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CBS "60 Minutes" - Transcript

Interview

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STEVE KROFT: The mood of the country, the mood in general, the political mood's different than it was when we talked two years ago, right after the presidential election.

PRESIDENT OBAMA: Absolutely.

KROFT: And I think that you made some allusions during that interview that it was gonna be difficult. And it's always a challenge to kind of read the tea leaves of midterm elections, because there's lots of different things going on. But the Republicans have said that this was a referendum on you and the Democratic Party. Do you agree with that?

PRESIDENT OBAMA: I think, first and foremost, it was a referendum on the economy. And the party in power was held responsible for an economy that is still underperforming and where a lot of folks are still hurting. I mean, we've got 9.6 percent unemployment. We've got higher than that underemployment. A lot of folks who would like to be working full time can't work full time. Families are struggling paying the bills. People have seen their home values decline all across the country. In some cases, so that they're under water. Their house is worth less than the cost of their mortgage.

And so, people I think expect that we would have made more progress than we have on the economic front. And I think that was uppermost on people's minds.

I do think that what was also true was that there are a lot of folks in this country who voted for me, hoping that we were gonna be able to get Washington to work again. And what they've seen over the last two years is a lot of partisan bickering. A lot of the same chronic problems that we've seen in Washington over the last several decades now. And that frustrated them. And I think they rightly said, "Okay, President Obama, you said you were gonna do something about this. We haven't seen enough change in Washington." And so in both those instances, I think people rightly said, "You're the President, you committed and promised that we would see changes. We haven't seen as many changes as we'd like. And we're gonna hold you accountable for it."

KROFT: The Republicans say the voters sent you a very clear message on Tuesday. That they want a smaller, less costly, more accountable government. Is that the message that you received?

PRESIDENT OBAMA: I think that, first and foremost, they want jobs and economic growth in this country. They want to feel that the next generation is gonna be able to benefit from the American dream the way previous generations have. That our kids and our grandkids are gonna have a better life than ours, not one that's diminished. That's the most important thing that people are looking for.

I also do think that the American people are concerned that the debt and deficits that have been built up over decades -- and they got worse as a consequence of this economic recession -- are things that have to be fixed. And we've gotta fix them so that the next generation doesn't have to fix 'em.

And so, our goal has to be to try to bring the parties together and see if we can move forward on some areas that we know will encourage growth -- like education, investment in research and development, investment in science and technology. Make sure that government continues to do the things that people think are important. Social Security. Making sure there's a safety net. Making sure that Medicare is there for future generations. Making sure that we have a strong defense. Try to find those areas where we're engaging in a lot of waste and eliminate those.

But there's one last component to this, Steve. That that is, I think, people want to see Washington work. And what they mean by Washington working: It's transparent. It's accountable. That people aren't just playing political games all the time. That Democrats and Republicans aren't shouting across the abyss, but instead are trying to sit down and have a conversation and come up with practical solutions. And we have not seen enough of that over the last two years.

KROFT: Are you saying, then, that idea of smaller, less costly, more accountable government was not what you think the voters were saying?

PRESIDENT OBAMA: No, no, no. There is no doubt that folks are concerned about debt and deficits. And they want to make sure that government spending is not leaving a big tab for the next generation. I think that is absolutely a priority. And by the way, that's a concern that I had before I was even sworn in. And the fact is, I had a $1.3 trillion deficit waiting for me. We then had an emergency situation that required us to take a series of steps that added to that deficit in the short term.

But part of the reason, for example, that I thought it was so important for us to take on health care reform was the single, biggest expansion of government -- one that is inevitable if we don't make some serious changes -- is on the health care front. Medicare, the cost of Medicare, Medicaid and, you know medical care for veterans. Medical care in the Defense Department. Medical care across the board. That is the single thing that is gonna be driving the expansion of the federal government over the next several years. And so one of the things that we've said is -- we've got to start getting a better bang for our buck on that front. If we don't, it is gonna be very difficult for future generations to deal with it.

KROFT: It wasn't just the Republicans. I mean, you lost a lot of your base on Tuesday. You lost people who had helped elect you. A lot of the people that helped elect you two years ago voted for Republicans. Women, senior citizens, independents. Young people and African Americans did not turn out in large numbers. How do you explain that?

PRESIDENT OBAMA: Well, I as I said, I think that folks are frustrated with what they've seen over the last two years. I mean, you know, one of the challenges we had was that we'd lost four million jobs in the six months before I was sworn in. We lost 750,000 jobs the month I was sworn in. 600,000 the month after that. 600,000 the month after that. So, what you had was the economy continuing to get worse in the first several months of my Administration, before any of our economic policies had a chance to be put into place.

And we saw such a big hole develop, eight million jobs lost, that the actions that we took may have saved or created 3.5 million jobs, but that still leaves a huge hole. And that's what people are experiencing on a day to day basis. The hardest argument to make in politics is: things would have been a lot worse if we hadn't done all those taken all these steps. And particularly since these were really big steps. I mean, yeah, the Recovery Act was big. The, you know, intervention with the auto companies, even though it will end up costing tax payers much less than anybody thought at the time, was still big.

You know? The bank interventions. TARP, that we inherited from the previous administration. The banks -- we're gonna make sure that they pay that money back. And it won't have cost taxpayers as much as, say, the savings and loans crisis back in the '80s. It's still big.

So, people are looking and saying, "Well government intervened a lot, spent a lot of money, and yet, I still don't have a job or my neighbor still doesn't have a job or that home is still being foreclosed down the block." And our argument was, "Well, we had to take these steps to stabilize the economy and things would be a lot worse if we hadn't taken these steps." And people say, "Well, you know what? That's not particularly persuasive to us."

We want to get back to a time when, if folks are willing to work hard, are responsible you know, we're making sure that our kids are staying in school and doing the right thing and going to college -- that there are gonna be opportunities out there. And right now, people, I think, are concerned as to whether that future is gonna be as bright as it needs to be. And appropriately, I'm held accountable for that. You know? I'm President of the United States. We painted a picture of how we can move this country forward. And we're not there yet. And, you know, I paid the political cost for not getting us there.

KROFT: You said at your news conference that you've been doing a lot of reflecting. Are there things that you wish you could do over?

PRESIDENT OBAMA: Oh, I think . . . .

KROFT: Pull back?

PRESIDENT OBAMA: I think there are things every day that I think about doing better. I'll give you an example. You know, 'cause this is fairly concrete. When we first came in and we were organizing to get the Recovery Act done you know, we knew that we were gonna have to act fast through Congress and get a lot of stuff moving. And there were a bunch of unfinished budgets that were wrapped up in an omnibus bill coming from the previous Congress.

And it was full of earmarks. Now, I campaigned saying we should stop doing earmarks. You know, even though it's small as a part of our overall federal budget, you know, what people consider to be pork projects, no matter how worthy, make people feel that government's not accountable. And there should be a better way of doing it. But I had to make a decision, "Do I sign this omnibus bill to finish last year's business? And, you know, make sure that I can keep on working with Congress to get all these things done? Or do I veto that bill and have a big fight right away in the middle of an economic crisis?"

Well, I decided to sign the bill. Now, that's an example of where I was so concerned about getting things done that, you know, I lost track of part of the reason I got elected. Which was we were gonna change how business was done here. And, you know, each one of those decisions may be justifiable in isolation, but cumulatively I think what people started feeling was, "Gosh, this is sort of business-as-usual in Washington." And that's part of what I ran against.

And so, I reflect a lot about over the next two years, making sure that I remind myself, my job is not legislator in chief. It's not just a matter of how many bills I'm passing, no matter how worthy they are. Part of it's also setting a tone in Washington and for the rest of the country that says, "We're responsible. We're transparent. We're open. We're talking to each other. We're civil." You know?

In some cases, there may be worthy projects that we can't do right now, just because we haven't built the consensus for it. You know, that's an aspect of leadership that I didn't pay enough attention to in the first couple of years.

KROFT: You ran as somebody who was gonna come to Washington and change it. And in the end, as some of your predecessors, it ended up changing you.

PRESIDENT OBAMA: You know, I . . .

KROFT: To a certain extent.

PRESIDENT OBAMA: Yeah. I'm not I . . .

KROFT: You haven't given up?

PRESIDENT OBAMA: Exactly. I think it's fair to say it hasn't changed me in terms of my ideals. But I think that in terms of how I operated on a day to day basis, when you've got a series of choices to make, I think that there are times where we said: let's just get it done, instead of worrying about how we're getting it done. And I think that's a problem.

As I said before, in a crisis situation, in an emergency situation -- which is really what we were in the first six to nine months -- I think it's fair to say that, you know, we made the right decisions in making sure that we stabilize the economy. But in terms of setting the tone and how this town operates, we just didn't pay enough attention to some of the things that we had talked about. And, you know I'm paying a political price for that.

KROFT: Well, to a certain extent the Tea Party and some of the Republicans ran on the same message or much of the same message that you ran on two years ago. Which is, "We're gonna change Washington." And now, you are Washington.

PRESIDENT OBAMA: Well you know, that's one of the dangers of assuming power. And you know, when you're campaigning, I think you're liberated to say things without thinking about, "Okay, how am I gonna actually practically implement this."

KROFT: Do you think you were naïve?

PRESIDENT OBAMA: No, I don't think I was naïve. I just think that these things are hard to do. You know, this is a big country. And democracy is an inherently messy business. And Congress is an institution that has a whole lot of traditions, some of 'em that aren't, you know, all that healthy. And there are a lot of special interests who've got a lot of power. And a lot of lobbyists who are paid a lot of money to influence legislation.

And so, you know, it's a hard, long slog to push up against that. But I think you make a good point, Steve, which is that you now have a lot of Republicans who ran as outsiders, who are coming in. And my hope is that we may be in a position now where the two sides meet and agree on some things that need to be changed. I noticed that [Virginia Congressman] Eric Cantor, one of the leaders in the House, said, you know, we really need to put an end to earmarks.

There are some sincere Republicans in the Senate like Tom Coburn, Oklahoma, who is about as conservative as they come, but a real friend of mine and somebody who has always had the courage of his convictions and not, you know, bringing pork projects back to Oklahoma. And it may be that that's an example of where, on a bipartisan basis, we can work together to change practices in Washington that generate a lot of the distrust of government.

KROFT: You talked about soul searching. The example you gave me was the one about the earmarks. Is that the only thing you . . . .

PRESIDENT OBAMA: Oh, no, no, no. I mean, I think that's an example of the kinds of things that you're thinking about all the time. I was thinking about it at the time. And I continue to think about it. I mean, I think that one of the areas that a lot of folks have focused on, obviously, is the health care bill.

KROFT: Right.

PRESIDENT OBAMA: Because after we took a whole series of these emergency measures, to save the economy, the stimulus, the steps to shore up the banking system, the auto bailout. I think there were some that argued, "Well, you should just stop and let people digest all these changes. And so, you shouldn't take on something as big as health care." And I'll be honest with you, Steve, at the time, we knew that it probably wasn't great politics.

KROFT: You were told that by your aides.

PRESIDENT OBAMA: Absolutely. There's a reason why our health care system hasn't been reformed over the last several decades. Why every president talks about it and it never happens. Because it's hard. It's a huge, big complicated system. Even as unhappy as people are with the system, the majority of people have health insurance. And so, they're more worried about what they might lose than what they might gain from any reforms.

So, we understood that this was bad politics, but I'll tell you, I had spent the previous two years traveling around the country. And in every town hall meeting, in every conversation that I had with a group of voters, there was somebody who'd come in and say, "You know, my kid is sick. And I couldn't get insurance for 'em, because they got a preexisting condition. Or I had to mortgage my house to pay the premiums."

Or a small business came and said, "You know, I'd love to provide health insurance for my employees, but I just can't afford -- I can barely afford health insurance for myself." And then I started looking at the budget and it turned out that if we continued on the same trajectory in terms of Medicare costs going up, that there was no possibility of ever balancing this budget without massive tax hikes. Because the population's getting older. We use more and more medical services. And we were gonna have to control those costs.

So, ultimately, I had to make a decision: do I put all that aside, because it's gonna be bad politics? Or do I go ahead and try to do it because it will ultimately benefit the country? I made the decision to go ahead and do it. And it proved as costly politically as we expected. Probably actually a little more costly than we expected, politically.

KROFT: In what ways?

PRESIDENT OBAMA: Well, partly because I couldn't get the kind of cooperation from Republicans that I had hoped for. We thought that if we shaped a bill that wasn't that different from bills that had previously been introduced by Republicans -- including a Republican governor in Massachusetts who's now running for President -- that, you know, we would be able to find some common ground there. And we just couldn't.

And that was costly partly because it created the kind of partisanship and bickering that really turn people off. Partly because the economy was still on the mend. And the entire focus on health care for so many months meant that people thought we were distracted and weren't paying attention to, you know, the key thing that was on their minds. And partly because the process itself ended up reinforcing this feeling of insider deals. And, you know, individual members of Congress trying to carve things out for themselves.

It just gave people, you know, sort of an overall a message that business hadn't changed in Washington. So there is no doubt. And I think that a lot of this is the lens through which a lot of people view the health care debate. There's no doubt that it hurt us politically.

KROFT: Would you do it again the same way? Or would you try something else?

PRESIDENT OBAMA: You know I think what I would have done is to be more scrupulous about sticking to some of the commitments I had made in how to get it done. For example, I made a commitment that I was gonna make sure that the key negotiations around health care were on C-SPAN. And the truth of the matter is that, you know, you have five different committees over there that are working on it.

KROFT: You did it behind closed doors.

PRESIDENT OBAMA: Trying to coordinate an ongoing conversation on television was, you know, something that we ultimately said, you know, "This is just too cumbersome, we can't pull it off." But there's a price to that, because I think people then felt like, "Well, if you're having conversations with Members of Congress or these various interest groups and we don't know what's going on, you know, then it's easier for them to believe that maybe, you know, what's going on isn't so good for us." And that, I think really hurt us politically. And I'm not sure that we couldn't have gotten it done if we had taken more care on that end of it.

KROFT: You mentioned a couple of times the emergency that you faced when you came into office. And you've mentioned, continually, the unemployment problem. And the economy. This emergency, is it over?

PRESIDENT OBAMA: Not for the people who are out of work. I mean, we've still got a very high unemployment rate. I think that the way to think about it is the dangers of a second big recession are now much reduced. The danger of us tipping into a great depression, I think most economists would say, is not there on the horizon.

What is a danger is that we stay stuck in a new normal where unemployment rates stay high. People who have jobs see their incomes go up. Businesses make big profits. But they've learned to do more with less. And so they don't hire. And as a consequence, we keep on seeing growth that is just too slow to bring back the eight million jobs that were lost. That is a danger. So that's something that I've spent a lot of time thinking about.

And the second danger has to do with our long term competitiveness. You know, a lot of the commercials that were flying around during this campaign -- both Democrat and Republican -- focused on China. And some of them were probably a little bit over the top. But what they captured, I think, was people's sense, rightly, that countries like India and China and Brazil and Germany -- they are investing in infrastructure. They're investing in research and development. Their kids are now working harder on math and science. And they're producing more engineers and more Ph.D.'s.

And so, you know, the playing field now is a lot bigger and a lot more competitive than it used to be. And people rightly worry that if we don't make some fundamental fixes to the economy, that America may not be the preeminent economic power that it's been in the past.

Now, I have confidence that it will be. Because we still have the best universities. The best scientists. The most productive workers in the world. We've got the most entrepreneurial culture. And the strongest capital markets in the world. So, I'm still confident that America will see the 21st Century as the American century just as the 20th Century was. But that won't happen unless we make some big fundamental changes. And that's why even in the midst of crisis, we still spent time on things like education reform. Because if we don't deal with 'em now, we're gonna fall behind.

KROFT: You spent nearly a trillion dollars on the stimulus package. Short term interest rates are practically zero. And still the unemployment rate is 9.6 percent. What can you do to create jobs that hasn't already been done?

PRESIDENT OBAMA: Well, first of all, I think it's just important to understand that the recovery package, the stimulus package, was about $700 billion. Now, that's still a lot of money. But there are a lot of folks who call it a trillion dollar package, and it was actually about a third tax cuts, a third help to states, and then a third infrastructure investments around the country. But look, it was still the biggest stimulus package that we've ever seen.

KROFT: $700 billion put back into the economy.

PRESIDENT OBAMA: Put back into the economy. You're right that the Federal Reserve has driven down interest rates about as low as they can go. Some of this is going to be just a matter of the economy healing.

I had a conversation here in the Oval Office with Warren Buffett, who remains very optimistic about America's long term prospects. And he said, "Look, let's take the housing market, which is about as big of a drag on the economy as anything." He said, "We overbuilt for a lot of years. Now, we're underbuilding to soak up that inventory. Over the course of several years. More new families are gonna go out there and start buying homes. And slowly housing prices are gonna stabilize. And these foreclosures are gonna end and things are gonna pick up." So, some of it is just a matter of the economy recovering from a real trauma, a real body blow.

There are some things we can do to accelerate growth, though. You know I put forward a proposal that in 2011: any business that buys new equipment, opens up a new plant, that they can write off all those expenses right away. That costs us, in the short term in terms of these tax breaks. But the truth is that we would end up seeing that money go back to these companies in out years anyway. So net, it doesn't necessarily add to our deficit. But it's a good way to get people to invest quicker, sooner

KROFT: Frontloading.

PRESIDENT OBAMA: Frontloading it. Infrastructure. We still we've got a couple of trillion dollars worth of infrastructure improvements that need to be made around the country. And we are falling behind other countries. And we spend a much lower percentage of our GDP than China's doing or even Europe is doing. So, for us to figure out in a bipartisan way how to start rebuilding our roads. How to make sure we got the best airports in the world. How do we make sure that we've got a rail system that works in this country? I mean, all those things could put people back to work right now. Doing the work that America needs done.

KROFT: All of them?

PRESIDENT OBAMA: Well, I think that, you know, for us to come up with creative ways, again, to frontload investments now -- at a time when interest rates are real low, and people are desperate for work -- is actually a pretty good investment for America. I mean, one of the interesting things about the Recovery Act was most of the projects came in under budget, faster than expected, because there's just not a lot of work there.

I mean, there are construction crews all across the country that are dying for work. And companies that are willing to take a very small profit in order to get work done. And so for us to say now's the time for us to rebuild this country and equip ourselves for the 21st Century. That's something that could make a real difference. But --

KROFT: Look, the Republicans aren't interested in spending a trillion dollars on infrastructure right now. They don't want stimulus programs.

PRESIDENT OBAMA: Well, you know, again, historically, rebuilding our infrastructure is something that has garnered Democratic and Republican support. I want to have a conversation with them and see if that's still the case. What I just mentioned in terms of providing tax breaks for companies that are investing here in the United States. That's not a traditional liberal position. That's a traditional Republican position. That's a Chamber of Commerce position.

KROFT: It is a Chamber of Commerce position. Why haven't they been able to persuade the Republicans that it's a good idea?

PRESIDENT OBAMA: Well, you know my hope is that now that the election's over. That there's gonna be more openness to taking those kinds of steps. The fact is that in the six months leading up to the election, I think whatever proposals we put forward were not gonna get a serious hearing. Because it didn't serve short term political purposes.

One thing that I'm absolutely convinced of is the message the American people were not sending in this election was, "We want to continue two years of bickering. We want to re-litigate the past two years." I think what they want to do is start acting like adults. Come together responsibly. And let's move the country forward.

KROFT: You talked about jobs. Where are these jobs gonna come from? What kind of jobs? There are people out there that haven't worked in two years that are worried that they're never gonna be able to get a job.

PRESIDENT OBAMA: Well, first of all, let's take the example of infrastructure. One of the hardest hit sectors is the construction industry. Because there are a lot of folks, particularly men, who are skilled tradesman. Who have been laid off from manufacturing plants that had closed. Went into the construction industry and the housing industry. Now, that is collapsed. And these guys are sitting around with skills, eager to work. Don't have a chance to work.

It would be natural for them to go back to work in constructing roads, bridges, airports. That's an example of us being able to absorb a workforce that needs help, is highly skilled, and ready to go. You know, we know that in the health care sector, there's gonna need to be a lot of a growing workforce. Because the population's gettin' older. And they're gonna need more health care.

We still, in this country, have a shortage of nurses. Despite the fact that there's really high unemployment. Partly because it's hard to get a nursing degree. There aren't enough slots out there. Nursing professors are paid so badly that a lot of schools can't hold on to nurses. So, for us to go in and say, "Let's make sure that young people can get the training for jobs that we know exist, make sure that they can finance their educations, make sure that people who are looking for second careers can potentially get the training that they need, even while they're working part time."

Those are all gonna be critical. And that's part of the reason why over the last two years, we've made a huge investment in community colleges. We've made an investment in, you know, a student loan system that works better for people. Because you're right, some of these jobs aren't gonna be comin' back.

Now, the third category is in new industries. And we've put a lot of emphasis on clean energy as an example. We used to . . .

KROFT: And has it produced any jobs?

PRESIDENT OBAMA: Absolutely it's produced jobs. And I'll give you a specific example. In advanced batteries that go into electric cars. We used to have two percent of the market. We're now on pace, because of the investments that we made, to see us have as much as 40 percent of the market by 2015. So, in five years we went from two percent of the world mark potentially to 40 percent of the world market. And those jobs are in places like Michigan and Ohio that had been really hard hit by the exodus of manufacturing jobs.

You're seeing some of these jobs start coming back. So, it's gonna be a mix of things that brings job growth back to the country. The one thing that we can't do, though, is to dis-invest in things like education. Or clean energy. Because our thinking is that we just need to retrench. I mean, we've got to distinguish between things that are wastes of money -- that don't give us a big return. And so, in terms of how we run our government, we've got to identify wasteful spending. And programs that no longer work. But we've gotta keep on investing in those things that are gonna create a better future for the country.

KROFT: The political landscape has changed. I mean, how do you plan to govern? President Clinton found himself in a very, very similar circumstance. And he reacted by pivoting to the middle, turning to the middle. And was successful at it. Is that what you're gonna do?

PRESIDENT OBAMA: Well, I when I . . . .

KROFT: You have to, don't you?

PRESIDENT OBAMA: What I'm gonna do is I'm gonna reach out to Republicans and I'm gonna say, "What can we work on together?" There are gonna be some things that we can't agree on. You know? Philosophically. And so, we will have those battles. And we'll save those decisions till after the next election. But in the meantime, there must be some things we can agree on.

KROFT: Haven't you tried that?

PRESIDENT OBAMA: Well I have, but I'm gonna keep on trying. And I'll give you an example that I mentioned yesterday at the press conference in energy. I think that you know the Republicans don't want to see some big comprehensive climate change bill. On the other hand, we can agree that we should be developing our natural gas resources more than we're doing. We can agree that making sure that electric cars are built here in the United States as opposed to just in Asia and Europe, make sense.

We can agree that a renewable energy standard that encourages things like biofuels could end up being an important component of our energy economy. We can agree on the idea of energy efficiency. Retooling our schools and our hospitals and other institutions so that they're using energy more efficiently, which drives down prices for everybody. You know, those are areas where we should be able to agree.

And what I'm gonna constantly be looking for are areas that draw from the Democratic ideas, Republican ideas to find that commonsense center, where we can move the country forward. Even though we'll still have some, you know, big disagreements and big debates on other issues.

KROFT: You said at a cabinet meeting you wanted to move forward on the people's agenda. Which people? The people who elected [incoming Florida Republican Senator] Marco Rubio and [incoming Kentucky Republican Senator] Rand Paul, or the people that reelected [Senate Majority Leader and Nevada Democrat] Harry Reid and [California Democrat and outgoing Speaker of the House] Nancy Pelosi?

PRESIDENT OBAMA: All people. You know it's interesting, while I was campaigning, even in this very partisan environment, the single line that always got the biggest applause, even in big, Democratic rallies, was, "Although we are proud to be Democrats, we are prouder to be Americans." And my expectation is that Republicans feel the same way.

And so there are huge overlaps in the interests of ordinary folks, whether they're Democrat or Republican. They want to make sure our schools are working. They want to make sure we've got the best scientists and engineers in the world. They want to make sure that we're competitive internationally. And what they don't want to see us do is to sit here for the next two years, having a long, drawn out political argument. When other countries are racing past us. I promise you, that's something that you know, whether you're a Democrat or Republican you know we just can't afford.

KROFT: No one at the news conference yesterday asked you about the Tea Party. According to the exit polls, four out of ten voters on Tuesday said they supported the movement. How seriously do you take the Tea Party, and will it make the task of finding common ground with the Republican Party more difficult?

PRESIDENT OBAMA: Well, it'll be interesting to see how it evolves. We have a long tradition in this country of a desire for limited government, the suspicion of the federal government, of a concern that government spends too much money. You know? I mean, that's as American as apple pie. And although, you know, there's a new label to this, I mean those sentiments are ones that a lot of people support and give voice to. Including a lot of Democrats.

And so, the test is gonna be what happens over the next several years, when it's not just an abstraction, but we have to start making serious choices. I've got a deficit commission that I've put forward that is gonna be releasing recommendations for how we can start reducing the deficit. And I don't know yet what they're gonna say, but I do know what the federal budget looks like. And if you eliminate all the earmarks. If you eliminate all the foreign aid. If you eliminate all the waste and abuse that people, you know, talk about eliminating -- you're still confronted with a fact that the vast majority of the federal budget are things that people really think are important. Like Social Security and Medicare and defense.

And so, you then have to start making some tough decisions about how do we pay for those things that we think are important? And you know, we're not gonna be able to balance the budget just by slashing the National Parks budget, even if you didn't think that was a proper function of government. We're not gonna be able to balance the budget by, you know, eliminating the National Weather Service.

I mean, we're gonna have to, you know, tackle some big issues like entitlements that, you know, when you listen to the Tea Party or you listen to Republican candidates they promise we're not gonna touch.

I'll give you another example. We've probably done more than any Administration over the last 20-30 years when it comes to increasing veteran spending. Because we've got over a million folks who've served in Iraq and Afghanistan who've come back with post-traumatic stress disorder you know, traumatic brain injury.

And I think I've got a sacred trust as Commander in Chief -- and I think most Americans feel we've got a sacred trust -- to care for these veterans. Well, that's expensive. And if we're not spending that money to take care of them, what does that say about us, as a country. And if we are, we've gotta find a way to pay for it. And those are the choices that I think if you lay out a budget, Republicans and Tea Party members are gonna have to confront in a serious way.

KROFT: One of the first chances you're gonna get to show a spirit of cooperation is on the Bush tax cuts, which are set to expire at the end of the year. You've said that you want to keep 'em in place for the middle class. You want them to expire for the wealthier Americans. The Republicans want to keep them for everybody. Are you ready to compromise on the Bush tax breaks?

PRESIDENT OBAMA: I think we're gonna have to have a serious conversation about it. Here's an example where I'd like to think we could at least settle on those things we agree on. I think both Democrats and Republicans agree that for people making $250,000 a year or less, the last thing we want right now is to see their taxes go up. Not only would it be bad for them, but it'd be bad for the economy as a whole. Because those are the folks who are most likely to spend. And a lot of them are having trouble paying the bills. So, we don't want to make it harder on them. We want to make it easier on them to be able to participate effectively in the economy. For folks who are making more than $250,000 a year, you and me, Steve you know, the question is, can we afford to borrow $700 billion.

KROFT: That's what it is?

PRESIDENT OBAMA: That's how much it would cost over the course of ten years. To give us an extra tax break. Or does it make sense to say to us, "You know what? After the first $250,000, your tax rates are gonna go back to what they were under Bill Clinton." When, by the way, rich people were doing pretty well.

Sometimes I think this debate gets framed as if I think rich people, folks who are doing well, should be punished.

KROFT: Well, I . . .

PRESIDENT OBAMA: Part of what America's all about is going out there and getting rich. And, you know, if you make a good product, you provide a good service, God bless you. I want you to do well. Then you can plow that money back into creating jobs. And building your businesses. That's terrific. What I don't think makes sense is for us to borrow $700 billion to pay for that. And we don't have the money. I mean, everybody's already talking about our debt and our deficit. Why would we want to add to it? Now, having said all that . . .

KROFT: The Republicans want everybody . . .

PRESIDENT OBAMA: I understand the Republicans have a different view. And so, we are going to have to have a negotiation. And I am open to you know, finding a way in which, you know, they can meet their, you know, principles and I can meet mine. But in order to do that, I think we do have to answer the question of how we pay for it. If in fact we're gonna extend these tax cuts, then we've got to figure out what does that mean for our debt and our deficit. Because there's no gettin' getting' around it. It's gonna cost $700 billion to extend those . . .

KROFT: Over ten years.

PRESIDENT OBAMA: Over ten years. Yeah.

KROFT: Congressman Boehner is the next Speaker of the House, most likely, offered you a compromise back in September. He suggested extending the tax break for the wealthiest for two more years. And rolling back discretionary government spending to levels before the bailout in 2008. Is that something that you could live with?

PRESIDENT OBAMA: I think that when we start getting specific like that, there's a basis for a conversation. I think that what that means is that, you know, we can look at what the budget projections are. We can think about what the economy needs right now. Given that it's still weak. And hopefully, we can agree on a set of facts that leads to a compromise. But my number one priority coming into this is making sure that middle class families don't see their tax rates go up January 1st.

KROFT: Do you want to make a counter proposal to him right now?

PRESIDENT OBAMA: I've already invited them over to the White House. And you know, there're gonna be a bunch of discussions. But I think we can make progress on this. It's not, by the way, just tax cuts for individuals that we're concerned about. There are also a bunch of provisions for businesses in terms of how business investment is treated. If they're investing in research and development here in the United States and what kind of tax breaks do they get on that. We need to provide businesses certainty on that. We've got to do before the end of the year. And my hope and expectation is that we can solve this problem.

KROFT: The point of view of a lot of people is, why would you want to raise taxes on the people who have money to spend? Not necessarily the wealthiest people in America. You're not talking about Goldman Sachs here. You're talking about small business people who maybe make $250,000 a year.

PRESIDENT OBAMA: Well . . .

KROFT: Why would you want to take that money back, when they've got money to spend to put it into the economy?

PRESIDENT OBAMA: Well, well, keep in mind, first of all, that under the proposal we put forward, folks who make $300,000 a year, would still get tax breaks up to $250,000. So, the majority of their taxes would still be low. It'd just be the amount over $250,000, where they'd go back to the Clinton tax rates.

The truth is that the way this thing works out, it's folks who are millionaires and billionaires who get the biggest breaks. And, you know, if you talk to Warren Buffett, he'll tell you, "I'm not gonna buy somethin' because of a tax break, because whatever it is I need, I can already afford." And the same is true for me. And the same is true for you.

And it turns out that actually the people who are most likely to use that money and spend that money are actually people of more modest means, and if what we're concerned about is how we can grow the economy, there are more efficient ways to recirculate dollars out there and get people to spend.

I mean unemployment insurance, most economists will tell you, is probably the single most important thing we can do to improve the economy, because if you're unemployed, you're out there looking for work, that unemployment insurance is gonna make a difference as to whether or not you can pay your bills.

KROFT: You've, I would say, don't have a very close relationship with Mr. McConnell, [Kentucky] Senator [Mitch] McConnell and Congressman [John] Boehner [of Ohio]. What do you think of these guys?

PRESIDENT OBAMA: You know, I think that both John and Mitch are very smart. They're capable. They have been able to, I think, organize the Republican caucus very effectively in opposition to a lot of the things that we tried to do over the last two years. And that takes real political skill.

And I believe that they want the best for the country just like I do. Just like Democrats do. So you know, my assumption is that we're gonna be able to work together. And whenever we've had conversations here at the White House or over on Capital Hill, they've always been cordial.

KROFT: It's just in the newspapers that they've been . . . .

PRESIDENT OBAMA: Well, you . . . .

KROFT: . . . less than cordial.

PRESIDENT OBAMA: Okay, during election season, I think the rhetoric flies. And by the way, I've been guilty of that. It's not just them. And you know again, this is an example, you asked me earlier, of what I reflect on. I reflect on the fact that part of my promise to the American people when I was elected was to maintain the kind of tone that says we can disagree without being disagreeable. And I think over the course of two years, there have been times where I've slipped on that commitment. And that's something that I've got to make sure that I'm checking on an ongoing basis, making sure that my rhetoric matches up with my expectations for myself and the expectations of my supporters.

KROFT: But there is this feeling particularly among people who are among your most ardent supporters, who feel a little disappointed that they think that they've lost your mojo. That you've lost your ability, that touch you had during the campaign, to inspire and lead.

You know, everybody in Washington writes about sort of aloofness that you have. And I'm sure that drives you crazy. How do you respond to that? People have made the argument you lost control of the narrative. You've let other people define you. That you haven't sold your successes well enough.

PRESIDENT OBAMA: I think that's a fair argument. I think that over the course of two years -- and I mentioned this during the press conference -- we were so busy and so focused on getting a bunch of stuff done that we stopped paying attention to the fact that we yeah, leadership isn't just legislation. That it's a matter of persuading people. And giving them confidence and bringing them together. And setting a tone. And making an argument that people can understand. And I think that we haven't always been successful at that. And I take personal responsibility for that. And it's something that I've got to examine carefully as I go forward.

You know, now I will say that when it comes to some of my supporters, some of my Democratic supporters who express some frustration, part of it, I think, is the belief that if I just communicated things better, that I'd be able to persuade that half of the country that voted for John McCain that we were right and they were wrong.

And, you know, one of the things that I think is important for people to remember is that, you know, this country doesn't just agree with The New York Times editorial page. And, you know, I can make some really good arguments defending the Democratic position, and there are gonna be some people who just don't agree with me. And that's okay. And then we've got to figure out a way to compromise. But even as we acknowledge that, this is a big country. And that, you know, there are conservatives who are good people, who feel very strongly about their ideas. That I'm never gonna persuade on some issues.

I think what's still fair to say is that I can do better than I've done in painting a picture for people about where we need to go. That pulls people together as opposed to drives them apart. And that's one of my central tasks over the next couple of years.

KROFT: Do you have any specific unemployment goals? I mean, is there a point where you would like to say, "Well, we be down by eight percent or nine percent by the end of the year?"

PRESIDENT OBAMA: Well look, I would love to have zero unemployment at the year. The question is, what's gonna be achievable over the next year or two. I mean, you remember one of the things that we got in trouble with -- and this is an example of, 'are there some things you'd do differently' -- we made an estimation that unemployment would peak at eight percent when we were still at the beginning of the crisis.

And we just kept on goin' north of that in a few months. That's at a time when economists just didn't realize how quickly companies were gonna be sheddin' jobs. And that actually hurt our credibility around the country, 'cause people started sayin', "Well gosh, you said if we passed The [American] Recovery [and Reinvestment Act of 2009], unemployment would peak here and it's already gone up to here."

Well, it wasn't because The Recovery Act didn't work; it's because the modeling, in terms of what to expect where unemployment would go to, turned out to be wrong. So, you know, I don't wanna pretend like I've got a crystal ball.

Here's what I wanna see, is that the economy is growing enough that each month we're seeing a lower unemployment rate, more jobs are being created than people who are coming into the workforce, so that people get confidence that there's a steady reduction in the unemployment rate.

And if we're doin' that, then, you know, over the course of the next year or two I think we can make real progress, and people are gonna be able to say to themselves, "It's worth me investing in a new plant because unemployment's low. I think there are gonna be customers out there. I'm gonna open up a new store because I'm pretty confident people are gonna be shoppin'." You know, that virtuous cycle is what I think we're strivin' for, and that's gonna require more work.

KROFT: There is a perception out there that you're anti business. Are you planning on putting some small business people, some people with business experience in the White House?

PRESIDENT OBAMA: Well, I think there's no doubt that the relationship with the business community over the course of the last two years at times has gotten strained. Part of it had to do with the fact that we were dealing with crises in various business sectors that required some tough choices.

I mean, you know, the banking sector and dealing with things like AIG didn't always endear me to Wall Street. You know, we had to go in and revamp the auto industry in a way that made it seem as if the normal relationship between government and business had changed too much, and government was exerting too much power.

And so I think that we've got some repair work to do there. And as I said in my press conference -- you know, the key to the American economy has always been the dynamic private sector that creates jobs. I would love a situation in which the private sector is off and roaring and movin' and, you know, the government is playing a much more limited role in the economy.

These were exceptional circumstances over the last two years. I think we have to make sure that people understand and business understands that my overarching philosophy is not one in which we have constantly increasing government intervention. Although I do think that some of the provisions we put in place to protect consumers, to create a regulatory framework where we don't have a repeat of the kinda crisis we had in the banking sector, those have to be preserved.

KROFT: You've got a situation right now that banks have not significantly loosened up credit in spite of all the money that they've received, in spite of the fact that they're quite profitable right now. And you've got manufacturing companies that haven't replaced many of the jobs or hired back the people that they've cut. How do you get the banks to loan money, and how do you get businesses to hire people back?

PRESIDENT OBAMA: Well, it starts with businesses wanting to hire people back because they see customers out there. And so everything that we can do to expand consumer confidence, everything that we can do to get businesses to invest in plants and equipment through the tax code, through accelerated depreciation, through keeping taxes on middle class families where they are, as opposed to having them spike up -- all that can make a difference. The more companies are doing well, the more likely they are to go to banks and say, "We need to borrow."

Now the one group that I think we have to make some extra effort on are small businesses, because a lot of them are eager to grow, but still just are having trouble gettin' credit. The big companies aren't havin' trouble borrowing from banks, but small companies are.

And that's why it was so important a couple of months ago for us to pass a bill for small businesses specifically that said, you know, "We're gonna give low-rate financing to community banks that are more likely to lend to small businesses, as long as they're actually lending it to the small businesses." And we've already seen a huge uptake in small businesses taking up those loans, which is gonna be real helpful because small businesses create a lotta jobs in the economy.

KROFT: We talked about some of the criticism that this presidency and you personally are seen as being very insular, closely held. Is it time to expand that circle? Well, you've got some jobs you have to fill.

PRESIDENT OBAMA: We do, and I think there's no doubt that over the next two years, I've got to make sure that that same spirit of openness and engagement with the American people and all sectors of the economy is a focus. As I said, you know, I think because we came in during crisis, we had sort of a narrow-tunnel vision on just getting the job done.

Well, part of the job is engaging people -- listening, making sure that they feel that they're bein' heard, gettin' out of here, gettin' out of the White House, gettin' out of Washington. And you know, that's not just good by the way in terms of developing policy -- 'cause I think a lotta people have good ideas -- it's good for me. It's good for my spirits, good for my soul.

You know, the thing I enjoy most about the presidency is when I've got a chance to interact with folks in a backyard town hall, in you know, buyin' some donuts in a store. You know, that's when things aren't scripted, that's when you're not, you know, spending all your time just goin' through a bunch of talkin' points.

That's when I get most optimistic about America because I'm reminded of how wonderful this country is and how diverse it is, and for all the arguments we have, how our core values are widely shared across this country. And we should be able to pull together to do better than we're doin' right now.

KROFT: You're halfway through --

PRESIDENT OBAMA: Uh-huh.

KROFT: -- your first term. What's the most important thing you've learned about your two years here, about yourself, about the job?

PRESIDENT OBAMA: I think that I've learned that America is incredibly resilient. We went through as bad of a financial crisis as anything in our lifetimes. And you know, the country has bounced back. It's not bounced back all the way, but people are tough, and folks work hard, and they're not easily shaken. It has been so impressive to me the way folks have been able to just keep goin' about their business. Some of them in very difficult circumstances.

I think I've learned about myself that I'm pretty resilient too. I'll get knocked down a couple of times. But when I read letters about folks who've lost their jobs and haven't been able to find one, sent out resume after resume, and then finally after a year and a half, they get hired, you know, that inspires me. It says to me, "You know what, whatever I'm goin' through, it's nothin' like what families around the country are goin' through. And if they are able to keep goin' even when things don't go the way they want then I sure can as well."

KROFT: Do you get discouraged? Are you discouraged now?

PRESIDENT OBAMA: No you know, I do get discouraged, I mean, there are times where you think, "Dog-gone-it you know, the job numbers aren't movin' as fast as I want." And you know, I thought that the economy would have gotten better by now. You know, one of the things I think you understand -- as president you're held responsible for everything. But you don't always have control of everything. Right?

And especially an economy this big, there are limited tools to encourage the kind of job growth that we need. But I have fundamental confidence in this country. I am constantly reminded that we have been through worse times than these, and we've always come out on top. And I'm positive that the same thing is gonna happen this time.

You know, there are gonna be setbacks, and we may take two steps forward and one step back, but the trajectory of this country is always positive. And that's something that that prevents me from getting too discouraged.

KROFT: You seem to feel that things are getting better. I sense that. One of the things that drives business crazy is this idea that they don't know what's going on. They have trouble planning. They don't know what the tax rates going to be

PRESIDENT OBAMA: Right.

KROFT: They're not convinced that things are getting better.

PRESIDENT OBAMA: Right. Well there are two separate arguments here. I think a lot of businesses still don't know what the economy is doing. They don't know, are consumers gonna start buyin' again? You know, are we gonna start getting the virtuous cycle, where because businesses start hiring, the people who get hired start shoppin', which means other businesses are hirin', and everybody starts feelin' better about the economy.

There's still a lotta uncertain data out there. And we're still workin' through some big problems of the economy. The housing market is a huge headwind. I think there was actually a lot of optimism back in April right before the Greek crisis, when suddenly a lotta companies who were planning to hire kinda pulled back and said, "Gosh, there may still be a lotta, you know, uncertainty in the global financial market."

So I do think that businesses have not yet committed to the kind of expansion that would involve a lotta hiring because they're nervous [that] maybe we're not completely out of the woods yet. And part of my job is to work with them to inspire that confidence.

Now, the second part of uncertainty, and this is the one that the Republicans focused a lot on during the campaign is, we've got a new healthcare law, we've got a new financial regulatory reform law. We don't know what all these regulations coming out of various agencies might be, and so that's making people hesitate.

And you know, I think that it is entirely legitimate that in the banking sector, it's very important for us to write these rules in collaboration with interested parties so that they can start knowin' how things are gonna work. When it comes to healthcare, we need to be consulting with the insurance industry to make sure they know how things are gonna work.

On the other hand, you know, Apple computer is makin' an awful lotta money right now under the exact same laws as some other companies. And the main reason they're makin' a lotta money is 'cause people are buyin' a lotta iPads. You know Caterpillar's sellin' an awful lotta big machinery and makin' good profits because they know there's some demand there.

So I think it's important for us to work to reduce regulatory uncertainty. I think it's important for us to see are there ways we can eliminate red tape when it comes to how businesses interact with government. I think getting things like the R&D tax credit for businesses, you know, settled, makin' that permanent so that people can start makin' investments, I think that's somethin' that's very important.

But probably the biggest uncertainty right now for a lotta companies is there gonna be enough demand out there for the products, and we've gotta make sure that we're workin' with them to try to improve that.

KROFT: Thank you Mr. President.

PRESIDENT OBAMA: Alright.

KROFT: Oh I have one thing.

OBAMA: Oh oh oh, wait, wait, wait - there's one more question . . . alright, go ahead.

KROFT: It's my own fault.

OBAMA: I'm going to give you one this last one cause you're excited about this one.

KROFT: One of the complaints has been that you've appeared on Comedy Central The View. They think it trivializes the president. I don't know if you saw this cartoon [Steve Kroft shows President Obama a political cartoon from the Daily News.]

PRESIDENT OBAMA: Let me take a look at it.

KROFT: Body by Bam.

PRESIDENT OBAMA: Body by Bam.

KROFT: From The Daily News.

PRESIDENT OBAMA: The challenge right now, and you know this better than I do, Steve, is that it used to be a President could call a press conference, and the three major networks would come, and he'd talk to 'em, and you pretty much reached everybody in America. And these days the closest I can get to that is bein' on 60 Minutes.

But there are a whole bunch of folks you know, unwisely on their part, who don't watch 60 Minutes, who watch The Daily Show¸ or watch The View. And so I've got to adapt the presidency to reach as many people as possible in as many settings as possible so that they can hear directly from me.

This is an example of where, you know, on the one hand folks say, "Well, you know he's a little too remote." Then if I'm on The View, "Well, you know, he shouldn't be you know on some daytime TV show you know, he should be a little more imperious."

And, you know, I guess my attitude is if I'm reaching people, if I'm talkin' to 'em. If I'm engaged with 'em, whatever the venue, then hopefully that makes people a little clear about what it is that I'm trying to do, and understand the challenges that we face. And so I'm willing to take the risks of overexposure on that front.


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