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Jobs From Bailout Cash; Health Care Compromise?; Create Your Own Job; Obama Speaks on Job Creation
Aired December 08, 2009 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: And good morning, everyone. It is Tuesday morning, December 8th. And here are the top stories for you in the CNN NEWSROOM.
The president revs up his new strategy to create jobs by squeezing more mileage out of the federal bailout. His speech live this hour.
A health care compromise seems to be cooking on Capitol Hill. The Senate may turn over the public option to the private sector.
The Copenhagen Climate Change Summit. We look at how pollution turns up the planet's thermostat.
Good morning, everyone. I'm Tony Harris, and you are in the CNN NEWSROOM.
And developing this hour, President Obama looks at ways to grease the job market with leftover cash from the big bank bailout. His address live from the Brookings Institution 15 minutes from right now.
First, though, Chief Business Correspondent Ali Velshi is joining us to set the stage.
Ali, good to see you, sir. What do you expect to hear from the president this morning?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Well, the president is going to put forward some proposals that are going to do two things. One, is he's call for Congress to do things that will give small businesses a break because small businesses are the engine of job growth in this country. They typically grow more jobs, hire more people than big businesses or government do. So that's number one.
Number two, and this is the interesting part, the president is going to talk about a savings, a $200 billion savings, over what the taxpayer was estimated to lose over 10 years from TARP. In other words, from the money that was used to bail out the banks, there was an estimate that Americans would, over the course of 10 years, be on the hook, or be liable for, $341 billion, almost half of TARP.
The government's new measure shows that because so many of these banks have given their money back, so as not to be subject to the government's restrictions on how they pay their executives, the government will see a loss of $141 billion. So you could say that's a savings of $200 billion.
But, Tony, that's kind of like losing your wallet and then finding it again and treating the money that you found as a bonus. It wasn't our money to start with, but the president is going to argue to use that money for job creation, particularly with some help for small businesses.
HARRIS: You think the president will get any pressure to use that money described here as savings to pay down the deficit?
VELSHI: Yes. Yes. It's already out there.
Republicans already calling on him to do that. In fact, many of those Republicans who were around when TARP was passed were saying there was no agreement or understanding that any money that was not used or saved, depending on how you want to describe it, would be used for other programs. It should be used to pay down the deficit because that money -- we didn't have that money, if you recall.
We run into deficit anyway, so that extra $700 billion, or the stimulus money, is all fresh money. So, the president is going to have an uphill battle.
So, there's two things we have to look at when we listen to the president speaking in 15 minutes, Tony. One is, are the proposals that the president is making sound? And, in fact, my initial look at them is that they are. We do need to give small businesses a leg up...
HARRIS: Yes, sir.
VELSHI: ... in order to stimulate hiring in this country.
The second one, which complicates things, is why the administration has chosen to call this $200 billion a saving and apply what was TARP money to something else. That's a political discussion, and that's going to get a little complicated for this administration.
HARRIS: What do we need to do here, in your view, as our chief business correspondent, to get small businesses going again, get entrepreneurs the cash they need with their business plans in hand to get those plans funded? What can we do? What has to happen here?
VELSHI: Well, you have to create the right environment for small business. Now, one of the things that's interesting is a recession often pushes people into small business.
HARRIS: Absolutely.
VELSHI: People who always wanted to run businesses but didn't have time to, now they're out of their job. Maybe they have some money.
The problem is they can't raise credit. So, number one, we've got to make it easier for small businesses to borrow. Number two, you have to let them write off investments so when they buy machinery and they buy plant, they get a break on those taxes because that will give them money to hire people. And those are basically the two things you have to do. You've got to give them some sort of short-term tax relief and you've got to give them the ability to get credit. Those are the two things that will be key to starting and running small businesses in this country, and that will be the key to recovering employment.
HARRIS: Hey, I've never tapped into the SBA, but is that the place for this administration to redouble efforts there, to pump some more funds there?
VELSHI: Yes, it's a system. The Small Business Administration offers guaranties on loans, and they work through banks. So a typical bank that a business would go to, they go there, and the SBA, if the company -- if the business meets certain basic standards, the SBA will guarantee that loan. It's a good technique, it's a good place to start with in terms of being able to get better money and easier money to businesses.
HARRIS: I don't know how busy you are, but are you going to be available to us after the president's speech...
VELSHI: I will be here.
HARRIS: ... to -- you are the man.
VELSHI: Sure. I'll be listening to it and I'll be here to talk to you.
HARRIS: All right. Terrific. All right. See you then.
VELSHI: All right. Bye.
HARRIS: And you will see the president's speech live on his plan to create jobs live in the CNN NEWSROOM. He is scheduled to speak at the Brookings Institution, as we mentioned, in Washington at 11:15 Eastern.
Checking the wire now and the day's other big stories.
The death toll rising in a series of terror attacks in Baghdad. Authorities now say at least 112 people were killed in five suicide car bombings, more than 400 others wounded in the blasts. Government buildings the main target; however, many children are among the dead.
In the Afghan war zone now, Defense Secretary Robert Gates has been meeting today with President Hamid Karzai. Gates' unannounced visit comes as the U.S. begins sending 30,000 more troops to that war. President Karzai says it may be 15 to 20 years before his government can bankroll its own security force.
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HAMID KARZAI, AFGHAN PRESIDENT: For a number of years, maybe for another 15 to 20 years, Afghanistan will not be able to sustain a force of that nature and capability with its own resources. We hope that the international community, in particular the United States, as our first ally, will help Afghanistan reach the ability in terms of economic (ph) ability, as well, eventually, to sustain a force that will treat Afghanistan with the right numbers and the right equipment.
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ROBERT GATES, DEFENSE SECRETARY: Our relationship with Afghanistan is a long-term commitment. As security improves and we begin turning over responsibility to Afghans, our relationship in other areas will only grow, especially with economic and political development. As President Obama and I have said repeatedly, our government will not again turn our back on this country or the region.
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HARRIS: Back here the home, a House panel questions the top commander and the U.S. ambassador to Afghanistan. General Stanley McChrystal and Ambassador Karl Eikenberry are testifying before the Armed Services Committee. Lawmakers want answers about the plans to send 30,000 more troops to Afghanistan and to begin bringing them home in 18 months.
Lots to shovel and plow in Big Bear, California. The West Coast getting hammered by a fierce snowstorm. Some areas getting up to an inch an hour.
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UNIDENTIFIED FEMALE: It's pretty cold, pretty snowy. It's kind of like a blizzard.
UNIDENTIFIED FEMALE: This is beautiful. It's absolutely amazing.
UNIDENTIFIED FEMALE: It's super fun. I love it.
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HARRIS: Now that's the spirit.
OK, now to the debate over health care reform.
Senate Democrats may be closing in on a compromise on one major obstacle.
Our congressional correspondent, Brianna Keilar, live from Capitol Hill.
And Brianna, boy, we tried to work a lot of this out on the phone this morning. It was tricky, but we are expecting some kind of compromise on the public option. Maybe the best way to think about it is maybe a new construct that is as much private as it is public. Does that get at what's being worked on here?
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: I think that's fair.
HARRIS: OK.
KEILAR: And what Senate Majority Leader Harry Reid has done is he has said, look, Democrats, we have this issue, we have this impasse over this public option, this government-run insurance plan. And so he's picked a handful of liberal Democrats who want that public option and he's picked a handful of more conservative Democrats who have serious misgivings about it.
They're in a room together hashing this out, and he's basically said, hey, work it out. So, the deal that they are moving towards, as we understand it, is one that's a little bit private, a little bit public. It would be a sort of -- sort of like this -- it would be private insurance companies providing the benefits, as we understand it, and it would be the federal government having some oversight over that, but, also, it would be operating on a not-for-profit, a nonprofit model.
And, Tony, I think the other thing we should mention is there are a lot of liberals who really do not want to give up on the public option. They want that public option. So the one thing that they may be willing to basically, if they can sort of get a carrot, if you will, that carrot would be expanding Medicare so that people who are 55 and older could buy into it.
You know, right now it covers people who are 65 and older, but people who are 55 and older could buy into it. And so it would basically expand what is a current public program since they would be giving away that government-run insurance program.
HARRIS: OK.
And let's quickly pivot to another contentious issue. Is there, Brianna, going to be a vote today on Senator Ben Nelson's amendment for bidding taxpayer-funded abortions?
KEILAR: There could be a vote. We know they're going to begin debating this.
This was introduced yesterday. And what you have is Senator Ben Nelson, who is a Democrat, but he is against abortion, he is anti- abortion, and he wants to toughen up the abortion language in this health care reform bill.
He wants to say any money, any federal money cannot be used to pay for abortions. So that would be -- if there is a public option, that would be no abortion coverage in that government-run insurance plan, that public option, and no abortion coverage in any private insurance plan that people would be using federal subsidies, taxpayer dollars. Those would be low-income, middle class Americans who would need help paying for their insurance. He's saying no abortion coverage in those private plans as well. But here's the thing -- he has really said, Tony, this is a deal- breaker for me, I need this toughened up language. And we are expecting that this could fail by a very close vote. But certainly, he is a Democrat, and Democrats, in order to get that 60-vote threshold, would need to stick together if they don't want Republican support, so it could be a step back here for Democrats today.
HARRIS: OK. Our congressional correspondent, Brianna Keilar, following it all from us from Capitol Hill.
Brianna, good to see you. Thank you.
We are about 10 minutes from the president's speech on your money and your government. While he's hoping to boost job growth, many of you are thinking about starting your own business.
Personal Finance Editor Gerri Willis has "Top Tips" to get you started. We'll talk to Gerri in just a couple of minutes.
In the meantime, Rob Marciano is tracking the sleet and snow. It is affecting many of you from California to Kansas City.
We're back with Rob in just a minute.
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HARRIS: Got some new information now about Tiger Woods and the events that unfolded this morning.
CNN can now confirm the woman taken by ambulance from Tiger Woods' home this morning was in fact his mother-in-law. An ambulance responded to a 911 call around 2:00 this morning in the Orlando area.
President Obama is bouncing around ideas to create jobs today. His speech live in just a couple of minutes. One approach he may talk about, starting your own business.
Let's talk about that with our personal finance editor, Gerri Willis.
And Gerri, good to see you.
How can a startup get off the ground -- are you kidding me -- in this economy?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, sometimes it's your only option if you can't find a job. And the way to do it is to make sure that the business you intend to enter is one that you actually have experience in.
Believe it or not, that's the biggest mistake that small business startups make. If it's not, you need to get a partner.
Next, be aware of the competition. You have to have a competitive edge. What are you providing that other folks don't?
You also have to write a business plan, which is more than a laundry list of goals and industry background. You also need to estimate operating costs, Tony, and determine how much business you will have to do to cover those costs. Your college or university may offer workshops or courses for entrepreneurs. And for older workers, AARP offers retraining opportunities -- Tony.
HARRIS: Hey, Gerri, that all sounds great, but it sounds a bit overwhelming as well.
Where can I go, anyone go for some help on this?
WILLIS: Well, good news. The Small Business Administration operates 364 SCORE chapters across the country to counsel new business startups.
Counselors are typically folks who have been through the process themselves and can assist newer ventures. Go to score.org on the Web. Believe it or not, they also have online mentoring service available 24 hours a day. The SCORE services are free.
Something else you'll want to know about, Fast Track. It's an academic program you can take locally or through a college or local business center. Classes cover things from how to target your customers, how to hire staff, how to put together a business plan.
In many cases the classes are free, but depending on where you live it can cost from $500 to $700 for a 10-week course. For more info, go to FastTrack.org.
And of course, Tony, as we know, money is the other important topic. Small business experts don't recommend tapping your 401(k) or credit cards for startup money. The SBA though will guarantee bank loans, making it easier for you to get started. Go to SBA.gov for help.
You might also want to check out entrepreneurship.org, where you can find blogs from other entrepreneurs with tips and advice.
HARRIS: Generally speaking, we all know that a new business is expensive, we know it's risky. What should entrepreneurs keep on their radar?
WILLIS: Well, watch out for what they call free grant money from the federal government. Most of the grant money that's available out there for business are for for-profit businesses that are already up and running, so you really want to be aware of government grant scams offering you dough. These scam artists will lie about where they're calling from, or they claim legitimacy using an official name sounding like the Federal Grants Administration.
HARRIS: That's right. WILLIS: They may ask you some basic questions to determine if you qualify to receive a grant. According to the FTC, it's a big, fat rip-off. Starting your business is no easy thing, and getting money to start that business is even harder.
And, of course, if you have any questions or tips for folks starting their own business, send them to me at Gerri@CNN.com.
HARRIS: Gerri, appreciate it. Good to see you. Thank you.
Let's do this -- let's get you a quick check of our top stories just ahead of the president.
Senators debating health care reform expected to vote today on the volatile issue of abortion. They'll decide whether to tighten restrictions on public money for the procedure. The amendment would prevent any health plan receiving federal subsidies from offering abortion coverage.
Pope Benedict is breaking tradition. Instead of midnight, the pontiff will celebrate Christmas mass at 10:00 p.m. The Vatican says it will ease Benedict's heavy seasonal workload. A spokesman insists there is nothing wrong with the 82-year-old pope's health.
A mom inspired by a drawing her daughter made in Girl Scouts turns it into a startup business.
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UNIDENTIFIED FEMALE: It's pretty amazing to see something that I had just been doodling come to life.
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HARRIS: We head into Denise's (ph) workshop and show you the steps she's taking to get her doll on the market. "Survival of the Fittest" is coming up.
And we are just minutes away from President Obama talking jobs and job creation at the Brookings Institute in Washington, D.C. When the president begins his remarks, we will take you to the Brookings Institution.
You're in the CNN NEWSROOM.
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HARRIS: And let's get you now to President Obama at the Brookings Institution.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you so much, Strobe, for your extraordinary leadership here at Brookings.
And thanks to all of you in attendance.
Almost exactly one year ago, on a frigid winter's day, I met with my new economic team at the headquarters of my presidential transition offices in Chicago. And over the course of four hours, my advisers presented an analysis of where the economy at that time stood, accompanied by a chilling set of charts and graphs predicting where we might end up. It was an unforgettable series of presentations.
Christina Romer, who's here today, tapped to head the Council of Economic Advisers, as well as Larry Summers, who I had chosen to head the National Economic Council, described an imminent downturn comparable in its severity to almost nothing since the 1930s. Tim Geithner, my incoming treasury secretary, reported that the financial system, shaken by the subprime crisis, had halted almost all lending, which in turn threatened to pull the broader economy in a downward spiral. Peter Orszag, my incoming budget director, closed out the proceedings with an entirely dismal report on the fiscal health of the country, with growing deficits and debts stretching to the horizon.
Now, having concluded that it was too late for me to request a recount, I tasked my team with mapping out a plan to tackle the crisis on all fronts. It wasn't long after that meeting, as we shaped this economic plan, that we began to see some of these forecasts materialize.
Over the previous year, it was obvious folks were facing hard times. As I traveled across the country during the long campaign, I would meet men and women bearing the brunt of not only a deepening recession, but also years, even decades, of growing strains on middle class families. But now the country was experiencing something far worse.
Our gross domestic product, the sum total of all that our economy produces, fell at the fastest rate in a quarter century. Five trillion dollars of Americans' household wealth had evaporated in just 12 weeks as stocks, pensions and home values plummeted.
We were losing an average of 700,000 jobs each month, equivalent to the population of the state of Vermont. That was true in December, January, February, March.
The fear among economists across the political spectrum was that we were rapidly plummeting towards a second Great Depression. So in the weeks and months that followed, we undertook a series of difficult steps to prevent that outcome, and we were forced to take those steps largely without the help of an opposition party, which, unfortunately, after having presided over the decision-making that had led to the crisis, decided to hand it over to others to solve.
We acted to get lending flowing again so businesses could get loans to buy equipment and ordinary Americans could get financing to buy homes and cars, to go to college and to start or run businesses. We enacted measures to stem the tide of foreclosures in our housing market, helping responsible homeowners stay in their homes and helping to stop the broader decline in home values, which was eating away at what tends to be a family's largest asset.
To achieve this and to prevent economic collapse, we were forced to extend assistance to some of the very banks and financial institutions whose actions had helped precipitate the turmoil. We also took steps to prevent the rapid dissolution of the American auto industry, which faced a crisis partly of its own making, to prevent the loss of hundreds of thousands of jobs during an already fragile, shaky time.
These were not decisions that were popular or satisfying. These were decisions that were necessary.
Now, even as we work to address the crisis in our banking sector, in our housing market, and in our auto industry, we also began attacking our economic crisis on a broader front.
Less than one month after taking office, we enacted the most sweeping economic recovery package in history, the American Recovery and Reinvestment Act. The Recovery Act was divided into three parts.
One-third went for tax relief for small businesses and 95 percent of working families. Another third was for emergency relief, to help folks who have borne the brunt of this recession. We extended or increased unemployment benefits for more than 17 million Americans, made health insurance 65 percent cheaper for families relying on COBRA. And for state and local governments facing historic budget shortfalls as demand for services went up and revenues went down, we provided assistance that has saved the jobs of hundreds of thousands of teachers and public school workers, firefighters and police officers.
The last third of the Recovery Act is for investments to put Americans to work doing the work that America needs done; doubling our capacity in renewable energy like wind and solar, computerizing medical records to save money and lives; providing the largest boost to medical research in history; renovating classrooms and school laboratories; and upgrading roads and railways as part of the largest investment in infrastructure since the creation of the interstate highway system half a century ago. And even as the Recovery Act has created jobs and spurred growth, we have not let up in our efforts to take every responsible action to get the economy growing and America working.
This fall, I signed into law more than $30 billion in tax cuts for struggling businesses, extended an effective tax credit for homebuyers, and provided additional unemployment insurance for one million Americans. And the Treasury is continuing to adapt our financial stability plan, helping to facilitate the flow of small credit to small businesses and families. In addition, we are working to break down barriers and open overseas markets so our companies can better compete globally, creating jobs in America by exporting our products around the world.
Now partly as a result of these and other steps, we're in a very different place today than we were one year ago. We may forget, but we're in a very different place. We can safely say that we are no longer facing the potential collapse of our financial system and we've avoided the depression many feared. Our economy is growing for the first time in a year, and the swing from contraction to expansion since the beginning of the year is the largest in nearly three decades.
Finally, we are no longer seeing the severe deterioration in the job market we once were; in fact we learned on Friday that the unemployment rate fell slightly last month. This is welcome news, and news made possible in part by the up to 1.6 million jobs that the Recovery Act has already created and saved according to the Congressional Budget Office.
But I'm here today because our work is far from done. For even though we have reduced the deluge of job losses to a relative trickle, we are not yet creating jobs at a pace to help all those families who have been swept up in the flood. There are more than seven million fewer Americans with jobs today than when this recession began. That's a staggering figure and one that reflects not only the depths of the hole from which we must ascend, but also a continuing human tragedy. And it speaks to an urgent need to accelerate job growth in the short term while laying a new foundation for lasting economic growth.
It was mentioned that I was in Allentown, Pennsylvania this past weekend and went to a job center where people were engaged in job search, and it ran the spectrum -- Blacks, Whites, Hispanics, young people who were just starting their careers, individuals 50, 60 years old looking for a job. And they were putting a brave face on it, confident that eventually things would work out. But you could also see the sense of anxiety, the fear that perhaps this time it was different. And sometimes it's hard to break out of the bubble here in Washington and remind ourselves that behind these statistics are people's lives, their capacity to do right by their families. It speaks to an urgent need to accelerate job growth in the short term while laying a new foundation for lasting economic growth.
So my economic team has been considering a full range of additional ideas to help accelerate the pace of private sector hiring. We held a jobs forum at the White House that brought together small business owners, CEOs, union members, economists, folks from non- profits, and state and local officials to talk about job creation. And I've asked people to lead forums in their own communities, sending the results to me, so we are hearing as many voices as possible as we refine our proposals. We've already heard a number of good ideas, and I know we'll learn of many more.
So today, I want to outline some of the broader steps that I believe should be at the heart of our efforts to accelerate job growth, those areas that will generate the greatest number of jobs while generating the greatest value for our economy.
First, we're proposing a series of steps to help small businesses grow and hire new staff. Over the past fifteen years, small businesses have created roughly 65 percent of all new jobs in America. These are companies formed around kitchen tables in family meetings, formed when an entrepreneur takes a chance on a dream, formed when a worker decides its time she became her own boss. These are also companies that drive innovation, producing thirteen times more patents per employee than large companies. And, it's worth remembering, every once in a while a small business becomes a big business and changes the world.
And that's why it is so important that we help small business struggling to stay open, or struggling to open in the first place, during these difficult times. Building on the tax cuts in the Recovery Act, we're proposing a complete elimination of capital gains taxes on small business investment along with an extension of write- offs to encourage small businesses to expand in the coming year. And I believe it's worthwhile to create a tax incentive to encourage small businesses to add and keep employees and I'm going to work with Congress to pass one.
These steps will help, but we also have to address the continuing struggle of small businesses to get the loans they need to start up and grow. To that end, we're proposing to waive fees and increase the guarantees for SBA-backed loans. And I am asking my Treasury Secretary to continue mobilizing the remaining TARP funds to facilitate lending to small businesses.
Second, we're proposing a boost in investment in the nation's infrastructure beyond what was included in the Recovery Act, to continue modernizing our transportation and communications networks. These are needed public works that engage private sector companies, spurring hiring all across the country. Already, more than 10,000 of these projects have been funded through the Recovery Act. And by design, Recovery Act work on roads, bridges, water systems, Superfund sites, broadband networks, and clean energy projects will all be ramping up in the months ahead.
It was planned this way for two reasons: so the impact would be felt over a two-year period; and, more importantly, because we wanted to do this right. The potential for abuse in a program of this magnitude, while operating at such a fast pace, was enormous. So I asked Vice President Biden and others to make sure -- to the extent humanly possible -- that the investments were sound, the projects worthy, and the execution efficient.
What this means is that we're going to see even more work -- and workers -- on Recovery projects in the next six months than we saw in the last six months. Even so, there are many more worthy projects than there were dollars to fund them. I recognize that by their nature these projects often take time, and will therefore create jobs over time. But the need for jobs will also last beyond next year and the benefits of these investments will last years beyond that. So adding to this initiative to rebuild America's infrastructure is the right thing to do.
Third, I'm calling on Congress to consider a new program to provide incentives for consumers who retrofit their homes to become more energy efficient, which we know creates jobs, saves money for families, and reduces the pollution that threatens our environment. And I'm proposing that we expand select Recovery Act initiatives to promote energy efficiency and clean energy jobs which have proven particularly popular and effective. It's a positive sign that many of these programs drew so many applicants for funding that a lot of strong proposals -- proposals that will leverage private capital and create jobs quickly -- did not make the cut. With additional resources, in areas like advanced manufacturing of wind turbines and solar panels, for instance, we can help turn good ideas into good private-sector jobs.
Finally, as we are moving forward in these areas, we should also extend the relief in the Recovery Act, including emergency assistance to seniors, unemployment insurance benefits, COBRA, and relief to states and localities to prevent layoffs. This will help folks weathering these storms while boosting consumer spending and promoting job growth.
Of course, there is only so much government can do. Job creation will ultimately depend on the real job creators: businesses across America. We were encouraged today to hear from the business roundtable that their survey showed greater confidence and greater potential investment coming out of the business community. Government can help lay the groundwork on which the private sector can better generate jobs, growth, and innovation. After all, small business tax relief is not a substitute for ingenuity and industriousness by our entrepreneurs, but it can help those with good ideas to grow and expand. Incentives to promote energy efficiency and clean energy manufacturing don't automatically create jobs or lower carbon emissions, but these steps provide a framework in which companies can compete and innovate to create those jobs and reduce energy consumption. And while modernizing the physical and virtual networks that connect us will create private-sector jobs, they'll do so while making it possible for companies to more easily and effectively move their products across this country and around the world and that will create more jobs.
And given the challenges of accelerating the pace of hiring in the private sector, these targeted initiatives are right and they are needed. But with a fiscal crisis to match our economic crisis, we also must be prudent about how we fund it. So to help support these efforts, we're going to wind down the Troubled Asset Relief Program, or TARP, the fund created to stabilize the financial system so banks would lend again.
I don't think I have to tell you there has rarely been a less loved or more necessary emergency program than TARP, which -- as galling as the assistance to banks may have been -- indisputably helped prevent a collapse of the entire financial system. Launched hastily -- understandably, but hastily -- under the last administration, the TARP program was flawed, and we have worked hard to correct those flaws and manage it properly.
And today, TARP has served its original purpose and at a much lower cost than we expected. In fact, because of our stewardship of this program, and the transparency and accountability we put in place, TARP is expected to cost the taxpayer at least $200 billion less than what was anticipated just this summer. And the assistance to banks, once thought to cost the taxpayers untold billions, is on track to actually reap billions in profits for the taxpaying public. So this gives us a chance to pay down the deficit faster than we thought possible and to shift funds that would have gone to help the banks on Wall Street to help create jobs on Main Street. Small business, infrastructure, clean energy: these are areas in which we can put Americans to work while putting our nation on a sturdier economic footing. That foundation for sustained economic growth, that must be our continuing focus and our ultimate goal. I've said this before, even before this particular crisis, much of our growth for a decade or more had been fueled by unsustainable consumer debt and reckless financial speculation, while we ignored the fundamental challenges that hold the key to our economic prosperity. We cannot simply go back to the way things used to be. We can't go back to an economy that yielded cycle after cycle of speculative booms and painful busts. We can't continue to accept an education system in which our students trail their peers in other countries, and a health care system in which exploding costs put our businesses at a competitive disadvantage. And we cannot continue to ignore the clean energy challenge or cede global leadership in the emerging industries of the 21st century.
And that's why, even as we strive to meet the crisis of the moment, we are laying a new foundation for the future. Because an educated workforce is essential in a 21st century global economy, we've launched a competitive Race to the Top fund through the Recovery Act to reform our schools and raise achievement, especially in math and science. And we've made college more affordable, proposed an historic set of reforms and investments in community college, and set a goal of once again leading the world in producing college graduates by the year 2020.
Because even the best trained workers in the world can't compete if our businesses are saddled with rapidly increasing health care costs, we are fighting to do what we have discussed in this country for generations: finally reforming our nation's broken health insurance system and relieving this unsustainable burden. Because our economic future depends on a financial system that encourages sound investments, honest dealings, and long-term growth, we've proposed the most ambitious financial reforms since the Great Depression. We'll set and enforce clear rules of the road, close loopholes in oversight, charge a new agency with protecting consumers, and address the dangerous, systemic risks that brought us to the brink of disaster. These reforms are moving through Congress, we're working to keep those reforms strong, and I'm looking forward to signing them into law.
And because our economic future depends on our leadership in the industries of the future, we are investing in basic applied research, and working to create the incentives to build a new clean energy economy. For we know the nation that leads in clean energy will be the nation that leads the world. I want America to be that nation. I want America's prosperity to be powered by what we invent and pioneer -- not just what we borrow and what we consume. And I know that we can and will be that nation, if we are willing to do what it takes to get there.
There are those who claim we have to choose between paying down our deficits on the one hand, and investing in job creation and economic growth on the other. But this is a false choice. Ensuring that economic growth and job creation are strong and sustained is critical to ensuring that we are increasing revenues and decreasing spending on things like unemployment insurance so that our deficits will start coming down. At the same time, instilling confidence in our commitment to being fiscally prudent gives the private sector the confidence to make long-term investments in our people and in America.
So one of the central goals of this administration is restoring fiscal responsibility. Even as we have had to spend our way out of this recession in the near term, we have begun to make the hard choices necessary to get our country on a more stable fiscal footing in the long run. So let me just be clear here: despite what some have claimed, the cost of the Recovery Act is only a very small part of our current budget imbalance. In reality, the deficit had been building dramatically over the previous eight years. We have a structural gap between the money going out and the money coming in. Folks passed tax cuts and expansive entitlement programs without paying for any of it -- even as health care costs kept rising, year after year. As a result, the deficit had reached $1.3 trillion when we walked into the White House. And I'd note: these budget busting tax cuts and spending programs were approved by many of the same people who are now waxing political about fiscal responsibility while opposing our efforts to reduce deficits by getting health care costs under control. It's a sight to see.
The fact is, we have refused to go along with business as usual; we are taking responsibility for every dollar we spend. We've done what some said was impossible: preventing wasteful spending on outdated weapons systems that even the Pentagon said it didn't want. We've combed the budget, cutting waste and excess wherever we could. I'm still committed to halving the deficit we inherited by the end of my first term -- cutting it in half. And I made clear from day one that I would not sign a health insurance reform bill if it raised the deficit by one dime -- and neither the House nor the Senate bill does. We have begun to not only change the policies in Washington, we've also begun to change the culture in Washington.
In the end, the economic crisis of the past year was not just the result of weaknesses in our economy. It was also the result of weaknesses in our political system. Because for decades, too many in Washington put off hard decisions. For decades, we've watched as efforts to solve tough problems have fallen prey to the bitterness of partisanship, to prosaic concerns of politics, to ever-quickening news cycles, to endless campaigns focused on scoring points instead of meeting our common challenges.
We have seen the consequences of this failure of responsibility, and the American people have paid a heavy price. And the question we'll have to answer now is if we are going to learn from our past, or if -- even in the aftermath of disaster -- we are going to repeat those same mistakes. As the alarm bells fade, the din of Washington rises, as the forces of the status quo marshal their resources, we can be sure that answering this question will be a fight to the finish. But I have every hope and expectation that we can rise to this moment, that we can transcend the failures of the past, that we can once again take responsibility for our future.
Now every night, I read letters and e-mails sent to me from folks across America. Ordinary folks, people who share their hopes and their hardships, their faith in this country and their frustrations with what's happened in this economy. I hear from small business owners worried about making payroll and keeping their doors open. I hear from mothers and fathers, sons and daughters, who have seen one or two or more family members out of work. The toughest letters are in children's handwriting, kids write to me -- my dad just lost a job, my grandma's sick she can't afford health insurance -- kids who can't just be kids because they're worried about mom's having her hours cut or dad losing his job or a family without health insurance.
Now these folks aren't looking for a hand out. They're not looking for a bail out. Just like those people I visited in Allentown, all they're looking for is a chance to make their own way, to work, to succeed using their talents and skills. And they're looking for folks in Washington to have a seriousness of purpose that matches the reality of their struggle.
Everywhere I've gone, every stop I've made, there are people like this, men and women who have faced misfortune, but who stand ready to build a better future. Students ready to learn, workers eager to work, scientists on the brink of discovery, entrepreneurs seeking the chance to open a small business. Everywhere I go there are once- shuttered factories just waiting to whir back to life in burgeoning industries. There is a nation ready to meet the challenges of this new age and to lead the world in this new century. And as we look back on the progress of the past year, and look forward to the work ahead, I have every confidence that we will do exactly that.
These have been a tough two years. And there will no doubt be difficult months ahead. But the storms of the past are receding, the skies are brightening, and the horizon is beckoning once more.
Thank you very much.
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HARRIS: The president announcing plans to gin up job creation in this country.
For small businesses the president is proposing the elimination of capital gains taxes on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year. The president wants to boost investment in the nation's infrastructure beyond what was included in the Recovery Act, and the president wants Congress to consider a new program to provide incentives for consumers who retrofit their homes to make them more energy efficient. And then there were some more poignant moments at the end there of the president's talk that we'll also take up in just a moment.
It's all about issue number one in the NEWSROOM this morning, your money, your life, your reaction to the president's speech from our chief business correspondent, Ali Velshi, next in the NEWSROOM.
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HARRIS: The president, just moments ago, announcing new initiatives to spur job creation in this country. Let's talk about the president's remarks with Ali Velshi, our chief business correspondent. I thought we were also going to have Felicia Taylor, but let's talk to Ali now and Felicia a little later.
Hey, Ali, what did you hear in this? For example, for small businesses, the elimination of capital gains on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year. Positive steps? Some good news here for small businesses?
VELSHI: Positive steps. The one particular point you just made, eliminating capital gains taxes on investment of the stock of small business -- in other words, that's for people who will invest. Assuming a small business is having trouble getting credit, they will sell stock to somebody. It's a bit strange that they're eliminating capital gains for one year, because we don't typically recommend that people invest in small businesses for a year. That tends to be a longer -- so that one strikes me as strange. I'll have to study it a little more.
But generally speaking the emphasis here is on trying to get Congress to pass laws that will give small businesses in America a break. What we have seen from the last stimulus program is that the efforts to have the shovel-ready construction projects that the government so touted didn't work the way that they had hoped it would work.
And what a lot of people have been saying is something we all know, Tony, small businesses have been and traditionally are the engine of job growth in America. They are more nimble, they create more jobs and they are the ones who have been feeling the pinch here, because they can't raise money or get loans from the bank, and they can't get breaks on their taxes.
So, the president is providing, or recommending that Congress provide both of those things in a number of applications. And I think that's a very strong move in the right direction.
HARRIS: Is it strong enough to, you know, if Congress goes along, is it strong enough potentially to get some money flowing to small businesses in your mind?
VELSHI: That is a good question. And when you put Congress into any equation these days, it sounds complex, it starts to get complicated. Ever since the days of TARP, when TARP was, relatively speaking, rushed through, American people have had a real antipathy toward the idea of Congress rushing things through that spend money.
However, there are a lot of economists who say cutting taxes in a targeted fashion, particularly to small businesses, cutting them a break, allowing them to be able to invest money and thereby hire new people may be the quickest solution to solving our employment problem.
And as we know, Tony, you and I talk about it all the time, we got three things that have to happen in the economy: home prices have to go up, the value of your investments have to go up, and your wage has to go up. Home prices, we're stabilizing, the government is doing everything they can with low interests. Stock market, look at it, even though it's down today, we're at 10,300 from 6,000 and change, that's going in the right direction. But jobs are a problem and that's what this administration has absolutely got to be focused on and they're trying a different angle through small businesses.
HARRIS: Great stuff, Ali. Got to jet, see you next hour, if you're available to us. Thank you.
Ali Velshi, our chief business correspondent.
In the next hour of CNN NEWSROOM, Dr. Sanjay Gupta is investigating the new government declaration that greenhouse gases are a public health hazard. He will take a the impact that they may have on allergies and disease and tell you what you can do about it.
We also have reaction on President Obama's speech on jobs and job creation, plus advice for the young and unemployed.
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