about 25 percent of the budget.  The rest of it is all Social Security, Medicare, and Medicaid.  And what's really going up fastest is Medicare and Medicaid.

So I just want everybody to understand, if you are a fiscal hawk, if you are -- if you are a deficit hawk and you are tired of this crazy spending in Washington and you want to finally make sure that we are looking out for the next generation, then you, more than anybody, should want to reform the health care system -- because if we don't do it, we can't solve that problem.  (Applause.)

Thank you, Grand Junction.  Love you.  (Applause.)

Remarks by the President during Town Hall Meeting in Elyria, Ohio

January 22, 2010

Lorain County Community College, Elyria, Ohio

1:45 P.M. EST

THE PRESIDENT:  Hello, everybody!  (Applause.)  Hello, Ohio! (Applause.)  Thank you very much, everybody.  Thank you.  Everybody, please relax.  (Laughter.)  We're going to be here for a little bit.  Everybody take a seat -- if you have a seat.  (Laughter.)  It is great to see you -- can everybody please give Jody a big round of applause for the introduction?  (Applause.) 

Everybody is a special guest, but we've got a few that I just want to mention.  First of all, obviously you've got one of the finest governors in the country in Ted Strickland.  Please give him a round of applause.  (Applause.)  My former colleague when he was in the Senate -- nobody fights harder for working people than Sherrod Brown.  Give him a big round of applause.  (Applause.)  

We've got a dynamo pair of members of the House of Representatives, who are so committed to their districts and committed to this state -- Betty Sutton and Marcy Kaptur.  (Applause.) 

I have been having just a wonderful time here in town, and your mayor has just been a really nice person.  (Applause.)  He and I shared a burger over at Smitty's -- (applause) -- give Bill Grace a big round of applause.  (Applause.)

And somebody who I'm hugely impressed with because I'm just so impressed with this institution, and his leadership obviously has been critical to it -- Dr. Ray Church, your school president here at Lorain County Community College.  (Applause.)

Well, listen, it is great to be here in Elyria.  Thank you so much for the great hospitality, the wonderful reception.  Look, it's just nice being out of Washington, let me say. (Laughter.)  I mean, there are some nice people in Washington, but it can drive you crazy.  (Laughter.)  Am I wrong, Sherrod? (Laughter.)  

For two years, I had the privilege of traveling across this country, and I had a chance to talk to people like you, and go to diners and sit in barbershops, and hear directly about the challenges that all of you are facing in your lives, and the opportunities that you're taking advantage of, and all the things that we face together as a nation.  And the single hardest thing -- people ask me this all the time -- the single hardest thing about being President is that it's harder for me to do that nowadays.  It's harder to get out of the bubble. 

I mean, don't get me wrong, the White House is a wonderful place to work.  You live above the store -- (laughter) -- which means I've got a very short commute.  I'm having -- I see my daughters before they go to school and I see them at night for dinner, even if I have to go back down to the office.  And that makes everything so much better.  But the truth is, this job is a little confining, and that is frustrating.  I can't just go to the barbershop or sit in a diner.  I can't always visit people directly.

This is part of the reason why I've taken to the practice of reading 10 letters, out of the 40,000 that I get, every night just so that I can stay in touch and hear from you.  But nothing beats a day where I can make an escape, I break out.  And so I appreciate the chance to come here and spend a day. 

Before I came here I visited the EMC Precision Machining plant.  I saw the great clean energy job training program here at Lorain County Community College.  And I'm obviously thrilled to be able to spend some time with you.


THE PRESIDENT:  I love you back.  (Applause.)  Thank you. 

Now, look, let's be honest.  These are difficult and unsettling times.  They're difficult times here in Elyria; they're tough in Ohio; they're tough all across the country.  I walked into office a year ago in the middle of a raging economic storm that was wreaking devastation on your town and communities everywhere.  We had to take some very difficult steps to deal with that mess, to stave off an even greater economic catastrophe.  We had to stabilize the financial system, which, given the role of the big banks in creating this mess, was a pretty tough pill to swallow.

I knew it would be unpopular -- and rightly so.  But I also knew that we had to do it because if they went down, your local banks would have gone down.  And if the financial system went down, it would have taken the entire economy and millions more families and businesses with it.  We would have looked -- we would have been looking at a second Great Depression.

So in my first months in office, we also had to save two of the big three automakers from a liquidation bankruptcy, complete collapse.  Some people weren't happy about that, either.  I understand that.  They felt like if you're in a business, you make a bad decision, you ought to reap the consequences, just like any business would.  The problem was, if we let GM and Chrysler simply go under, hundreds of thousands of Americans would have been hurt, not just at those companies themselves, but at auto suppliers and other companies and dealers here in Michigan, up in -- here in Ohio, up in Michigan, all across this country.

So we said, if you're willing to take some tough and painful steps to make yourself more competitive, we're willing to invest in your future.  And earlier this week, we heard that the auto industry planned to make almost 3 million cars and trucks here in North America in the next three months, which is up 69 percent from the first three months of last year.  (Applause.)

We also passed a Recovery Act to pull our economy back from the brink.  Now, there's been a lot of misunderstanding about this Recovery Act.  Sherrod and Marcy and Betty and I were talking about this on the way over here.  If you ask the average person, what was the Recovery Act, the stimulus package, they'd say, "the bank bailout."  So let me just be clear here:  The Recovery Act was cutting taxes for 95 percent of working families -- 15 different tax cuts for working families, seven different tax cuts for small businesses so they can start up and grow and hire.  The Recovery Act was extending and increasing unemployment insurance and making COBRA available at a cheaper rate for people who had lost their jobs so they could keep their health care.  (Applause.)

We gave aid directly to states to help them through tough times.  Ted can testify the help that it provided to the Ohio budget so we wouldn't have to lay off teachers and firefighters and police officers all across this state.  And we made the largest investment in infrastructure since the creation of the Interstate Highway System, putting Americans to work rebuilding our roads, bridges, waterways -- doing the work that America needs to be done.

Now, today, because we took those actions, the worst of this economic storm has passed.  But families like yours and communities like this one are still reeling from the devastation it left in its wake.  At one of the companies, at EMC, where I went today -- wonderful company, passed on through generations -- they have hung on with their precision manufacturing, high value added.  They can do things that can't be shipped off to China because they're so attuned to their customers' needs.  But they had 77 employees; now they've got 44.  They want to start hiring back, but it's going to take a little time.  The good news is they're starting to see orders pick up just a little bit.

But it's tough.  Folks have seen jobs you thought would last forever disappear.  You've seen plants close and businesses shut down.  I've heard about how the city government here is starting to cut into bone, not just fat.  You can't get to work or go buy groceries like you used to because of cuts in the county transit system.

And this all comes after one of the toughest decades our middle class has faced in generations.  I mean, think about what's happened over the last 10 years, even before the crisis hit.  This is a decade where some folks made tons of money, but so many others were just pedaling faster and faster, but they were stuck in the same place, sometimes slipping behind.  The average wage, the average income over the last decade actually flat-lined; in some cases went down.  That was before the crisis.

So, for many of you, even as you found your paychecks shrinking, even as after the crisis you found the value of your biggest asset, your home, falling, the cost of everything else has gone up:  the cost of groceries, the cost of sending your kids to college, costs of retirement.  And you've also faced the breakneck, unrelenting climb of costs for your health care needs.

Now, here's the message I want you to take away -- and we're going to have a lot of time for questions, but I want to make this absolutely clear.  I did not run for President to turn away from these challenges.  I didn't run to kick these challenges down the road.  I ran for President to confront them –- once and for all.  (Applause.)

I ran for this office to rebuild our economy so it works not just for the fortunate few, but for everybody who's willing to work hard in this country -- (applause) -- to create good jobs that can support a family; to get wages growing and incomes rising; to improve the quality of America's schools and lift up great community colleges like this one so that people are constantly learning, constantly retraining for the jobs of the 21st century; to make higher education affordable for the children of working families -- and, yes, to deal with the problem of runaway health insurance costs that are breaking family budgets and breaking business budgets and breaking our national budgets.  (Applause.)

Now, since this has been in the news a little bit this week -- (laughter) -- let me say a little something about health care. I had no illusions when I took this on that this was going to be hard.  Seven Presidents had tried it, seven Congresses had tried it -- and all of them had failed. 

And I had a whole bunch of political advisors telling me this may not be the smartest thing to do.  "You've got a lot on your plate:  the biggest economic crisis since the Great Depression; two wars.  You may not get a lot of cooperation. you're going to have a lot of pushback from the insurance companies and the drug companies.  It's complicated.  Don't do it."

Now, let me tell you why I did it.  I knew that insurance premiums had more than doubled in the past decade.  I knew that out-of-pocket expenses had skyrocketed.  I knew that millions more people had lost their insurance, and I knew that because of that economic crisis that was only going to get worse.  When you lose 7 million jobs, like we lost over the last two years, what do you think happens to those folks' health insurance?  What happens when their COBRA runs out? 

I took this up because I wanted to ease the burdens on all the families and small businesses that can't afford to pay outrageous rates.  And I wanted to protect mothers and fathers and children by being targeted by some of the worst practices of the insurance industry that I had heard time and time again as I traveled through this country.  (Applause.)

Now, let me dispel this notion that somehow we were focused on that, and so, as a consequence, not focused on the economy.  First of all, all I think about is how we're going to create jobs in this area.  All I think about is how do we get banks lending again.  I've been doing that the entire year.  So have folks like Sherrod and Marcy and Betty.  But what I also know is, is that health care is part of the drag on our economy.  It's part of the eroding security that middle-class families feel. 

So here's the good news:  We've gotten pretty far down the road.  But I've got to admit, we had a little bit of a buzz saw this week.  (Laughter.) 

Now, I also know that part of the reason is, is that this process was so long and so drawn out -- this is just what happens in Congress.  I mean, it's just an ugly process.  You're running headlong into special interests, and armies of lobbyists, and partisan politics that's aimed at exploiting fears instead of getting things done.  And then you've got ads that are scaring the bejesus out of everybody.  (Laughter.)  And the longer it take, the uglier it looks. 

So I understand why people would say, boy, this is -- I'm not so sure about this -- even though they know that what they got isn't working.  And I understand why, after the Massachusetts election, people in Washington were all in a tizzy, trying to figure out what this means for health reform, Republicans and Democrats; what does it mean for Obama?  Is he weakened?  Is he  -- oh, how's he going to survive this?  (Laughter.)  That's what they do.  (Laughter.)

But I want you -- I want you to understand, this is not about me.  (Applause.)  This is not about me.  This is about you. This is not about me; this is about you.  I didn't take this up to boost my poll numbers.  You know the way to boost your poll numbers is not do anything.  (Laughter.)  That's how you do it.  You don't offend anybody.  I'd have real high poll numbers.  All of Washington would be saying, "What a genius!"  (Laughter.) 

I didn't take this on to score political points.  I know there are some folks who think if Obama loses, we win.  But you know what?  I think that I win when you win.  (Applause.)  That's how I think about it. 

So if I was trying to take the path of least resistance, I would have done something a lot easier.  But I'm trying to solve the problems that folks here in Ohio and across this country face every day.  And I'm not going to walk away just because it's hard.  We are going to keep on working to get this done -- with Democrats, I hope with Republicans -- anybody who's willing to step up.  Because I'm not going to watch more people get crushed by costs or denied care they need by insurance company bureaucrats.  I'm not going to have insurance companies click their heels and watch their stocks skyrocket because once again there's no control on what they do.

So long as I have some breath in me, so long as I have the privilege of serving as your President, I will not stop fighting for you.  I will take my lumps, but I won't stop fighting to bring back jobs here.  (Applause.)  I won't stop fighting for an economy where hard work is rewarded.  I won't stop fighting to make sure there's accountability in our financial system.  (Applause.)  I'm not going to stop fighting until we have jobs for everybody.

That's why I'm calling on Congress to pass a jobs bill to put more Americans to work -- (applause) -- building off our Recovery Act; put more Americans back to work rebuilding roads and railways; provide tax breaks to small businesses for hiring people; offer families incentives to make their homes more energy-efficient, saving them money while creating jobs.

That's why we enacted initiatives that are beginning to give rise to a clean energy economy.  That's part of what's going on in this community college.  If we hadn't done anything with the Recovery Act, talk to the people who are building wind turbines and solar panels.  They would have told you their industry was about to collapse because credit had completely frozen.  And now you're seeing all across Ohio some of the -- this state has received more funds than just about anybody in order to build on that clean energy economy -- new cutting-edge wind turbines and batteries that are going to be going into energy-efficient cars.

Almost $25 million of our investment went to a plant right here in Elyria that's helping produce the car batteries of the future. (Applause.)  That's what we're going to keep on doing for the rest of 2010 and 2011 and 2012, until we've got this country working again.  (Applause.)

So long as I'm President, I'll never stop fighting for policies that will help restore home values, to redeem the investment that folks have made.  We've seen some of those values return in some places, in some pockets, but it's still tough out there.  We're going to have to do more this year to make sure that banks are responsive to folks who are working hard, have been paying their mortgage, but have found themselves in a tough situation.

I'm not going to stop fighting to give our kids the best education possible -- (applause) -- to take the tens of billions of dollars we pay banks to act as middlemen on student loans and invest that money in students who actually need it.  We don't need the middlemen -- cut them out.  (Applause.)

I won't stop fighting to give every American a fair shake.  That's why the very first bill I signed into law was the Lilly Ledbetter Act to uphold the principle of equal pay for equal work for men and women alike -- (applause) -- especially when families need two paychecks to survive.  (Applause.)

So long as I'm President, I won't stop fighting to protect you from the kinds of deceptive practices we've seen from some in the financial sector.  That's why I signed a Credit Card Bill of Rights into law, to protect you from surprise charges and retroactive rate hikes and other unfair rules.  That's why I'm fighting for a tough consumer financial protection agency to protect you against those hidden overdraft fees that can make a single ATM withdrawal cost 30 bucks.  (Applause.)  That happened to you, didn't it?  (Applause.)

I won't stop fighting to open up government.  Now, this is hard to do because we don't control every branch.  But I can tell you we have put in place the toughest ethics laws and toughest transparency rules of any administration in history.  In history.

By the way, this is the first administration since the founding of the country where all of you can find out who visits the White House.  First time in history.  And that's just one example of how we're trying to constantly open the process. 

And so long as I'm President, I won't stop fighting to cut waste and abuse in Washington -- to eliminate what we don't need, to pay for what we do; to rein in exploding deficits that we've been accumulating not just last year but for the last 10.  (Applause.)

And I'm going to keep on fighting for real, meaningful health insurance reform.  (Applause.)  We expanded the Children's Health Insurance Program to include four million kids -- we already did that.  But we are also going to fight to hold the insurance industry accountable, to bring more stability and security to folks who are in our health care system.  And, yes, I want to make sure that people who don't have health care right now can get some.  (Applause.)  It's shameful that we don't do that.

Now, these are some of the fights we've already had, and I can promise you there will be more fights ahead.  I'm not going to win every round.  We're having a fight right now because I want to charge Wall Street a modest fee to repay taxpayers in full for saving their skins in a time of need.  (Applause.)  We want our money back.  (Applause.)  We want our money back.  And we're going to get your money back, every dime -- each and every dime. 

But it's going to be a fight.  You watch.  I guarantee you when we start on financial regulatory reform, trying to change the rules to prevent what has caused so much heartache all across the country, there are people who are goIng to say, "Why is he meddling in government -- why is meddling in the financial industry?  It's another example of Obama being big government."

No, I just want to have some rules in place so that when these guys make dumb decisions, you don't end up having to foot the bill.  (Applause.)  That's pretty straightforward.  I don't mind having that fight.  (Applause.)

You know, I said at the beginning how much it means to me to be able to travel this country, and how much it means for me to be here.  And that is true now more than ever, because there's no doubt that it's easy to get a pretty warped view of things in Washington.  But then you start talking to the guys working on those machines, creating products all across the country, you go into the diner and you meet folks who are raising their kids and working hard and trying to keep things together, and I'm reminded of the strength and the resilience and the perseverance of the American people.  I'm reminded of the fundamental character of the Americans that I'm so privileged to serve. 

It's that character that has borne our nation through the roughest of seas, a lot rougher than the ones we're going through right now.  That's the character that will carry us through this storm to better days ahead.  I am confident of that, because of you.  And I'm very grateful for all of you taking the time to be here today.  Thank you.  Thank you, everybody.  Thank you.  Thank you.  (Applause.)

All right.  Let's take some questions.  You guys -- everybody, sit down, sit back down.  All right.  So I'm just going to call on people.  We're going to do girl-boy-girl-boy -- (laughter) -- so that there's no accusations of bias.  But we'll try to get as many questions in as we can.

All right, this young lady right back here.  Yes, you.  There should be a microphone -- wait till the mic comes so everybody can hear you.  Oh, I'm sorry -- that's okay, I'll call on you next.  Well -- (laughter) -- one of you ask your question. (Laughter.)

Q    Thank you, Mr. President.  It's an honor to be here with you today.  I work here in LCCC's financial services office. I am proud to be part of finding pathways for students who attend college.  I feel that a college education is a lifeline to the future of our citizens.  We greatly appreciate the increase in the Pell Grant, which allowed our neediest students to access a college education.  (Applause.)  It increased buying power as  college costs continue to rise.  My question to you is, will your administration support continued increases to the Pell Grant so that our neediest students have access to higher education?

THE PRESIDENT:  The answer is yes.  I want everybody to understand, we made -- and this was the help -- with the help of the members of Congress who are here -- made an enormous investment in higher education, making sure that young people could afford to go to great institutions like this.  So we significantly increased the level of each Pell Grant, and we also put more money so that we could have more Pell Grants.

Now, we want to continue to do this.  I mentioned during my formal remarks the fact that a lot of banks and financial institutions are still serving as middlemen in the financial aid process, and they take out several billions dollars' worth of profits from that.  It turns out that actually it can be administered in such a way where these loans go directly to the students.  And if you do that, then you're saving several billion dollars that can then be put back into the system.  We want to get that finalized; we want to get that done.  That will be an enormous boost.

Now, one thing I have to say, though.  Even as we put more money into the Student Loan Program, we are also trying to reach out to university presidents and administrators to figure out how can we reduce the inflation in higher education -- because the fact is, is that the only thing that has gone up faster in cost than health care is -- guess what.  Higher education.  And the problem is, if we're not thinking about ways to curve the inflation, then even if we put more money in, what that money is buying becomes less and less.  And so trying to find creative ways for universities to do more with less is going to be important.

Now, in fairness to universities and colleges, part of the reason they've been having to jack up their costs is they used to get more support from the state.  State budgets got into a hole, and then it became harder, and so they had to make it up on the tuition side.  Nevertheless, what is also true, though, is just their general costs of operating have gone up in ways that I think we can improve.  So we're going to be working on that as well.

All right?  Okay, I've got to call a gentleman, then I got to go back to you because you thought that I called you and I feel bad.  (Laughter.)

All right.  This gentleman right here in the tie.  Yes, you look sharp.  (Laughter.)

Q    Mr. President, thank you.  It's an honor to stand before you.  Thank you.  Earlier in your message, you mentioned our transit system.  Obviously we do need help and we're in dire need to have some assistance there.  But what I didn't hear in anything is your interest in our steel mill.  That's a big part of our community and we desperately need help there as well.  (Applause.)  We just wondered where Washington's stance is on our steel mill.  Thank you.

THE PRESIDENT:  Well, I was talking to your mayor about this.  Obviously he's a big advocate for manufacturing in the region.  I do not have all the details in terms of what's happening at the steel mill at this moment.  But what we've done is we've set up an office in the White House just focused on manufacturing -- because it's my view that America's got to make things.  (Applause.) 

Now, we're not going to make -- I want to be honest.  Not all the manufacturing jobs that have gone are going to come back.  And if people tell you they are, that's just not true -- because a lot of that has moved to places where the wages are just much lower.  And I know that some people say, well, then we should just set up tariffs so that folks can't ship them in.  But these days the economy, the global economy is so interconnected that that's just not a practical solution. 

The solution is to find -- and I don't Know the details of the steel mill here -- but I know that the ones that have been successful, they do what EMC is doing as well, which is you find what's the high-end market.  What's the market that involves a lot of technology, specialization, highly trained workers, quick turnarounds to spec so that the customers really feel like they're getting something special and different -- that's how you compete, because that's something that a steel mill in China or in Brazil can't do.  They can't compete with you being on the spot working closely with customers. 

So finding ways to develop specialty steels and so forth, that's going to be the key.  Our manufacturing office will be working with folks here in town to see what we can do.

All right?  Thank you.  (Applause.)  All right, back to this young lady here.

Q    First I want to start by saying that I am very grateful to be here to meet you in person.  I absolutely support you and back you.  I feel like Rome wasn't built in a day, and I know that everybody is really impatient, but I know that with time things can be turned around.  And I believe that your intentions are really honorable in that.

THE PRESIDENT:  I appreciate it.

Q    I am a single mother of three, and I have two quick issues that are very important to me -- one being that I have a three-year-old, who has just turned three, who got lead poisoning last year and almost died.  And I called everyone, including the EPA of Ohio, and I cannot seem to get any response to this.

THE PRESIDENT:  Well, guess what.  I guarantee you that somebody from the EPA is going to call you in about -- (applause) -- in about five minutes.  Before you sit down, there's going to be a phone call from the EPA.  (Laughter.) 

All joking aside -- and I know you have a second question, but I just want to focus on this -- lead poisoning, a lot of it from lead paint, from older homes all across the country and all across the Midwest is something that we have to be more aggressive on.  This is something that I worked on when I was a U.S. senator, when I was a state senator.  I'm working on it as President, and I will find out directly from them how they can help not only with your particular situation but what we're doing in this area in terms of lead abatement.

Q    Okay.


Q    The second thing that I wanted to address to you is the unfair labor laws that they seem to have in some of these industries as far as discrimination and different issues of that nature that don't seem to get addressed from the bigger companies.  I have actually worked for Ford -- I'm a full-time student now here at LC, gratefully -- and even when I was working there and I have -- my whole family has actually come up through Ford -- and there's a lot of very unjust situations that come about, but no attorneys will deal with it, no one will talk about it, and it's always pushed under the rug.  And I -- I do owe my  -- what I have now to Ford because it was what was bread and butter for my family.  But at the same time, it's not fair that even at this point my mother still can't retire, she has to continue to suffer.

THE PRESIDENT:  Well, look, let me just say generally, one of the things that my administration has been able to do over the last year that does not cost money is just enforcing laws that are on the books a little more aggressively, making sure -- I mentioned earlier equal pay for equal work. 

We are so past the point where it should be debatable that women get paid the same as men for doing the same job.  (Applause.)  And it is something that -- especially because there was a -- it was just released I think last week showing that increasingly the wives are making more than the husbands in some circumstances.  And whoever is making more, you've got to have two paychecks.  So this is not just a "feminist issue" -- you know, sometimes guys say, well, why do I -- why should I care about it?  Well, let me tell you something.  If your wife is getting paid fairly, that means your family is getting paid fairly.  (Applause.)  And I want my daughters to be treated the same way as your sons.  That's something we shouldn't be arguing about anymore.  (Applause.)

All right, gentleman right back here.  Yes, it's a guy's turn.  Yes, sir.

Q    I'm an inventor, and I hold U.S. patent number 7,397,731.


Q    And before I ask my question I'd like to make a sales pitch.  (Laughter.)  If you can use my patent in your next election, I think you can raise a ton of money worldwide.  You should take a look at it.

THE PRESIDENT:  All right, we'll take a look.  All right.

Q    If you can't use it, the government could use it, and I could build a multibillion-dollar business here in Ohio.  (Laughter.)

THE PRESIDENT:  All right, we'll take a look at your patent.  Go ahead, what's your question?

Q    Yes, okay, it has to do with international patent rights.  With all this free trade and trade barriers falling, it's really hard for an individual like me with a global-scope patent to file all over the world and get patent protection everywhere, and having to go overseas to fight infringement.  So if you're going to drop trade barriers, maybe you can extend my patent rights to the foreign countries.

THE PRESIDENT:  Well, this is a great question, and this is a huge problem.  (Applause.)  Look, our competitive advantage in the world is going to be people like this who are using their minds to create new products, new services.  But that only helps us and helps you build a multibillion-dollar company if somebody can't just steal that idea and suddenly start making it in Indonesia or Malaysia or Bangladesh with very cheap workers. 

And one of the problems that we have had is insufficient protection for intellectual property rights.  That's true in China; it's true for everything from bootleg DVDs to very sophisticated software.  And there's nothing wrong with other people using our technologies.  We just want to make sure that it's licensed and you're getting paid.

So I've given instructions to my trade offices -- and we actually highlight this at the highest levels of foreign policy  -- that these are issues that have to be addressed because that's part of the reciprocity of making our markets open.  And so when I met with President Hu of China, this is a topic that, at dinner, I directly brought up with him.  And -- but as you point out, it's got to be sustained, because a lot of times they'll say, yes, yes, yes, but then there's no enforcement on their end.

And one of the things that we're also doing is using our export arm of the U.S. government to help work with medium-sized businesses and small businesses, not just the big multinationals to protect their rights in some of these areas, because we need to boost exports. 

Can I just say, we just went through a decade where we were told that it didn't matter, we'll just -- you just keep on importing, buying stuff from other countries, you just take out a home equity loan and max out your credit card, and everything is going to be okay.  And it looked, for a lot of people, like, well, the economy seems to be growing -- but it was all built on a house of cards.  That's what we now know.  And that's why if we're going to have a successful manufacturing sector, we've got to have successful exports. 

When I went and took this trip to China, and took this trip to Asia, a lot of people said, "Well, why is he going to Asia?  He's traveling overseas too much.  He needs to be coming back home and talking about jobs."  I'm there because that's where we're going to find those jobs, is by increasing our exports to those countries, the same way they've been doing in our country. If we increased our exports -- our share of exports by just 1 percent, that would mean hundreds of thousands of jobs here in the United States.  Five percent -- maybe a million jobs, well-paying jobs.  So we're going to have to pry those markets open.  Intellectual property is part of that process.

All right, great question. 

It's a woman's turn now.  You guys just put down your hands. (Laughter.)  Oh, okay, well, this young lady right in front.  We've got a microphone over here.  You know, I would give it to you if I could reach, but -- go ahead.  (Laughter.)

Q    I introduce myself.  I'm 83 years old.  I know I don't look it.  (Laughter.)  

THE PRESIDENT:  You don't.  You don't.  You look great.

Q    Thank you.  I'm very concerned about Social Security.  I think there's a few here who are probably living on that or supplementing that.  I understand that Congress has given themselves a raise but has denied us COLA for possibly the next three years.  At the time of the H1N1 thing, people over 65 were not given the right to have the shot.  For some reason or other this health care crisis was left on our senior backs.  What can we do about this?

THE PRESIDENT:  Well, let me address all three of your issues, because you're raising actually three separate issues. 

First is how do we make sure that Social Security is sustainable over the long term.  Social Security is one of our entitlement programs that for now is stable, but will not be if we don't make some changes.  Now, here's the good news.  Compared to Medicare, Social Security is actually in reasonably good shape, and with some relatively small adjustments, you can have that solvent for a long time.  So Social Security is going to be there.  I know a lot of people are concerned about it.  Social Security we can fix.

Now, in terms of the COLA, the formula -- COLA stands for Cost of Living Allowance, so it's put in place to make sure that Social Security is keeping up with inflation.  Here's the problem.  This past year, because of the severity of the recession, we didn't have inflation; we actually had deflation.  So prices actually fell last year.  As a consequence, technically, seniors were not eligible for a Cost of Living Adjustment, to have it go up because prices did not go up in the aggregate.  That doesn't mean that individual folks weren't being pinched by higher heating prices or what have you, but on average prices went down.

Here's what we did.  Working with these key members of Congress here, we did vote to provide a $250 one-time payment to seniors, which, when you factored it in, amounted to about 1.8 percent.  So it was almost the equivalent of the COLA, even though it wasn't actually the COLA.

So we didn't forget seniors.  We never forget seniors because they vote at very high rates.  (Laughter.)  Not to mention you changed our diapers and things.  And so we appreciate that.

The third point that you made had to do with the H1N1 virus. The reason that seniors were not prioritized was because, unlike the seasonal flu shot, H1N1 was deadliest in young people and particularly children.  And because the virus came up fairly late in the time frame for preparing flu shots, we had a limited number of vaccines, and we had to decide who gets the vaccines first. 

Now, by the way, let me just do a little PSA here.  Anybody who has not gotten a H1N1 shot, along with their seasonal flu, I would still advise you to get it, because historically there are two waves of this.  Particularly make sure your kids have gotten it, because there have been a significantly higher number of children killed under H1 -- who get H1N1 than those who just get the seasonal flu.  It's still a small fraction, I don't want to make everybody afraid.  But it's just -- it's a little more serious than the normal seasonal flu.

So it's not that seniors were neglected here.  What happened was, according to the science, according to the CDC, it was determined that we had to go to the most vulnerable groups the quickest, and that was children, particularly those who had underlying neurological disorders or immunity disorders. 

All right?  We haven't forgotten about you.  And you don't look 83.  (Laughter.)

Okay.  This young man -- he's been standing up quite a long time.  There you go.

Q    Mr. President, my name is Jordan Brown.  Can you hear me?


Q    Okay.

THE PRESIDENT:  Go ahead and give him the mic.  I don't want to have him fall over there.  (Laughter.)

Q    Okay.  I don't have a question but I do want to know if I would like -- if I can shake your hand.  (Laughter.)

THE PRESIDENT:  Well, yes, yes, you'll be able to come up here.  If somebody lets you through, I'll definitely give you a handshake.  (Applause.)

All right, who -- I want to make sure -- you know, there's another young man here so I'll call on him.

Q    I'm 29 years old, and I've never had a job in my life. I went to jail when I was younger.  It's like hard to get a job as a felon.  Is this -- any programs that hire people with felonies like something that -- because it's sad, it's like -- 29 years old, I'm 29.  (Applause.)

THE PRESIDENT:  All right.  Jerome --

Q    And also I wanted to -- I'm a poet and I wrote a poem for you and I've been dying to put this poem in your hand.

THE PRESIDENT:  Okay.  Give me the poem.  (Applause.)  First of all, it's never too late.  It's never too late.  (Applause.)  One of these gentlemen here will hand this poem to me.  There you go.  I won't read it from the stage but -- because it's --

Q    I'd appreciate it, later when you get back to the White House.

THE PRESIDENT:  But I will definitely think about it. 

Look, I'm proud of the fact that you're bringing this up because there are people who've made mistakes, particularly when they're young, and it is in all of our interests to help them redeem themselves and then get on a straight path.  Now, I don't blame employers obviously for being nervous about hiring somebody who has a record.  It's natural if they've got a lot of applicants for every single job that that's a question that they'd have in their minds.  On the other hand, I think one of the great things about America is we give people second chances. (Applause.)

And so what we've tried to do -- and I want to say, this has been a bipartisan effort -- when I was in the Senate, working with Sam Brownback; my Vice President, Joe Biden -- passing a Second Chance Act that helps to fund programs that help the reintegration of ex-felons.

It's smart for us to do.  You know, sometimes people say, well, that's just coddling people.  No; you reduce the recidivism rate, they pay taxes, it ends up being smart for taxpayers to do.

I don't know, Jerome, what particular programs may exist in this county, but I promise you I'll find out.  And we'll see if we can get you hooked up with one of them.  All right?  (Applause.)

Okay, right here.  Yes.  No, no, no.  Right here.  Yes.  Go ahead.

Q    Mr. President, I started a Great Lakes Truck Driving School in 2008 in Lorain County.

THE PRESIDENT:  I'm sorry, what kind of school?

Q    Great Lakes Truck Driving School.

THE PRESIDENT:  Cross driving school?  Oh, truck driving school, I'm sorry.

Q    Great Lakes Truck Driving School.  Started in 2008.  Our first year we trained 287 people and we placed over 70 percent of those people into jobs.  At that time there was enough money, through the Workforce Investment Board, to train those people.  In the past few months we've had a number of people on a daily basis coming into our school that's unemployed, but there are no training funds for truck driver training.  And I want to know why that has changed.

THE PRESIDENT:  Well, the Recovery Act put a huge amount of money into retraining.  We are now preparing for next year's budget, and I know that we have actually allocated additional money for retraining.

I don't know specifically what's happening that would cause those dollars to dry up with respect to a truck driving school.  Let me see if I can find out.  I'll have one of my staff get your card, and maybe we can provide you some information.

Q    Thank you very much.

THE PRESIDENT:  Here's the broader point, though.  The story of retraining has become so important.  When I went to EMC, the precision tool-making place, there were a group of guys -- and one guy who said I should call him "Jerry the Mechanic."  (Laughter.)  He shakes my hand, and he and his buddy are talking to me.  I said, "How long have you been working here?"  They said, "Twenty years."  And I'd noticed that a lot of the equipment now is all digital and fancy, compared to the old machines on the other side of the building.  I said, "Well, did you guys have to get additional training for this?"  And they said, "Well, you know what happened was, we used to work in this old plant, and we got laid off.  We came here to Lorain Community College and took a six-month, 12-hour-a-day course that completely retrained us, and that's what got us these new jobs, and we've been working for over a decade now at these new jobs." (Applause.)

Now, here's the thing.  These guys were -- these guys -- first of all, they weren't plants, as far as I know -- unless the mayor is a lot slicker than I think.  (Laughter.)  But these guys did point out that it was JTPA funds -- job training funds that the federal government and the state and local all work together to make sure that people have access to funds.  They also said, though, during that time they were still working eight hours a day because they had found sort of lower-paying jobs just to pay the rent while they were getting retrained.  I said, "Okay, so you've been working eight hours and going to class 12 hours?"  "Yes."  I said, "Well, when do you sleep?"  "Well, in between class and taking the shift." 

They did this for six months.  I tell this story, one, to emphasize how important the college system is in making our workforce prepared for the 21st century.  I make the point because, number two, it only works if the government is providing some help for people to finance their educations, their retraining.

But point number three is, even if you've got a great community college, you've got the financing, you've also got to want it.  You've also got to want it.  Think about these guys -- you work eight hours, you go to class 12 hours, you're working -- you're sleeping in between, doing that for six months.  But because they were hungry and they had confidence about their ability to translate their old skills into new skills, they've had steady jobs ever since that allow them to support their families.

Now, that's the partnership between the government, the free market, businesses, individuals -- that's what we're trying to forge.  And that's why I get so frustrated when we have these ideological debates in Washington where people start saying how, "oh, Obama is just trying to perpetrate big government."  What big government exactly have we been trying to perpetrate here?  We're trying to fund those guys who want to go to truck driving school.  We want to make sure that they've got some money to get trained for a job in the private sector. 

When we passed the Recovery Act, these aren't all a bunch of government jobs.  These are jobs that private contractors contract with the state or the city or the county to build roads and highways, the same way that we built the Interstate Highway System and the Intercontinental Railroad System. 

I mean, I understand how people have become mistrustful of government.  We don't need big government; we need smart government -- that works and interacts with the private sector to create opportunity for ordinary people.  But it can't be this constant ideological argument.  People need help.  We need to provide them a helping hand.  That's what we stand for.  (Applause.)

All right.  I've got time for only, unfortunately, one more question.  I've been having a great time.  But it is a man's turn here.  All right.  Is that you, Joe?  Well, this is a ringer.  I'm going to talk -- I'll talk to you separately.  This is a friend of mine.  People will say, ah, he called on a friend of his.  I'll talk to you over to the side here.

Go ahead, this gentleman right here.

Q    Thank you for taking my question.  Thank you for coming here.  I'm a 52-year-old businessman from Akron, Ohio.  I want to create 1,200 jobs.  I spend $60,000 of my own money to do a due diligence, travel to China with a German-designed turbine, and they're producing it now in China.  I have rights to North America, primarily the Great Lakes.

Two things that I'm challenged by -- I'm having a very difficult time raising money.  I'm not asking for a handout.  All I'm asking is loan me the money; I'll account for it, every dollar, I'll pay it back.

Secondly -- and I'm willing to risk millions -- 99 percent of my net worth.  The second thing is that GE has a patent -- and I believe in patents.  I listened to this gentleman back here, and I can truly appreciate what he's going through.  But in this instance, GE inherited this patent from Enron, and it's created a wall so that they won't let people come in and build turbines in the United States.  Now, the patent is going to expire very soon. But now they're calling it a royalty but it's really a gate to keep people out. 

Is there any programs -- I've talked to Governor Strickland, I've talked to Sherrod Brown, I've talked to Lee Fisher.  This company was identified by the city of Akron and Donald Plusquellic's visionary leadership down in Akron.  But I want to bring this to the United States.  I want to bring these jobs -- and this not about money for me.  This is about creating jobs.

I can feel for that gentleman that wants to work.  He should have a right to work.  God bless him.  (Applause.)

THE PRESIDENT:  Let me respond -- first of all --

Q    Is there any -- is there any federal programs that can help me -- I just want to borrow the money to create this factory and create these jobs.

THE PRESIDENT:  Well, obviously I don't know about the particular situation so I'll just speak generally to it.  And if you want to get one of my team your card, then maybe they can follow up with you. 

But one of the things that we've done -- or one of the things that we've seen coming out of the financial crisis is that banks are still not lending to small businesses enough.  The mayor and I talked about this.  The business owners that I talked to will confirm this.  And if you ask why -- if you ask the banks why, they'll say, well, it's a combination of, in some cases, demand really is down; businesses don't have as many customers as they used to so revenues are down and -- so they don't want to lend.  That's some cases.  But in some cases what you've got is very profitable businesses that are ready to go, ready to invest, got a proven track record -- the banks feel as if regulators are looking over their shoulder and discouraging them from lending.

So what I've said to Treasury Secretary Geithner and others is we can't meddle with independent regulators -- their job is to stay apart from politics and make sure the banking system is sound -- but there should be a discussion about whether or not we have seen the pendulum swing too far, where it used to be they'd just lend anybody anything; then they lost all this money and now they won't lend people with good credit anything.  That is not good for the economy. 

So what we've tried to do is to fill some of these gaps in the meantime.  For example, our small business lending through the SBA has actually gone up 70 percent.  And we've been waiving fees, increasing guarantees, and what we're trying to do is streamline the process for SBA loans because right now there's just too much paperwork.  It's typical government not having caught up with the 21st century.  And you can't have a 50-pound application form.  People just -- after a while, it's not worth it, in some cases.  So we're trying to do all those things.

Now, with respect to patents, again, I don't know the particular situation.  I will say this.  It's important that we protect internationally intellectual property.  It is also important though that we have a patent system that encourages innovation but doesn't just lock in big monopolies that prevent new people from bringing new products into the system.

The worst offender of this problem is actually the drug companies, because they will try to lock in their patents for as long as they can to prevent generics from coming onto the market, and that costs customers billions of dollars.  And sometimes the drug company will redesign it so it's a caplet instead of a pill, and then try to get a new patent, to get another seven or nine or 10 years of coverage.  That is something that we've got to change.  I don't know whether that applies to your particular situation, but we have to have a patent system that doesn't prevent competition.  We want a patent system that encourages innovation.

Now, I'm out of time, but I want to say one last thing.  First of all, because there's been so much attention focused on this health care issue this week, I just want to emphasize not the myths but the reality of what is trying to -- that both the House and the Senate bill were trying to accomplish, because it's actually very simple.  There are a bunch of provisions in it, but it's pretty simple.

Number one, for those of you who have health insurance, we are trying to get in place reforms that make sure you are getting your money's worth for the insurance that you pay for.  That means, for example, that they can't impose a lifetime cap where if you really get sick and suddenly there's some fine print in there that says you're not completely covered.  We're trying to make sure that there is a cap on out-of-pocket expenses so that you don't find out, when you read the fine print, that you've got to pay a huge amount that you thought you were covered for.  We're trying to make sure that if you've got a preexisting condition, you can actually still get health insurance, because a lot of people have been banned from getting health insurance because of a preexisting condition.  (Applause.)

One of the provisions -- one of the reforms we want is to make sure that your 26- or 27-year-old could, up until that age, could stay on your insurance, so that once they get out of high school and college, they can stay on their parents' insurance for a few years until they've got a more stable job. 

So you've got all these insurance reforms that we're trying to get passed.  Now, some people ask, well, why don't you just pass that and forget everything else?  Here's the problem.  Let's just take the example of preexisting conditions.  We can't prohibit insurance companies from preventing people with preexisting conditions getting insurance unless everybody essentially has insurance.  And the reason for that is otherwise what would happen is people would just -- just wouldn't get insurance until they were sick and then they'd go and buy insurance and they couldn't be prohibited.  And that would drive everybody else's premiums up.

So a lot of these insurance reforms are connected to some other things we have to do to make sure that everybody has some access to coverage.  All right? 

So the second thing we've been trying to do is to make sure that we're setting up an exchange, which is just a big pool so that people who are individuals, who are self employed, who are small business owners, they can essentially join a big pool of millions of people all across the country, which means that when you go to negotiate with your insurance company you've got the purchasing power of a Ford or a GM or Wal-Mart or a Xerox or the federal employees.  That's why federal employees have good insurance, and county employees and state employees have good insurance, in part is because they're part of this big pool.

And our attitude is, can we make sure that everybody is part of a big pool to drive down costs.  That's the second thing we're trying to do.

Third thing we're trying to do is to try to reduce costs overall because the system -- how many of you, you go into the doctor's office, you fill out a form, you get a checkup, you go fill out another form, somebody else asks you for the form you just filled out.  Then the doctor fills out a form, you got to take it to the pharmacist.  The pharmacist can't read the doctor's -- this is the only industry in the country that still does that, that still operates on paper systems, that still orders all kinds of unnecessary tests. 

Because a lot of times, I walk in the doctor, I just do what I'm told -- I don't know what he's doing.  I don't know whether this test was necessary or whether we could have had the test that I took six months ago e-mailed to the doctor so I wouldn't have to take another test and pay for another test.  Right?  (Applause.)  So there are all these methods of trying to reduce costs.  And that's what we've been trying to institute.

Now, I just want to say, as I said in my opening remarks, the process has been less than pretty.  When you deal with 535 members of Congress, it's going to be a somewhat ugly process -- not necessarily because any individual member of Congress is trying to do something wrong, it's just they may have different ideas, they have different interests, they've got a particular issue of a hospital in their district that they want to see if they can kind of get dealt with and this may be the best vehicle for doing it.  They're looking out for their constituents a lot of times.

But when you put it all together, it starts looking like just this monstrosity.  And it makes people fearful.  And it makes people afraid.  And they start thinking, you know what, this looks like something that is going to cost me tax dollars and I already have insurance so why should I support this.

So I just want to be clear that there are things that have to get done.  This is our best chance to do it.  We can't keep on putting this off.  Even if you've got health insurance right now, look at what's happening with your premiums and look at the trend.  It is going to gobble up more and more of your paycheck. Ask a chunk of you folks in here who have seen your employers say you've got to pick up more of your payments in terms of higher deductibles or higher copayments.  (Applause.)  Some of you, your employers just said, we can't afford health insurance at all.  That's going to happen to more and more people.

You asked about Social Security.  Let me talk about Medicare.  Medicare will be broke in eight years if we do nothing.  Right now we give -- we give about $17 billion in subsidies to insurance companies through the Medicare system -- your tax dollars.  But when we tried to eliminate them, suddenly there were ads on TV -- "Oh, Obama is trying to cut Medicare."  I get all these seniors writing letters:  "Why are you trying to cut my Medicare benefits?"  I'm not trying to cut your Medicare benefits.  I'm trying to stop paying these insurance companies all this money so I can give you a more stable program.

The point is this:  None of the big issues that we face in this country are simple.  Everybody wants to act like they're simple.  Everybody wants to say that they can be done easily.  But they're complicated.  They're tough.  The health care system is a big, complicated system, and doing it right is hard. 

Energy.  If we want to be energy independent -- I'm for more oil production.  I am for -- I am for new forms of energy.  I'm for a safe nuclear industry.  I'm not ideological about this.  But we also have to acknowledge that if we're going to actually have a energy-independent economy, that we've got to make some changes.  We can't just keep on doing business the same way.  And that's going to be a big, complicated discussion. 

We can't shy away from it, though.  We can't sort of start suddenly saying to ourselves, America or Congress can't do big things; that we should only do the things that are noncontroversial; we should only do the stuff that's safe.  Because if that's what happens, then we're not going to meet the challenges of the 21st century.  And that's not who we are.  That's not how we used to operate, and that's not how I intend us to operate going forward. 

We are going to take these big things on, and I'm going to do it, and you're going to do it, because you know that we want to leave a better America for our children and our grandchildren. And that doesn't mean standing still; that means marching forward.  (Applause.)

I want to march forward with you.  I want to work with you. I want to fight for you.  I hope you're willing to stand by me, even during these tough times, because I believe in a brighter future for America.

Thank you, everybody.  God bless you.  (Applause.)

3:00 P.M. EST


Remarks by the President in State of the Union Address

U.S. Capitol

January 27, 2010

President Obama speaking
White House Photo, Pete Souza, 1/27/10

9:11 P.M. EST

THE PRESIDENT:  Madam Speaker, Vice President Biden, members of Congress, distinguished guests, and fellow Americans:

Our Constitution declares that from time to time, the President shall give to Congress information about the state of our union.  For 220 years, our leaders have fulfilled this duty. They've done so during periods of prosperity and tranquility.  And they've done so in the midst of war and depression; at moments of great strife and great struggle.

It's tempting to look back on these moments and assume that our progress was inevitable -– that America was always destined to succeed.  But when the Union was turned back at Bull Run, and the Allies first landed at Omaha Beach, victory was very much in doubt.  When the market crashed on Black Tuesday, and civil rights marchers were beaten on Bloody Sunday, the future was anything but certain.  These were the times that tested the courage of our convictions, and the strength of our union.  And despite all our divisions and disagreements, our hesitations and our fears, America prevailed because we chose to move forward as one nation, as one people. 

Again, we are tested.  And again, we must answer history's call.

One year ago, I took office amid two wars, an economy rocked by a severe recession, a financial system on the verge of collapse, and a government deeply in debt.  Experts from across the political spectrum warned that if we did not act, we might face a second depression.  So we acted -– immediately and aggressively.  And one year later, the worst of the storm has passed.

But the devastation remains.  One in 10 Americans still cannot find work.  Many businesses have shuttered.  Home values have declined.  Small towns and rural communities have been hit especially hard.  And for those who'd already known poverty, life has become that much harder.

This recession has also compounded the burdens that America's families have been dealing with for decades –- the burden of working harder and longer for less; of being unable to save enough to retire or help kids with college. 

So I know the anxieties that are out there right now.  They're not new.  These struggles are the reason I ran for President.  These struggles are what I've witnessed for years in places like Elkhart, Indiana; Galesburg, Illinois.  I hear about them in the letters that I read each night.  The toughest to read are those written by children -– asking why they have to move from their home, asking when their mom or dad will be able to go back to work.

For these Americans and so many others, change has not come fast enough.  Some are frustrated; some are angry.  They don't understand why it seems like bad behavior on Wall Street is rewarded, but hard work on Main Street isn't; or why Washington has been unable or unwilling to solve any of our problems.  They're tired of the partisanship and the shouting and the pettiness.  They know we can't afford it.  Not now.  

So we face big and difficult challenges.  And what the American people hope -– what they deserve -– is for all of us, Democrats and Republicans, to work through our differences; to overcome the numbing weight of our politics.  For while the people who sent us here have different backgrounds, different stories, different beliefs, the anxieties they face are the same. The aspirations they hold are shared:  a job that pays the bills; a chance to get ahead; most of all, the ability to give their children a better life. 

You know what else they share?  They share a stubborn resilience in the face of adversity.  After one of the most difficult years in our history, they remain busy building cars and teaching kids, starting businesses and going back to school. They're coaching Little League and helping their neighbors.  One woman wrote to me and said, "We are strained but hopeful, struggling but encouraged." 

It's because of this spirit -– this great decency and great strength -– that I have never been more hopeful about America's future than I am tonight.  (Applause.)  Despite our hardships, our union is strong.  We do not give up.  We do not quit.  We do not allow fear or division to break our spirit.  In this new decade, it's time the American people get a government that matches their decency; that embodies their strength.  (Applause.)   
And tonight, tonight I'd like to talk about how together we can deliver on that promise.   

It begins with our economy. 

Our most urgent task upon taking office was to shore up the same banks that helped cause this crisis.  It was not easy to do. And if there's one thing that has unified Democrats and Republicans, and everybody in between, it's that we all hated the bank bailout.  I hated it -- (applause.)  I hated it.  You hated it.  It was about as popular as a root canal.  (Laughter.)  

But when I ran for President, I promised I wouldn't just do what was popular -– I would do what was necessary.  And if we had allowed the meltdown of the financial system, unemployment might be double what it is today.  More businesses would certainly have closed.  More homes would have surely been lost. 

So I supported the last administration's efforts to create the financial rescue program.  And when we took that program over, we made it more transparent and more accountable.  And as a result, the markets are now stabilized, and we've recovered most of the money we spent on the banks.  (Applause.)  Most but not all.

To recover the rest, I've proposed a fee on the biggest banks.  (Applause.)  Now, I know Wall Street isn't keen on this idea.  But if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need.  (Applause.)

Now, as we stabilized the financial system, we also took steps to get our economy growing again, save as many jobs as possible, and help Americans who had become unemployed. 

That's why we extended or increased unemployment benefits for more than 18 million Americans; made health insurance 65 percent cheaper for families who get their coverage through COBRA; and passed 25 different tax cuts.

Now, let me repeat:  We cut taxes.  We cut taxes for 95 percent of working families.  (Applause.)  We cut taxes for small businesses.  We cut taxes for first-time homebuyers.  We cut taxes for parents trying to care for their children.  We cut taxes for 8 million Americans paying for college.  (Applause.)

I thought I'd get some applause on that one.  (Laughter and applause.)

As a result, millions of Americans had more to spend on gas and food and other necessities, all of which helped businesses keep more workers.  And we haven't raised income taxes by a single dime on a single person.  Not a single dime.  (Applause.)

Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed.  (Applause.)  Two hundred thousand work in construction and clean energy; 300,000 are teachers and other education workers.  Tens of thousands are cops, firefighters, correctional officers, first responders.  (Applause.)  And we're on track to add another one and a half million jobs to this total by the end of the year.

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act.  (Applause.)  That's right -– the Recovery Act, also known as the stimulus bill.  (Applause.)  Economists on the left and the right say this bill has helped save jobs and avert disaster.  But you don't have to take their word for it.  Talk to the small business in Phoenix that will triple its workforce because of the Recovery Act.  Talk to the window manufacturer in Philadelphia who said he used to be skeptical about the Recovery Act, until he had to add two more work shifts just because of the business it created.  Talk to the single teacher raising two kids who was told by her principal in the last week of school that because of the Recovery Act, she wouldn't be laid off after all. 

There are stories like this all across America.  And after two years of recession, the economy is growing again.  Retirement funds have started to gain back some of their value.  Businesses are beginning to invest again, and slowly some are starting to hire again.   

But I realize that for every success story, there are other stories, of men and women who wake up with the anguish of not knowing where their next paycheck will come from; who send out resumes week after week and hear nothing in response.  That is why jobs must be our number-one focus in 2010, and that's why I'm calling for a new jobs bill tonight.  (Applause.)  

Now, the true engine of job creation in this country will always be America's businesses.  (Applause.)  But government can create the conditions necessary for businesses to expand and hire more workers. 

We should start where most new jobs do –- in small businesses, companies that begin when -- (applause) -- companies that begin when an entrepreneur -- when an entrepreneur takes a chance on a dream, or a worker decides it's time she became her own boss.  Through sheer grit and determination, these companies have weathered the recession and they're ready to grow.  But when you talk to small businessowners in places like Allentown, Pennsylvania, or Elyria, Ohio, you find out that even though banks on Wall Street are lending again, they're mostly lending to bigger companies.  Financing remains difficult for small businessowners across the country, even those that are making a profit.

So tonight, I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. (Applause.)  I'm also proposing a new small business tax credit
-– one that will go to over one million small businesses who hire new workers or raise wages.  (Applause.)  While we're at it, let's also eliminate all capital gains taxes on small business investment, and provide a tax incentive for all large businesses and all small businesses to invest in new plants and equipment.  (Applause.) 

Next, we can put Americans to work today building the infrastructure of tomorrow.  (Applause.)  From the first railroads to the Interstate Highway System, our nation has always been built to compete.  There's no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products.

Tomorrow, I'll visit Tampa, Florida, where workers will soon break ground on a new high-speed railroad funded by the Recovery Act.  (Applause.)  There are projects like that all across this country that will create jobs and help move our nation's goods, services, and information.  (Applause.) 

We should put more Americans to work building clean energy facilities -- (applause) -- and give rebates to Americans who make their homes more energy-efficient, which supports clean energy jobs.  (Applause.)  And to encourage these and other businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America.  (Applause.)

Now, the House has passed a jobs bill that includes some of these steps.  (Applause.)  As the first order of business this year, I urge the Senate to do the same, and I know they will.  (Applause.)  They will.  (Applause.)  People are out of work.  They're hurting.  They need our help.  And I want a jobs bill on my desk without delay.  (Applause.)

But the truth is, these steps won't make up for the seven million jobs that we've lost over the last two years.  The only way to move to full employment is to lay a new foundation for long-term economic growth, and finally address the problems that America's families have confronted for years.  

We can't afford another so-called economic "expansion" like the one from the last decade –- what some call the "lost decade" -– where jobs grew more slowly than during any prior expansion; where the income of the average American household declined while the cost of health care and tuition reached record highs; where prosperity was built on a housing bubble and financial speculation. 

From the day I took office, I've been told that addressing our larger challenges is too ambitious; such an effort would be too contentious.  I've been told that our political system is too gridlocked, and that we should just put things on hold for a while. 

For those who make these claims, I have one simple question: How long should we wait?  How long should America put its future on hold?  (Applause.)

You see, Washington has been telling us to wait for decades, even as the problems have grown worse.  Meanwhile, China is not waiting to revamp its economy.  Germany is not waiting.  India is not waiting.  These nations -- they're not standing still.  These nations aren't playing for second place.  They're putting more emphasis on math and science.  They're rebuilding their infrastructure.  They're making serious investments in clean energy because they want those jobs.  Well, I do not accept second place for the United States of America.  (Applause.) 

As hard as it may be, as uncomfortable and contentious as the debates may become, it's time to get serious about fixing the problems that are hampering our growth.

Now, one place to start is serious financial reform.  Look, I am not interested in punishing banks.  I'm interested in protecting our economy.  A strong, healthy financial market makes it possible for businesses to access credit and create new jobs. It channels the savings of families into investments that raise incomes.  But that can only happen if we guard against the same recklessness that nearly brought down our entire economy. 

We need to make sure consumers and middle-class families have the information they need to make financial decisions.  (Applause.)  We can't allow financial institutions, including those that take your deposits, to take risks that threaten the whole economy.  

Now, the House has already passed financial reform with many of these changes.  (Applause.)  And the lobbyists are trying to kill it.  But we cannot let them win this fight.  (Applause.)  And if the bill that ends up on my desk does not meet the test of real reform, I will send it back until we get it right.  We've got to get it right.  (Applause.)

Next, we need to encourage American innovation.  Last year, we made the largest investment in basic research funding in history -– (applause) -- an investment that could lead to the world's cheapest solar cells or treatment that kills cancer cells but leaves healthy ones untouched.  And no area is more ripe for such innovation than energy.  You can see the results of last year's investments in clean energy -– in the North Carolina company that will create 1,200 jobs nationwide helping to make advanced batteries; or in the California business that will put a thousand people to work making solar panels.

But to create more of these clean energy jobs, we need more production, more efficiency, more incentives.  And that means building a new generation of safe, clean nuclear power plants in this country.  (Applause.)  It means making tough decisions about opening new offshore areas for oil and gas development.  (Applause.)  It means continued investment in advanced biofuels and clean coal technologies.  (Applause.)  And, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in America.  (Applause.)

I am grateful to the House for passing such a bill last year.  (Applause.)  And this year I'm eager to help advance the bipartisan effort in the Senate.  (Applause.) 

I know there have been questions about whether we can afford such changes in a tough economy.  I know that there are those who disagree with the overwhelming scientific evidence on climate change.  But here's the thing -- even if you doubt the evidence, providing incentives for energy-efficiency and clean energy are the right thing to do for our future -– because the nation that leads the clean energy economy will be the nation that leads the global economy.  And America must be that nation.  (Applause.)

Third, we need to export more of our goods.  (Applause.)  Because the more products we make and sell to other countries, the more jobs we support right here in America.  (Applause.)  So tonight, we set a new goal:  We will double our exports over the next five years, an increase that will support two million jobs in America.  (Applause.)  To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security.  (Applause.)

We have to seek new markets aggressively, just as our competitors are.  If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.  (Applause.)  But realizing those benefits also means enforcing those agreements so our trading partners play by the rules.  (Applause.)  And that's why we'll continue to shape a Doha trade agreement that opens global markets, and why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia.  (Applause.)

Fourth, we need to invest in the skills and education of our people.  (Applause.)

Now, this year, we've broken through the stalemate between left and right by launching a national competition to improve our schools.  And the idea here is simple:  Instead of rewarding failure, we only reward success.  Instead of funding the status quo, we only invest in reform -- reform that raises student achievement; inspires students to excel in math and science; and turns around failing schools that steal the future of too many young Americans, from rural communities to the inner city.  In the 21st century, the best anti-poverty program around is a world-class education.  (Applause.)  And in this country, the success of our children cannot depend more on where they live than on their potential. 

When we renew the Elementary and Secondary Education Act, we will work with Congress to expand these reforms to all 50 states.  Still, in this economy, a high school diploma no longer guarantees a good job.  That's why I urge the Senate to follow the House and pass a bill that will revitalize our community colleges, which are a career pathway to the children of so many working families.  (Applause.) 

To make college more affordable, this bill will finally end the unwarranted taxpayer subsidies that go to banks for student loans.  (Applause.)  Instead, let's take that money and give families a $10,000 tax credit for four years of college and increase Pell Grants.  (Applause.)  And let's tell another one million students that when they graduate, they will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years –- and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college.  (Applause.) 

And by the way, it's time for colleges and universities to get serious about cutting their own costs -– (applause) -- because they, too, have a responsibility to help solve this problem. 

Now, the price of college tuition is just one of the burdens facing the middle class.  That's why last year I asked Vice President Biden to chair a task force on middle-class families.  That's why we're nearly doubling the child care tax credit, and making it easier to save for retirement by giving access to every worker a retirement account and expanding the tax credit for those who start a nest egg.  That's why we're working to lift the value of a family's single largest investment –- their home.  The steps we took last year to shore up the housing market have allowed millions of Americans to take out new loans and save an average of $1,500 on mortgage payments.     

This year, we will step up refinancing so that homeowners can move into more affordable mortgages.  (Applause.)  And it is precisely to relieve the burden on middle-class families that we still need health insurance reform.  (Applause.)  Yes, we do.  (Applause.)

Now, let's clear a few things up.  (Laughter.)  I didn't choose to tackle this issue to get some legislative victory under my belt.  And by now it should be fairly obvious that I didn't take on health care because it was good politics.  (Laughter.)  I took on health care because of the stories I've heard from Americans with preexisting conditions whose lives depend on getting coverage; patients who've been denied coverage; families –- even those with insurance -– who are just one illness away from financial ruin.

After nearly a century of trying -- Democratic administrations, Republican administrations -- we are closer than ever to bringing more security to the lives of so many Americans.  The approach we've taken would protect every American from the worst practices of the insurance industry.  It would give small businesses and uninsured Americans a chance to choose an affordable health care plan in a competitive market.  It would require every insurance plan to cover preventive care. 

And by the way, I want to acknowledge our First Lady, Michelle Obama, who this year is creating a national movement to tackle the epidemic of childhood obesity and make kids healthier. (Applause.)  Thank you.  She gets embarrassed.  (Laughter.)

Our approach would preserve the right of Americans who have insurance to keep their doctor and their plan.  It would reduce costs and premiums for millions of families and businesses.  And according to the Congressional Budget Office -– the independent organization that both parties have cited as the official scorekeeper for Congress –- our approach would bring down the deficit by as much as $1 trillion over the next two decades.  (Applause.)

Still, this is a complex issue, and the longer it was debated, the more skeptical people became.  I take my share of the blame for not explaining it more clearly to the American people.  And I know that with all the lobbying and horse-trading, the process left most Americans wondering, "What's in it for me?"

But I also know this problem is not going away.  By the time I'm finished speaking tonight, more Americans will have lost their health insurance.  Millions will lose it this year.  Our deficit will grow.  Premiums will go up.  Patients will be denied the care they need.  Small business owners will continue to drop coverage altogether.  I will not walk away from these Americans, and neither should the people in this chamber.  (Applause.)

So, as temperatures cool, I want everyone to take another look at the plan we've proposed.  There's a reason why many doctors, nurses, and health care experts who know our system best consider this approach a vast improvement over the status quo.  But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know.  (Applause.)  Let me know.  Let me know.  (Applause.)  I'm eager to see it. 

Here's what I ask Congress, though:  Don't walk away from reform.  Not now.  Not when we are so close.  Let us find a way to come together and finish the job for the American people.  (Applause.)  Let's get it done.  Let's get it done.  (Applause.)

Now, even as health care reform would reduce our deficit, it's not enough to dig us out of a massive fiscal hole in which we find ourselves.  It's a challenge that makes all others that much harder to solve, and one that's been subject to a lot of political posturing.  So let me start the discussion of government spending by setting the record straight. 

At the beginning of the last decade, the year 2000, America had a budget surplus of over $200 billion.  (Applause.)  By the time I took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade.  Most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program.  On top of that, the effects of the recession put a $3 trillion hole in our budget.  All this was before I walked in the door.  (Laughter and applause.)

Now -- just stating the facts.  Now, if we had taken office in ordinary times, I would have liked nothing more than to start bringing down the deficit.  But we took office amid a crisis.  And our efforts to prevent a second depression have added another $1 trillion to our national debt.  That, too, is a fact.

I'm absolutely convinced that was the right thing to do.  But families across the country are tightening their belts and making tough decisions.  The federal government should do the same.  (Applause.)  So tonight, I'm proposing specific steps to pay for the trillion dollars that it took to rescue the economy last year.

Starting in 2011, we are prepared to freeze government spending for three years.  (Applause.)  Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected.  But all other discretionary government programs will.  Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don't.  And if I have to enforce this discipline by veto, I will.  (Applause.)  

We will continue to go through the budget, line by line, page by page, to eliminate programs that we can't afford and don't work.  We've already identified $20 billion in savings for next year.  To help working families, we'll extend our middle-class tax cuts.  But at a time of record deficits, we will not continue tax cuts for oil companies, for investment fund managers, and for those making over $250,000 a year.  We just can't afford it.  (Applause.) 

Now, even after paying for what we spent on my watch, we'll still face the massive deficit we had when I took office.  More importantly, the cost of Medicare, Medicaid, and Social Security will continue to skyrocket.  That's why I've called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad.  (Applause.)  This can't be one of those Washington gimmicks that lets us pretend we solved a problem.  The commission will have to provide a specific set of solutions by a certain deadline. 

Now, yesterday, the Senate blocked a bill that would have created this commission.  So I'll issue an executive order that will allow us to go forward, because I refuse to pass this problem on to another generation of Americans.  (Applause.)  And when the vote comes tomorrow, the Senate should restore the pay-as-you-go law that was a big reason for why we had record surpluses in the 1990s.  (Applause.) 
Now, I know that some in my own party will argue that we can't address the deficit or freeze government spending when so many are still hurting.  And I agree -- which is why this freeze won't take effect until next year -- (laughter) -- when the economy is stronger.  That's how budgeting works.  (Laughter and applause.)  But understand –- understand if we don't take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing, and jeopardize our recovery -– all of which would have an even worse effect on our job growth and family incomes. 

From some on the right, I expect we'll hear a different argument -– that if we just make fewer investments in our people, extend tax cuts including those for the wealthier Americans, eliminate more regulations, maintain the status quo on health care, our deficits will go away.  The problem is that's what we did for eight years.  (Applause.)  That's what helped us into this crisis.  It's what helped lead to these deficits.  We can't do it again.

Rather than fight the same tired battles that have dominated Washington for decades, it's time to try something new.  Let's invest in our people without leaving them a mountain of debt.  Let's meet our responsibility to the citizens who sent us here.  Let's try common sense.  (Laughter.)  A novel concept.

To do that, we have to recognize that we face more than a deficit of dollars right now.  We face a deficit of trust -– deep and corrosive doubts about how Washington works that have been growing for years.  To close that credibility gap we have to take action on both ends of Pennsylvania Avenue -- to end the outsized influence of lobbyists; to do our work openly; to give our people the government they deserve.  (Applause.)

That's what I came to Washington to do.  That's why -– for the first time in history –- my administration posts on our White House visitors online.  That's why we've excluded lobbyists from policymaking jobs, or seats on federal boards and commissions.

But we can't stop there.  It's time to require lobbyists to disclose each contact they make on behalf of a client with my administration or with Congress.  It's time to put strict limits on the contributions that lobbyists give to candidates for federal office. 

With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests –- including foreign corporations –- to spend without limit in our elections.  (Applause.)  I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities.  (Applause.)  They should be decided by the American people.  And I'd urge Democrats and Republicans to pass a bill that helps to correct some of these problems.

I'm also calling on Congress to continue down the path of earmark reform.  Applause.)  Democrats and Republicans.  (Applause.)  Democrats and Republicans.  You've trimmed some of this spending, you've embraced some meaningful change.  But restoring the public trust demands more.  For example, some members of Congress post some earmark requests online.  (Applause.)  Tonight, I'm calling on Congress to publish all earmark requests on a single Web site before there's a vote, so that the American people can see how their money is being spent. (Applause.)

Of course, none of these reforms will even happen if we don't also reform how we work with one another.  Now, I'm not naïve.  I never thought that the mere fact of my election would usher in peace and harmony -- (laughter) -- and some post-partisan era.  I knew that both parties have fed divisions that are deeply entrenched.  And on some issues, there are simply philosophical differences that will always cause us to part ways. These disagreements, about the role of government in our lives, about our national priorities and our national security, they've been taking place for over 200 years.  They're the very essence of our democracy.

But what frustrates the American people is a Washington where every day is Election Day.  We can't wage a perpetual campaign where the only goal is to see who can get the most embarrassing headlines about the other side -– a belief that if you lose, I win.  Neither party should delay or obstruct every single bill just because they can.  The confirmation of -- (applause) -- I'm speaking to both parties now.  The confirmation of well-qualified public servants shouldn't be held hostage to the pet projects or grudges of a few individual senators.  (Applause.) 

Washington may think that saying anything about the other side, no matter how false, no matter how malicious, is just part of the game.  But it's precisely such politics that has stopped either party from helping the American people.  Worse yet, it's sowing further division among our citizens, further distrust in our government.

So, no, I will not give up on trying to change the tone of our politics.  I know it's an election year.  And after last week, it's clear that campaign fever has come even earlier than usual.  But we still need to govern. 

To Democrats, I would remind you that we still have the largest majority in decades, and the people expect us to solve problems, not run for the hills.  (Applause.)  And if the Republican leadership is going to insist that 60 votes in the Senate are required to do any business at all in this town -- a supermajority -- then the responsibility to govern is now yours as well.  (Applause.)  Just saying no to everything may be good short-term politics, but it's not leadership.  We were sent here to serve our citizens, not our ambitions.  (Applause.)  So let's show the American people that we can do it together.  (Applause.)

This week, I'll be addressing a meeting of the House Republicans.  I'd like to begin monthly meetings with both Democratic and Republican leadership.  I know you can't wait.  (Laughter.)

Throughout our history, no issue has united this country more than our security.  Sadly, some of the unity we felt after 9/11 has dissipated.  We can argue all we want about who's to blame for this, but I'm not interested in re-litigating the past. I know that all of us love this country.  All of us are committed to its defense.  So let's put aside the schoolyard taunts about who's tough.  Let's reject the false choice between protecting our people and upholding our values.  Let's leave behind the fear and division, and do what it takes to defend our nation and forge a more hopeful future -- for America and for the world.  (Applause.)

That's the work we began last year.  Since the day I took office, we've renewed our focus on the terrorists who threaten our nation.  We've made substantial investments in our homeland security and disrupted plots that threatened to take American lives.  We are filling unacceptable gaps revealed by the failed Christmas attack, with better airline security and swifter action on our intelligence.  We've prohibited torture and strengthened partnerships from the Pacific to South Asia to the Arabian Peninsula.  And in the last year, hundreds of al Qaeda's fighters and affiliates, including many senior leaders, have been captured or killed -- far more than in 2008.

And in Afghanistan, we're increasing our troops and training Afghan security forces so they can begin to take the lead in July of 2011, and our troops can begin to come home.  (Applause.)  We will reward good governance, work to reduce corruption, and support the rights of all Afghans -- men and women alike.  (Applause.)  We're joined by allies and partners who have increased their own commitments, and who will come together tomorrow in London to reaffirm our common purpose.  There will be difficult days ahead.  But I am absolutely confident we will succeed.

As we take the fight to al Qaeda, we are responsibly leaving Iraq to its people.  As a candidate, I promised that I would end this war, and that is what I am doing as President.  We will have all of our combat troops out of Iraq by the end of this August.  (Applause.)  We will support the Iraqi government -- we will support the Iraqi government as they hold elections, and we will continue to partner with the Iraqi people to promote regional peace and prosperity.  But make no mistake:  This war is ending, and all of our troops are coming home.  (Applause.)   

Tonight, all of our men and women in uniform -- in Iraq, in Afghanistan, and around the world –- they have to know that we -- that they have our respect, our gratitude, our full support.  And just as they must have the resources they need in war, we all have a responsibility to support them when they come home.  (Applause.)  That's why we made the largest increase in investments for veterans in decades -- last year.  (Applause.)   That's why we're building a 21st century VA.  And that's why Michelle has joined with Jill Biden to forge a national commitment to support military families.  (Applause.)

Now, even as we prosecute two wars, we're also confronting perhaps the greatest danger to the American people -– the threat of nuclear weapons.  I've embraced the vision of John F. Kennedy and Ronald Reagan through a strategy that reverses the spread of these weapons and seeks a world without them.  To reduce our stockpiles and launchers, while ensuring our deterrent, the United States and Russia are completing negotiations on the farthest-reaching arms control treaty in nearly two decades.  (Applause.)  And at April's Nuclear Security Summit, we will bring 44 nations together here in Washington, D.C. behind a clear goal:  securing all vulnerable nuclear materials around the world in four years, so that they never fall into the hands of terrorists.  (Applause.)

Now, these diplomatic efforts have also strengthened our hand in dealing with those nations that insist on violating international agreements in pursuit of nuclear weapons.  That's why North Korea now faces increased isolation, and stronger sanctions –- sanctions that are being vigorously enforced.  That's why the international community is more united, and the Islamic Republic of Iran is more isolated.  And as Iran's leaders continue to ignore their obligations, there should be no doubt:  They, too, will face growing consequences.  That is a promise.  (Applause.)

That's the leadership that we are providing –- engagement that advances the common security and prosperity of all people. We're working through the G20 to sustain a lasting global recovery.  We're working with Muslim communities around the world to promote science and education and innovation.  We have gone from a bystander to a leader in the fight against climate change. We're helping developing countries to feed themselves, and continuing the fight against HIV/AIDS.  And we are launching a new initiative that will give us the capacity to respond faster and more effectively to bioterrorism or an infectious disease -– a plan that will counter threats at home and strengthen public health abroad.

As we have for over 60 years, America takes these actions because our destiny is connected to those beyond our shores.  But we also do it because it is right.  That's why, as we meet here tonight, over 10,000 Americans are working with many nations to help the people of Haiti recover and rebuild.  (Applause.)  That's why we stand with the girl who yearns to go to school in Afghanistan; why we support the human rights of the women marching through the streets of Iran; why we advocate for the young man denied a job by corruption in Guinea.  For America must always stand on the side of freedom and human dignity.  (Applause.)  Always.  (Applause.)

Abroad, America's greatest source of strength has always been our ideals.  The same is true at home.  We find unity in our incredible diversity, drawing on the promise enshrined in our Constitution:  the notion that we're all created equal; that no matter who you are or what you look like, if you abide by the law you should be protected by it; if you adhere to our common values you should be treated no different than anyone else.    

We must continually renew this promise.  My administration has a Civil Rights Division that is once again prosecuting civil rights violations and employment discrimination.  (Applause.)  We finally strengthened our laws to protect against crimes driven by hate.  (Applause.)  This year, I will work with Congress and our military to finally repeal the law that denies gay Americans the right to serve the country they love because of who they are.  (Applause.)  It's the right thing to do.  (Applause.)  

We're going to crack down on violations of equal pay laws -– so that women get equal pay for an equal day's work.  (Applause.) And we should continue the work of fixing our broken immigration system -– to secure our borders and enforce our laws, and ensure that everyone who plays by the rules can contribute to our economy and enrich our nation.  (Applause.)

In the end, it's our ideals, our values that built America  -- values that allowed us to forge a nation made up of immigrants from every corner of the globe; values that drive our citizens still.  Every day, Americans meet their responsibilities to their families and their employers.  Time and again, they lend a hand to their neighbors and give back to their country.  They take pride in their labor, and are generous in spirit.  These aren't Republican values or Democratic values that they're living by; business values or labor values.  They're American values.  

Unfortunately, too many of our citizens have lost faith that our biggest institutions -– our corporations, our media, and, yes, our government –- still reflect these same values.  Each of these institutions are full of honorable men and women doing important work that helps our country prosper.  But each time a CEO rewards himself for failure, or a banker puts the rest of us at risk for his own selfish gain, people's doubts grow.  Each time lobbyists game the system or politicians tear each other down instead of lifting this country up, we lose faith.  The more that TV pundits reduce serious debates to silly arguments, big issues into sound bites, our citizens turn away.  

No wonder there's so much cynicism out there.  No wonder there's so much disappointment. 

I campaigned on the promise of change –- change we can believe in, the slogan went.  And right now, I know there are many Americans who aren't sure if they still believe we can change –- or that I can deliver it. 

But remember this –- I never suggested that change would be easy, or that I could do it alone.  Democracy in a nation of 300 million people can be noisy and messy and complicated.  And when you try to do big things and make big changes, it stirs passions and controversy.  That's just how it is.

Those of us in public office can respond to this reality by playing it safe and avoid telling hard truths and pointing fingers.  We can do what's necessary to keep our poll numbers high, and get through the next election instead of doing what's best for the next generation. 

But I also know this:  If people had made that decision 50 years ago, or 100 years ago, or 200 years ago, we wouldn't be here tonight.  The only reason we are here is because generations of Americans were unafraid to do what was hard; to do what was needed even when success was uncertain; to do what it took to keep the dream of this nation alive for their children and their grandchildren.

Our administration has had some political setbacks this year, and some of them were deserved.  But I wake up every day knowing that they are nothing compared to the setbacks that families all across this country have faced this year.  And what keeps me going -– what keeps me fighting -– is that despite all these setbacks, that spirit of determination and optimism, that fundamental decency that has always been at the core of the American people, that lives on.   

It lives on in the struggling small business owner who wrote to me of his company, "None of us," he said, "…are willing to consider, even slightly, that we might fail."

It lives on in the woman who said that even though she and her neighbors have felt the pain of recession, "We are strong.  We are resilient.  We are American."

It lives on in the 8-year-old boy in Louisiana, who just sent me his allowance and asked if I would give it to the people of Haiti. 

And it lives on in all the Americans who've dropped everything to go someplace they've never been and pull people they've never known from the rubble, prompting chants of "U.S.A.! U.S.A.!  U.S.A!" when another life was saved. 

The spirit that has sustained this nation for more than two centuries lives on in you, its people.  We have finished a difficult year.  We have come through a difficult decade.  But a new year has come.  A new decade stretches before us.  We don't quit.  I don't quit.  (Applause.)  Let's seize this moment -- to start anew, to carry the dream forward, and to strengthen our union once more.  (Applause.)

Thank you.  God bless you.  And God bless the United States of America.  (Applause.)

                                         END                   10:20 P.M. EST












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