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General Motors Cuts Thousands of Jobs; Press Conference with President Bush
Aired July 15, 2008 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: President Bush speaks this hour and responds to the latest wave of troubling economic news. The President's news conference just minutes from now. And of course we'll carry it live for you right here in the NEWSROOM.
One of today's gloomy headlines, General Motors latest bid to survive. The struggling automaker cutting thousands of jobs, suspending its dividend, further slashing truck production. This hour, a view from the economy from people who shaped it. Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke briefing a Senate panel on their latest efforts, that includes the new moves to revive and regulate mortgage lending. A look now at Wall Street. Concerns over the U.S. economy have rippled around the world. Here is a look at the big board. Whoa, a steep sell off right now inside the first 30 minutes of the trading day. The Dow down almost 200 points, 189 points. We are following the markets. Maybe we'll squeeze this into the lower right-hand corner here just to keep an eye on it. Down 190 now. We're following the numbers all morning. Susan Lisovicz and her money team right here on the NEWSROOM.
HEIDI COLLINS, CNN ANCHOR; President Bush and the economy. Minutes from now he is due to hold a news conference, his first since late April. CNN's Elaine Quijano is at our post at the White House with more on this. We're going to be talking about several different items here.
ELAINE QUIJANO, CNN, WHITE HOUSE CORRESPONDENT: That's right. You know, President Bush is going to be starting off with an opening statement, about five minutes long we're told, giving his take on the current state of the economy, trying essentially to reassure a jittery American public. The White House says the President will talk about steps that the administration is taking to shore up the housing and financial markets, namely the news announced over the weekend that the administration would work to bolster Fannie Mae and Freddie Mac, the mortgage finance giant.
We're also expecting President Bush to talk about oil and specifically offshore oil drilling. Yesterday, of course, the President lifted the executive branch's ban on that activity and he wants to keep the pressure up on Congress so that they lift the congressional ban as well. The President saying essentially there is untapped oil there that might help alleviate some of the high gas prices that Americans are feeling.
But the bottom line, Heidi, the President is holding this press conference at a time when Americans, of course, have been bombarded really with a steady stream of bad economic news, the uncertainty over Fannie Mae and Freddie Mac, continued high gas prices. So this will be President Bush trying to reassure the American public that the government is on top of the situation and trying to calm some of the fears that are out there. Heidi.
COLLINS: All right. We'll be looking forward to that. Thank you so much. CNN's Elaine Quijano.
HARRIS: General Motors and its latest bid to survive now. Deep cuts felt from the assembly line to the showroom this morning. The car maker announcing it will eliminate thousands of jobs, many of them salaried office workers. GM is also slashing truck production as gas weary car buyers seek better mileage. GM's chairman announced the cut to employees last hour.
(BEGIN VIDEO CLIP)
RICK WAGONER, GM CHAIRMAN AND CEO: I don't want to minimize the challenges we face here in the U.S. because they are substantial, but we face these challenges with confidence and strength knowing that the progress we've made in recent years positions us to address them straight on and that the momentum we've built throughout the business will allow us to emerge from the current market conditions as a stronger and more dynamic company in the U.S. and around the world.
(END VIDEO CLIP)
HARRIS: GM is also suspending its dividend. The company stock recently slid to its lowest value in almost 50 years. But you know, GM is not alone in trying to cut costs. Ford Motor Company is also laying off workers. The goal? Eliminate 15 percent of salaried labor cost by the first of next month.
Ford is also idling plants and delaying production of its new F- 150 pickup truck. The reason? Record gas prices mean Americans want vehicles with better mileage. Those prices are also impacting the sales of Japanese giant Toyota. It will hold truck production in Texas and Indiana for three months beginning in August and Ford and GM have extended their annual two-week summer shutdown. Some truck plants will be closed for as long as three months.
COLLINS: Barack Obama on Iraq. A major foreign policy address expected this hour. That's what his campaign is calling it. We're going to bring it to you live. Obama will soon be traveling to Iraq. A trip that's likely to get a lot of attention in November. More now from CNN's senior political analyst Bill Schneider, part of the best political team on television.
(BEGIN VIDEOTAPE)
BILL SCHNEIDER, CNN SENIOR POLITICAL ANALYST (voice-over): John McCain believes he has Barack Obama boxed in on Iraq. Obama says he has a plan.
SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I'm going to call in the Joint Chiefs of Staff and give them a new mission and that is to bring the war in Iraq to a close. We are going to get out.
SCHNEIDER: If Obama returns from his upcoming trip to Iraq and says his position is unchanged, McCain will claim he didn't listen. But if he talks to the generals and shifts his position in any way, then McCain will call him a flip flopper.
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: I will look forward to seeing his position when he comes back, when he for the first time sits down and gets a briefing from General Petraeus.
SCHNEIDER: In his op-ed article, Obama acknowledges that our troops have performed heroically in bringing down the level of violence. But, he adds, the same factors that led me to oppose the surge still hold true.
MCCAIN: His proposals would jeopardize the fragility of the success we've achieved and his refusal to acknowledge that success is remarkable.
SCHNEIDER: Obama argues that debating the surge is not relevant anymore because the big strategic picture has changed. He points to two changes two, one inside Iraq -
OBAMA: We had the Prime Minister of Iraq Malaki, say that we should have a timetable for withdrawal. They want to end the occupation.
SCHNEIDER: The other outside Iraq.
OBAMA: We can refocus our attention on Afghanistan where the situation has gotten worse and worse.
SCHNEIDER: The situation has changed, and that, Obama says, strengthens his case for ending the war.
SCHNEIDER (on-camera): In his op-ed article, Obama writes, "ending the war is essential to achieving our broader strategic goals, starting in Afghanistan and Pakistan where the Taliban is resurgent and Al Qaeda has a safe haven." Bill Schneider, CNN, Washington.
(END VIDEOTAPE)
COLLINS: A reminder, we are waiting for Barack Obama's speech on Iraq. It's going to happen at 10:45 Eastern. We'll bring it to you live.
And President Bush speaking out on the economy and other issues. He has scheduled a news conference for 10:20 eastern. We will bring that to you live as well.
HARRIS: Heidi, we mentioned just a moment ago that Ben Bernanke and Henry Paulson, Treasury Secretary, were on Capitol Hill this morning to speak before the Senate Banking Committee. The Fed chairman has made some comments that's are really having an impact on the market. The Fed chairman Ben Bernanke has made some comments that apparently really having an impact on the markets.
Fed chairman Ben Bernanke has told Congress that the fragile economy is being confronted by numerous difficulties, those include persistent strains in financial markets, rising joblessness and housing problems, despite aggressive interest rate reductions and other fortifying steps over the past year.
Let me see, let me look down the note just a little bit. The situation, he said, poses significant challenges for Fed policymakers as they try to chart the best course for keeping the economy growing. And you can see what is happening with the Dow right now. To be fair about it, there are a number of factors weighing down the Dow this morning, including the dollar sinking to new lows against the euro. The Dow down 208 points. We'll keep an eye on the hearing with our Kathleen Koch and we will watch the markets as well.
Is your bank safe? That is an area of real concern. A big bank failure has us wondering if our savings are safe. Gerri Willis with what you need to know.
(COMMERCIAL BREAK)
COLLINS: OK. there you have it. It's down. Dow Jones industrial average is down 186 points. I shouldn't be laughing because now we are down below the 11,000 mark that we've been talking about for weeks and weeks. So, we are watching these numbers. And as we've been saying all morning, an awful lot of economic factors at play here today as well as the Fed chairman before the Senate Banking Committee.
So, we're going to stay on top of all of it, as well as President Bush's address coming up in about 10 minutes or so right here in the CNN NEWSROOM.
HARRIS: You know, more banks are expected to fail over the next year and a half or so. If that has you wondering if your own bank is in trouble, CNN personal finance editor Gerri Willis is here with what you need to look out for. Gerri, good morning to you.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Hey, good morning, Tony.
HARRIS: We have to ask you, how many more bank failures are analysts expecting?
WILLIS: Well, there could be up to 150 bank failures on the horizon. Even today Wachovia was downgraded by a Wall Street analyst. Yesterday shares of Washington Mutual and National City both plunged on concerns about this banking crisis. But hey, let's put this in perspective. The FDIC insures over 8,000 thrifts and banks. And this is nothing like what we saw during the 1980s and early 1990s where more than a thousand institutions failed amid the savings and loan crisis.
HARRIS: Now, good point. WILLIS IndyMac was just one bank and it is the fifth bank failure this year. The other failed firms were mostly small community institutions.
HARRIS: Yes. It comes back to confidence in the system again. I'm curious, Gerri, is there any way to rank the safety of a financial institution?
WILLIS: Well, let's drill down here. First off, the institutions that most folks are concerned about are small and midsize banks. That's because they may not have enough money, if they get into trouble, it's more difficult for them to raise cash.
Now, if you're looking for you to park your money somewhere safe or worried about your own bank, think about larger, more familiar banks. The FDIC of course is not releasing the name of the banks that they are scrutinizing. But there ware other ways to check up on these banks. Go to bankrate.com. This site has what they call a safety and soundest rating system that will give you an instant picture of your bank's health. Now, if you want to dig down more and get more detailed info, go to an ambest.com. You can really look at the financials there.
HARRIS: Gerri, what are some of the red flags to look out for or to determine if your bank may actually be in trouble here?
WILLIS: Well, understand, you know, bottom line here, financial institutions are having a tough time across the board. So, while it may just be the environment, you want to pay attention to massive job layoffs, cuts back in services. If your banks aren't accepting new loan applications, that's a red flag. If you start to see generous CD yields advertised, that could be a sign of a bank in trouble. That's because banks are trying to grab capital at any price.
Now as we've been reporting, if you're within the limits of FDIC insurance coverage with an FDIC-insured bank, don't panic. The worst move you can make here today is pulling your money out of a regulated institution and holding the cash yourself. That is dangerous.
HARRIS: OK. So let's be really clear here. Very solid. What happens if you have more than $100,000 in your bank account?
WILLIS: Well, look, the FDIC is not required to reimburse you for anything over these covered amounts, but there are some cases where you'll be okay. Let's describe. For example, you may qualify for more than $100,000 worth of coverage if there are accounts in different ownership categories. For example, your share of any joint accounts that a bank is insured up to 100,000 separately from accounts you hold in your name alone. And the bank can also choose to pay for uninsured deposits if it raises enough money after selling off bank assets.
Now, in the case of IndyMac, the FDIC said they'll cover at least 50 percent of uninsured deposits. So, you know, you may be in a better situation than you think even if you have more than $100,000 in an institution. And just a reminder, too - if it's a retirement account you're worried about, those limits are $250,000 for an I.R.A.. Of course, if you have any questions, particularly about this banking crisis, send them to us at toptips@CNN.com. We love hearing from you and we'd love to answer questions on this topic.
HARRIS: How full is your plate for "Issue number one" today?
WILLIS: We've got a lot going on. Of course, we'll continue to talk about this issue with the banks, what's going on there. But we're also looking at offshore drilling. If the ban is lifted, would it lower prices at the pump?
Plus, sweeping changes for General Motors. You've been covering this, Tony. We'll bring you all the details about that. Join us at noon for "Issue number 1." We're covering everything that matters to your wallet today.
HARRIS: Boy, can't wait. Gerri, appreciate it. Thank you, as always.
COLLINS: My pleasure.
And as Tony and Gerri were just talking about, an awful lot of financial news to talk about today and the economy as well. We're looking at the big board now, down 187 points. We're also looking at Ben Bernanke going before - and Henry Paulson as well going before the Senate Banking Committee today talking about prices for energy and prices for food going up. What that could mean toward inflation. Those will be some interesting comments.
And also President Bush coming to the microphone in just a few minutes. Going to be talking about the economy as well. And as you know, he's decided to lift the ban on offshore drilling. Not a final decision yet. Obviously, he has to be approved. But that is his idea over the weekend. Then we've got GM certainly issues there to talk about, 20 percent of salaries being cut and selling off $4 to $7 billion of asset. So, there, again, an awful lot going on in the financial sector.
We'll stay on top of all of those issues for you right here in the CNN NEWSROOM.
(COMMERCIAL BREAK)
HARRIS: A lot of activity in Washington today. There you see the man of the hour really, Fed chairman Ben Bernanke and Treasury Secretary Paulson, front and center on the issue of the economy today as they testify before the Senate committee on banking, housing and urban affairs. Ben Bernanke will deliver the semi-annual monetary policy report to Congress. That's happening right now.
Also, President Bush speaking out on the economy and other issues - he has scheduled a news conference at any moment now. We will bring that to you live right here in the NEWSROOM.
COLLINS: On the Hill facing questions, the hearing on interrogation rules for Guantanamo Bay terrorist suspects gets under way this hour on Capitol Hill.
Among those scheduled to testify is Douglas (Fight), former undersecretary of defense for policy. That's a top Pentagon position. (Fight) pulled out a previous hearing at the last minute. He is under subpoena now to testify. This will be the fourth in a series of interrogation hearings held by the House Judiciary subcommittee.
For the first time, in fact, we are seeing a videotape that purportedly shows the interrogation of a terror suspect at Gitmo. That suspect was 15 years old when he was questioned by a Canadian interrogator. More now from CNN Justice Department Kelli Arena. So Kelli, what does the tape really show us?
KELLI ARENA, CNN JUSTICE DEPARTMENT CORRESPONDENT: Well, it shows us a Omar Khadr who is a Canadian citizen. It does not show any interaction with U.S. officials. It does not show Khadr being tortured or mistreated. But he was very young on the tape. He was 15 when he was taken into custody. These tapes were shot about a year later. The tapes could be used to show what his mental state was like. He's seen uncontrollably crying, showing his interrogator his wounds and insisting that no one cares about him. Let's listen.
(BEGIN VIDEO CLIP)
OMAR KHADR: You don't care about me. That's what.
INTERROGATOR: Well, I do care about you, but I want to talk to the honest Omar that I was talking to yesterday. I don't want to talk this Omar.
KHADR: It wasn't I.
INTERROGATOR: Yes it was.
KHADR: You see, you're not going to believe me.
INTERROGATOR: Well, look me straight in the eyes and tell me that you're being honest.
KHADR: I am being honest.
(END VIDEO CLIP)
ARENA: His lawyers who released the tapes and hopes it would bring world wide attention to Khadr's plight. They argued the conditions he was being held in were deplorable, that he was sleep deprived, kept in solitary confinement which they contends are especially harmful to a minor. Their goal, of course, is to get him out of Gitmo and back to Canada. But Carter is charged with the murder of a U.S. soldier in Afghanistan. He is expected to go before a military tribunal at the very least civil liberties advocates that is poke to today, you're hoping that these tapes will put further pressure on the Bush administration to close down Guantanamo Bay.
COLLINS: It's going to be tough because you don't really see anything on the tape. ARENA: That's right. But his lawyers argue look you can see that he's distraught, you can see that this was taken its toll on him. After all, he was a minor.
COLLINS: All right. CNN Justice correspondent, Kelli, thank you.
ARENA: You're welcome.
HARRIS: And again, we're just minutes away, maybe moments away from the President's news conference this morning. So much to talk about as the president addresses the economy. What was that list you ticked off just a moment ago of really sort of hot-button economic issues?
COLLINS: GM, gas prices, offshore drilling, Bernanke, as we talked about before the Senate Banking Committee. Is this a test, by the way? And I mean, there's an awful lot to talk about. And there he is now. Let's listen in.
(JOINED IN PROGRESS)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: ... it's been a difficult time for American families who are coping with declining housing values and high gasoline prices. This week my administration took steps to help address both of these challenges. To help address challenges in the housing and financial markets, we announced temporary steps to help stabilize them and increase confidence in Fannie Mae and Freddie Mac. These two play a central role in our housing and finance system.
Treasury Paulson has worked with the Federal Reserve Chairman Bernanke so the companies and the government regulators on a plan to strengthen these enterprises. We must ensure they can continue providing access to mortgage credit during this time of financial stress. I appreciate the positive reaction this plan has received from many members of Congress.
I urge members to move quickly to enact the plan in its entirety, along with a good oversight legislation that we have recommended for both Fannie Mae and Freddie Mac. This should be part of a housing package that is moving its way through the congress.
And I hope they move quickly. The newly proposed authorities will be temporary and used only if needed. And as we work to maintain the health of Fannie Mae and Freddie Mac, we'll work to ensure that they remain shareholder-owned companies.
To help address the pressure on gasoline prices, my administration took action to clear the way for offshore exploration on the outer continental shelf, called OCS. Congress has restricted access to key parts of the OCS since the early 1980s. I've called on Congress to remove the ban. It was also an executive prohibition on offshore exploration. Yesterday I issued a memorandum to lift this executive prohibition. With this action, the executive branch's restrictions have been removed. This means that the only thing standing between the American people and these vast oil resources is actually from the U.S. congress. Bringing resources online is going to take time, which means that the need for congressional action is urgent. The sooner Congress lifts the ban, the sooner we can get these resources from the ocean floor to refineries to the gas pump.
Democratic leaders have been delaying action on offshore exploration and now they have an opportunity to show that they finally heard the frustrations of the American people. They should match the action I have taken, repeal the congressional ban and pass legislation to facilitate responsible offshore exploration.
Congress needs also to pass bills to fund our government in a fiscally responsible way. I was disappointed to learn that democratic leaders in the House postponed committee consideration of the Defense Appropriations Bill and they did so yesterday. They failed to get a single one of the 12 annual appropriations bills to my desk. In fact, this is the latest that both the House and the Senate have failed to pass any of their annual spending bills in more than two decades.
There are just 26 legislative days left before the end of the fiscal year. This means that to get their fundamental job done, Congress would have to pass a spending bill nearly every other day. This is not a record to be proud of, and I think the American people deserve better. Our citizens are rightly concerned about the difficulties in the housing markets and high gasoline prices and the failure of the democratic Congress to address these and other pressing issues, yet despite the challenges we face, our economy has demonstrated remarkable resilience.
While the unemployment rate has risen, it remains at 5.5 percent, which is still low by historical standards. And the economy continued to grow in the first quarter of this year. The growth is slower than we would have liked, but it was growth nonetheless. We saw the signs of a slowdown early and enacted a bi-partisan stimulus package. We've now delivered more than $91 billion in tax relief to more than 112 millions of American house holds this year. It's going to take some time before we feel the full benefit of the stimulus package, but the early signs are encouraging.
Retail sales were up in May and June and should and will contribute to economic growth. In the months ahead we expect more Americans to take advantage of these stimulus payments and inject new energy into our economy. Bottom line is this - we're going to through a tough time, but our economy has continued growing, consumers are spending, exports continue increasing and American productivity remains strong.
We can have confidence in the long-term foundation of our economy, and I believe we will come through this challenge and stronger than ever before. And now I'd be glad to take some questions from you -- Mr. Hunt.
QUESTION: Mr. President, are America's banks in trouble? And does the rescue of Freddie Mac and Fannie Mae make more bail outs inevitable by sending the message that there are some institutions that are too big fail and that it's OK to take risks?
BUSH: First let me talk about Fannie Mae and Freddie Mac. A lot of people in the country probably don't understand how important they are to the mortgage markets. And it's really important for people to have confidence in the mortgage markets and that there be stability in the mortgage markets. That's why Secretary Paulson announced the plan this weekend, which says that he needs authorities from the Congress to come up with a line of credit for these institutions, if needed, and that he ought to have the authority to invest capital if needed. So the purpose was to send a clear signal that, one, we understand how important these institutions are to the mortgage markets and two, to kind of calm nerves.
The truth of the matter is, by laying this out, it makes it less likely we'll feed to use this authority to begin with, which by the way is temporary authority. As you talked about banks, if you're a commercial bank in America and you have a deposit in a commercial bank in America, your deposit is insured by the federal government up to $100,000.
Therefore, you hear nervousness about your bank, start talking about your bank's condition, the depositor must understand that the federal government through the FDIC stands behind their deposit up to $100,000. Therefore, which leads me to say, that if you're a depositor, you're protected by the federal government. I happen to witnessed the bank run in Middelton, Texas one time. I'll never forget the guy standing in the bank lobby saying, your deposits are good. We've got you insured. You don't have to worry about it, if you've got less than 100,000 in the bank.
The problem was, people didn't hear and there's you know, became a nervousness. My hope is, is that people take a deep breath and realize that their deposits are protected by our government. So there's two different instances, mortgage markets on the one hand, banking on the other.
QUESTION: In banking, do you think the system is in trouble?
BUSH: I think the system basically is sound. I truly do. And I understand there's a lot of nervousness and the economy's growing.
Productivity is high. Trade's up. People are working. It's not as good as we'd like, but -- and to the extent we find weakness, we'll move. That's one thing about this administration. We're not afraid of making tough decisions. And I thought the decision that Secretary Paulson recommended on Fannie Mae and Freddie Mac was the right decision.
QUESTION: Mr. President, you mentioned the latest retail sales. But they actually show a smaller boost than economists had expected from the government rebate checks.
Given the latest economic data, are you still insisting that the United States is not heading for a recession and are you willing to consider a second stimulus package if needed?
BUSH: Matt, all I can tell you is we grew in the first quarter. I can remember holding a press conference here and that same question came about, assuming that we weren't going to grow. But we showed growth. It's not the growth we'd like. We'd like stronger growth. There are some things we can do.
One is wait for the stimulus package to fully kick in and not raise taxes. If the Democratic leaders had their way in Congress, they would raise taxes. Which would be the absolute wrong thing to do. Secondly, they can pass housing legislation that reforms FHA as well as Fannie Mae and Freddie Mac. And by the way, a part of that, as I mentioned in my opening statement, part of that reform will be a strong regulator to help these institutions stay focused on the core mission, which is mortgages.
They can pass energy legislation. Readily concede that you know, it's not going to produce a barrel of oil tomorrow. But it is going to change the psychology that you know, demand will constantly outstrip supply. As I said my remarks, it's going to take while to get these reserves online. But it won't take a while to send a signal to the world that we're willing to use, you know, new technologies to find oil reserves here at home.
And the other thing Congress can do is work on trade legislation. One of the positives in the economy right now is the fact that we're selling more goods overseas. And they need to open up markets to Columbia and South Korea and Panama -- John.
QUESTION: Mr. President, just to follow up on Terry's question a little bit.
You talked about the mortgage markets and banks. Are there other entities in the economy that are so crucial to the stability and confidence in the economy? Particularly, General Motors, which today is cutting jobs (INAUDIBLE) going to the credit market to raise billions of dollars.
Are there other entities that are so crucial to stability that require government action to show support for them?
BUSH: Government action -- if you're talking about bailing out. If your question is, should the government bail out private enterprise? The answer is, no, it shouldn't.
And by the way, the decisions on Fannie Mae and Freddie Mac. I hear some say bailout, I don't think it's a bail out. The shareholders still own the company. That's why I said, we want this to continue to be a shareholder-owned company. In this case, there is -- you know, there's a feeling that the government will stand behind mortgages through these two entities.
And therefore, we felt a special need to step up and say that we are going to provide, if needed, temporary assistance through either debt or capital. In terms of private enterprises, no, I don't think the government ought to be involved with bailing out companies. I think the government ought to create the conditions so the companies can survive. And I've listed four. One of the things I'm deeply troubled about is people who feel like it's OK to raise taxes during these times. It would be a huge mistake to raise taxes right now.
QUESTION: Mr. President, you just said twice that the Fannie Mae and Freddie Mac should remain shareholder-owned companies.
If that's the case, because of the implicit government guarantee that they have or that is understood -- that has been understood by the markets. Their exposure is higher and their reserves are lower than any normal businesses.
Should they be privatized altogether and be subject to normal business rules?
BUSH: The first step is to make sure that there's confidence and stability in the mortgage markets to the actions we have taken. Secondly, we strongly believe there ought to be a regulator. That's something -- this is a position I have been advocating for a long time. And the reason why is, it's going to be very important for these institutions to focus on their core mission. Which is to provide refinancing for the mortgage industry. And hopefully these measures will instill the confidence in the people. And we'll see how things go.
QUESTION: But they should still have that public guarantee, then.
BUSH: You know, there's an implicit guarantee, as you said. They ought to be focusing on the missions they're expected to do. We have advocated reform for a long period of time. But these need to remain private enterprises. And that's what our message is.
QUESTION: Mr. President, in February, you were asked about Americans facing the prospect of $4 a gallon gasoline and you said you hadn't heard of that at the time.
BUSH: Where is it, now?
QUESTION: Gas prices are now approaching $5 a gallon in some parts of the country. Offshore oil exploration is obviously a long- term approach.
What is the short-term advice for Americans? What can you do now to help them?
BUSH: First of all, there is a psychology in the oil market that basically says, supplies are going to stay stagnant while demand rises. And that's reflected somewhat in the price of crude oil. Gasoline prices are reflected -- the amount of a gasoline price at the pump is reflected in the price of crude oil. And therefore, it seems like it makes sense to me, to say to the world that we're going to use you know, new technologies to explore for oil and gas in the United States.
Offshore oil, ANWR, oil shell projects, to help change the psychology. To send a clear message that the supplies of oil will increase. Secondly, obviously, good conservation measures matter. I've been reading a lot about how the automobile companies are beginning to adjust. People are -- consumers are beginning to say, wait a minute, I don't want a gas guzzler anymore, I want a smaller car.
So, the two need to go hand in hand. There is no immediate fix. This took us a while to get in this problem. There is no short-term solution. I think I was in the Rose Garden where I issued this brilliant statement, if I had a magic wand -- but the president doesn't have a magic wand. You can't just say, low gas. It took us a to get here. And we need to have a good strategy to get out of it.
QUESTION: But you have the strategic oil petroleum reserve. What about opening that?
BUSH: The strategic oil petroleum reserve is for you know, emergencies. But that doesn't address the fundamental issue. And we need to address the fundamental issue. Which I frankly have been talking about since I first became president. Which is a combination of using technology to have alternative sources of energy. But, at the same time, finding oil and gas here at home.
And now is the time to get it done. I heard somebody say, well, it's going to take seven years. Well, if we'd of done it seven years ago, we'd be having a different conversation today. I'm not suggesting it would have completely created -- you know, changed the dynamics in the world. But it certainly would have been, we'd of been using more of our own oil and sending less money overseas -- Ed.
QUESTION: Thank you, Mr. President. Good morning.
BUSH: Thank you. It is a good morning. Every day is a good morning when you get to serve the country.
QUESTION: And we know you prize loyalty in that. So, I wonder whether you felt betrayed by Scott McClellan's assessment of the war of Iraq. And moving forward, since there have been positive signs on the ground, in Iraq. Senator Obama is about to take a trip there.
What would be your advice to him as he tries to assess the situation on the ground?
BUSH: I have had no comment on -- no comment now on Scott's book.
Secondly, I would ask him to listen carefully to Ryan Crocker and General Petraeus. You know, there's the temptation to let the politics at home get in the way with you know, the considered judgment of the commanders. That's why I strongly rejected an artificial timetable of withdrawal. It's kind of like an arbitrary thing, you know. We will decide in the halls of Congress how to conduct our affairs in Iraq based upon polls and politics. And we're going to impose this on people as opposed to listening to our commanders and our diplomats and listening to the Iraqis, for that matter. The Iraqis have invited us to be there. But they share a goal with us, which is to get our combat troops out. As conditions permit. As a matter of fact, that's what we're doing. Return on success has been the strategy of this administration and our troops are coming home, but based upon success.
And so I would ask whoever goes there, whatever elected official goes there, to listen carefully to what is taking place and understand that the best way to go forward is to, you know, listen to the parties who are actually on the ground. And that's hard to do. I understand for some in Washington that you know, there's a lot of pressure. We've got group these groups out there, moveon.org, you know, banging away on these candidates. And it's hard to kind of divorce yourself from the politics.
And so I'm glad all the politics -- a lot of these elected officials are going over there. They'll get an interesting insight. Something that you don't get from just reading your wonderful newspapers or listening to your TV shows -- John.
QUESTION: Mr. President...
BUSH: Don't you call them TV shows? Newscasts, yes.
QUESTION: Following up on the question about oil. In the past, with oil prices have gone up a lot, they've wound up going down a lot afterward. But I wonder if you're able to say that oil prices in the future are going to come down a lot?
BUSH: I can't believe this, John.
I mean, my attitude is that, unless there is a focused effort in the short term -- unless there's a focused effort to bring more supplies to market, there's going to be a lot of pressure on price.
We've got 85 million barrels a day and of demand. And 86 million barrels of production. And it's just too narrow a spread, it seems like to me. Now, I'm encouraged by the Caspian Basin exploration. I'm encouraged that the Saudis are reinvesting a lot into their older fields. And remember, some of these old fields get on the decline rate, which requires a lot of investment to keep their production up to previous levels.
So, one thing we look at is how much money is being reinvested in some of those fields. I'm encouraged by that. I'm discouraged by the fact that some nations subsidize the purchases of product, like gasoline. Which therefore means that you know, demand may not be causing the market to adjust as rapidly as we'd like. I was heartened by the fact that the Chinese the other day announced that they're going to start releasing some of their subsidies. Which all of a sudden you may have some you know, demand-driven changes in the overall balance.
But look, if we conserve and find more energy, we will have done our part to address you know, the global market right now. And the other thing is that this is just a transition period. All of us want to get away from reliance upon hydrocarbons, but it's not going to happen overnight. You know, one of these days people are going to be using battery technologies in their cars. You've heard me say this a lot. I'm confident it's going to happen. And you know, the throw- away line of course, is that your car won't have to look like a golf cart.
But, the question then becomes, where are we going to get electricity? And that's why I'm a big believer in nuclear power to make us less dependent on oil and better stewards of the environment. But there is a transition period during the hydrocarbon era. And it hasn't ended yet. Our people now know. Gasoline prices are high. Again, I don't want to be a told you so, but if you go back and look at the strategy we put out early on in this administration, we understood what was coming.
We knew the markets were going to be tight and therefore we called for additional exploration at home, plus what was been happening. Which is an acceleration of new technologies, including ethanol technologies, to get us less dependent on crude oil from overseas.
Let's see here, Steven Lee.
QUESTION: Thank you. I wonder in light of the Supreme Court's decision, if you could tell us what you plan to do with Guantanamo.
BUSH: Steven Lee, we're still analyzing. We, being the justice department, are still analyzing -- the effects of the decision, which as you know, I disagreed with.
And secondly we're working with members of Congress on a way forward. This is a very complicated case. It complicated the situation in Guantanamo. My view all along has been either send them back home or give them a chance to have a day in court. I still believe that makes sense. We're trying to figure out how to do so in light of the Supreme Court ruling.
QUESTION: Mr. President, last week China joined Russia in blocking the sanctions Mugabe (INAUDIBLE) in Zimbabwe. I can't imagine this pleased you very much.
Do you have any reaction to particularly the Chinese move? And also where you go from here to try to make sure that the regime doesn't...
BUSH: You read my reaction, right? I was displeased. We spent a lot of time on this subject at the G8.
And there was great concern by most of the nations there -- well, of the G8 nations that were there -- about -- as to what was taking place in Zimbabwe. And it's frankly, unacceptable. And should be acceptable to a lot of folks. And so we discussed the need for you know, U.N. security council resolutions. And I was disappointed that the Russians vetoed.
I haven't spent any time with the Chinese leader talking about -- specifically talking about any security council resolutions I'd had with the president Medvedev. And so I think the thing we need to do now is for us to analyze whether or not we can have more bilateral sanctions on the regime leaders. These sanctions were not against the Zimbabwe people. They were against the people that -- you know, in the Mugabe regime that made the decisions it made. Get the Treasury Department, State Department, are now working on a potential U.S. action -- Brett.
QUESTION: Thank you, Mr. President.
I have a two-part question on the war in light of increasing violence in Afghanistan.
Do you believe current U.S. troop levels in Iraq are hindering efforts to put more U.S. troops into Afghanistan? And secondly, this morning in his prepared remarks, Senator Obama will say this: By any measure of single minded, open-ended focus on Iraq is not a sound strategy for keeping America safe. In fact, it should have been apparent to President Bush and Senator McCain, the central front in the war on terror is not Iraq and never was.
BUSH: Well, as you know, I'm loathed to respond to a particular presidential candidate. And so I will try not to.
My view is, is that the war on terror is being fought out on two simultaneous fronts that are noticeable to the American people and on other fronts that aren't. And so the first question that anybody running for president gets is, is this a war? Or is this like law enforcement? Is it a -- does this require you know, full use of U.S. assets in order to protect the American people? As you know, I made the decision that it does require those assets.
Secondly, that these are two very important fronts. Both of which, you know, are important to the future of the country. And therefore, we've got to succeed in both. Thirdly, one front right now is going better than the other. And that's Iraq, where we're succeeding and our troops are coming home based upon success. And Afghanistan's a tough fight.
It's a tough fight because one, this is a state that had been just ravaged by previous war. And there wasn't a lot of central government you know, outreach to the people. Secondly, there is a you know, tough enemy. And they're brutal and they kill at the drop of a hat in order to affect behavior. It's a little bit reminiscent of what was taking place in Iraq a couple of years ago. Where the enemy knows that they can affect the mentality of the American people if they just continue to kill innocent folks. They have no disregard for human life. And it's really important we succeed there, as well as in Iraq. We do not want the enemy to have safe haven. Unless of course, your attitude is, this isn't a war. So and if that's the case, it wouldn't matter if succeed or not.
But it is a two front war. And I say there's other fronts. But there's other fronts where we're taking covert actions, for example. Go ahead.
QUESTION: Should Americans expect a troop surge in Afghanistan?
BUSH: We are surging troops in Afghanistan, it's very committed.
We'll analyze the situation, of course. Make a determination based upon the conditions on the ground. But, we did surge troops. We surged troops. France surged troops. I said in Bucharest, we'll add more troops. And then, of course, we've got to make sure the strategy works. You know, have a counter insurgency strategy that not only provides security, but also provides economic follow-up after the security has been enhanced.
The question really facing the country is, will we have the patience and the determination to succeed in these very difficult theaters? And I understand exhaustion. I understand people getting tired. And I -- but I would hope that whoever follows me understands that we're at war. And now is not the time to give up in the struggle against this enemy. And that while there hasn't been an attack on the homeland, that's not to say people don't want to the attack us.
And safe havens become very dangerous for the American people. And we've got to deny safe haven. At the same time, win the struggle by advancing democracy. This is an ideological struggle we're involved in. These people kill for a reason. They want us to leave. They want us to not push back. They don't want democracy to succeed. And yet, if given a chance, democracy will succeed. And so these two theaters are the big challenge of the time and the war itself is the challenge. Yes -- Roger.
QUESTION: Thank you, sir.
I want to follow up on Matt's question about a second economic stimulus package.
BUSH: On who's question?
QUESTION: Matt's question about the second economic stimulus package.
(CROSSTALK)
QUESTION: Maybe I missed it, but did you rule one out?
BUSH: I said we ought to see how this fist one works. Let it run its course.
QUESTION: Is it too late to consider a second one in your administration?
BUSH: You know, we're always open-minded to things. But I -- we'll see how this stimulus package works. And let us deal with the housing market with good piece of housing legislation and the energy issue, we'll get energy legislation. And the trade issue with good trade legislation.
People say, oh man, you're running out of time. Nothing's going to happen. I'll remind people what did happen. We got a good troop funding bill with no strings. Got a GI bill. We got FISA. What can we get done? We can get good housing legislation done. We can get good energy legislation done. We can get trade bills done. I mean, there's plenty of time to get action with the United States Congress. And they need to move quickly. We can get judges approved. And, so I -- we'll see what happens up there.
I'm confident that if they put their mind to it, we can get good legislation. Let's see here. Yes -- Mark.
QUESTION: Mr. President, understanding what you say about energy supplies being tight and the debate over energy, which has gone on for years and will continue on through the campaign and the next administration. One thing nobody debates is that if Americans use less energy, supply, demand equation will improved.
Why have you not sort of called on Americans to drive less and to turn down thermostat?
BUSH: Aren't they smart enough to figure out whether they're going to drive less or not.
I mean, you know, it's interesting what the price of gasoline has gone. Is it caused people to drive less. That's why they want smaller cars. They want to conserve. But, the consumers are plenty bright, Mark. The marketplace works.
Secondly, we have worked with Congress to change cap A standards and add a mandatory alternative fuel requirement. So, no question about what you said, is right. One way to correct the imbalance is to save, is to conserve. And as you noticed my statement yesterday, I talked about good conservation. And people can figure out where they need to drive more or less. They can balance their own checkbooks.
QUESTION: (INAUDIBLE) You don't see the value in your calling for a campaign on this?
BUSH: I think people ought to conserve and be wise about how they use gasoline and energy. Absolutely.
And that there's some easy steps people can take. If they're not in their home, they don't keep their air conditioning running. And there's a lot of things people can do. But my point to you Mark, is that you know, it's a little presumptuous on my part to dictate to consumers how they live their lives.
The American people are plenty capable and plenty smart people. And they'll make adjustments to their own pocketbooks. That's why I was so much in favor of letting them keep more of their own money. It's the philosophical difference, should the government spend their money or should they spend their own money? And I've got faith in the American people. As much as I regret that the gasoline prices are high, and they are. I also understand that people are going to make adjustments to meet their own needs. And I suspect you'll see in the whole, Americans using less gasoline. I bet that's going to happen.
And in the meantime, technologies will be coming on the market that will enable them to drive and save money compared to the automobiles they were using before. And as you noticed, the automobile industry is beginning to adjust here at home, as consumer demand changes. The great thing about our system is it's the consumer that drives our system. It's the individual American and their collection that end up driving the economy.
QUESTION: Could I follow up on a couple of points, please?
BUSH: OK.
QUESTION: You never mention oil companies. Are you confident that American oil producers are tapping all of the sources they have out there, including offshore?
And on Iraq, will you sign an interim agreement with Prime Minister Malaki, on American operations in Iraq, leaving it to your successor to do a more permanent agreement?
BUSH: There are -- let me start with Iraq.
We're in the process of working on a strategic framework agreement with the Iraqi government that will talk about cooperation on a variety of fronts. Diplomacy, economics, justice. Part of that agreement is a security agreement. And I believe that if you know, they want to have an aspirational goal as to how quickly the transition to what we have called over watch, takes place. Over watch will mean that the U.S. will be in a training mission, You know, logistical support as well as special ops.
In order for our troops to be in a foreign country, there must be an understanding with the government. There must be authorities to operate as well as protections for our troops. We're in the process of negotiating that as well. And it needs to be done prior to the year because unless, of course, the U.N. mandate is extended.
So there are two aspects to the agreement. People seem to conflict the two. And we're working both of them simultaneously. Let's see here. Matt, what was the question again on that?
Do I think they're investing capital to find more reserves with the price of $140 a barrel? Absolutely. Take an offshore exploration company. First of all, it costs a lot of money to buy the lease. They tie up capital. Secondly, it takes a lot of money to do the geophysics to determine what the structure may or may not look like. That ties up capital. Then they put the rig out there. Now first of all, in a federal offshore lease, if you're not exploring within a set period of time, you lose your bonus. You lose the amount of money you paid to get the lease in the first place.
And once you explore, do your first exploratory, if you happen to find oil or gas, it is -- you'll find yourself in a position where a lot of capital is tied up.. And it becomes in your interest -- your economic interest to continue to explore so as to reduce the capital costs of the project on a per barrel basis. And so I think they're exploring. And hopefully a lot of people continue to explore so that the supply of oil worldwide increases relative to demand. People say, what about the speculators? You know, I think you can't help but notice there is some volatility in price in the marketplace. Which obviously, there's some people, you know, buying and selling on a daily basis. On the other hand, the fundamentals are really what's driving the long-term price of oil. And that is demand for oil has increased. And supply has not kept up with it.
And so part of our strategy in our country has got to be to say, OK, here are some suspected reserves. And that we ought to go after them in an environmentally friendly way. Buddy of mine said, what about the reefs? He said, I'm concerns about the reefs, I'm a fisherman. I like to fish. Reefs are important for fisheries. But the technology is such that you can protect the reefs. You know, you don't have to drill on top of a reef. You can drill away from a reef and then, you know, have a horizontal hole to help you explore a reservoir.
It's like in Alaska. You know, the old days -- if you ever go out to west Texas, you'll see. There's like a rig every 20 acres, depending upon the formation. In Alaska you can have one pad with you know, a lot of horizontal drilling. Which enables you to exploit the resources in a way that doesn't damage the environment. These are new technologies that have come to be and yet we've got an old energy policy that hasn't recognized how the industry has changed. And now's the time to get people to recognize how the industry has changed -- April.
QUESTION: Mr. President, two questions. One on energy and another on (INAUDIBLE).
BUSH: On what?
QUESTION: Not energy, I'm sorry. The economy.
When in your guesstimation, will this country see a turn-around as it relates to the softening of the economy? When will it become strong again?
And also on the Sudan. The Sudanese government is looking to the United Nations for help in the situation with the ICC. And this is a body that they have ignored. What's your thoughts about what's happening with the Sudan?
BUSH: Well, we're not a member of the ICC. So we see how that plays out.
My thought on Sudan is, is that the United Nations needs to work with this current government to get those troops in to help save lives.
