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Hoping to Hold Back Red River; President Obama Holds Internet Town Hall Meeting; Timothy Geithner Back on the Hill; Bye-Bye Retirement, President Obama Online With You

Aired March 26, 2009 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DON LEMON, CNN ANCHOR: It is Thursday, March 26th. Here are the top stories today, right here in the CNN NEWSROOM.

North Dakota faces an icy flood. Volunteers fill sandbags in Fargo, hoping to hold back the Red River.

And check that out to the west. Crews blast ice jams on the Missouri River, hoping to keep Bismarck dry.

A first at the White House. President Barack Obama logs on to speak out. His electronic town hall meeting live on the Internet this hour.

A lot happening here in Washington, D.C., today, and that's where I'm live from.

I'm Don Lemon. Tony Harris is off.

You're in the CNN NEWSROOM.

LEMON: And here is the question of the hour. Can two million sandbags save Fargo?

North Dakota's city is scrambling to hold back a flood maybe as high as a four-story building. The Red River is forecast to crest at 41 feet on Saturday. That would be the highest on record. So city leaders have told volunteers to build a sandbag dike 43 feet high.

(BEGIN VIDEO CLIP)

MAYOR DENNIS WALAKER, FARGO, NORTH DAKOTA: As far as the river is concerned, a quick shot on that. It's gone up about three feet a day for the last two days. We were at 32 on the 24th. And 7:00 this morning, we're at 38.19. And from the information I have from the National Weather Service and the Corps of Engineers, everything seems to be falling in place.

We're looking at, oh, 39 -- we're looking at 40 feet on -- tomorrow. That's going to come very quickly. And 41...

(END VIDEO CLIP)

LEMON: Just to give you an idea about Fargo, it is a town of 90,000 on the border of Minnesota, and it's pretty much shut down today. The region is coming off one of its coldest and snowiest winters in years, and that is the fuel for the spring flood.

Now take a look at this CNN iReport from Cheryl Brown. Water everywhere. A bridge nearly under water from the Red River flooding. This is down river from Fargo, some 40 miles in Wahpeton.

Another iReporter shows us this sandbag dike protecting her home.

(BEGIN VIDEO CLIP)

JENNIFER SONDAG, IREPORTER: We have our sandbag dike that stretches basically from this neighborhood, goes all through here, and you can see kind of curves back there behind the trees. And people will just bring in bag after bag after bag after bag.

(END VIDEO CLIP)

LEMON: Boy, look at what folks are going through there. You know, we'll get more iReports on that record flooding at the half- hour, when we take a trip to the CNN.com iReport Desk.

Meantime, right now, CNN's Susan Roesgen is at the Fargo Dome, and we'll check in with her soon. But first, we want to tell you how the survivors there are struggling.

(BEGIN VIDEOTAPE)

SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): You expect to see snowmobiles in North Dakota, but airboats belong in the Everglades. And anyone who sees one here now knows it's probably too late to save the neighborhood.

MAYOR MARK VOXLAND, MOORHEAD, MINNESOTA: I woke up this morning and looked outside, and I guess I thought of the same thing everybody else did. I remembered what my -- my dad always watched the TV show, and the quote that came to mind is, "What a revolting development this is."

ROESGEN: Good humor and good, strong arms, this could be the difference between relief and ruin. The Fargo mayor says the city needs half a million more sandbags between now and Saturday, when the Red River is expected to crest here at a record high 41 feet.

SHERIFF PAUL LANEY, CASS COUNTY, NORTH DAKOTA: If you know you have to get out, don't wait until tonight. Get out now, and let us be able to work, keep our people safe, by being able to operate in the daylight. Don't ask us to come back in an hour, because we don't know what's going to happen in an hour. This thing has been happening fast.

ROESGEN: The Coast Guard has rescued more than a dozen people. One, a 2-year-old baby. Others are getting out on their own.

UNIDENTIFIED FEMALE: Higher ground, that's where we're going. Just take a couple of suitcases and away we go.

ROESGEN: City leaders didn't want to do it, but they've got an evacuation plan for Fargo now, even as they build a second circle of dikes, worried that the first one won't be enough. And in Bismarck, on the Missouri River, the dikes are not enough. A demolitions crew is using dynamite to try to blow holes in huge chunks of ice that are raising the level of the Missouri. Part freeze and part flood, only a short time left to try to stop a disaster.

(END VIDEOTAPE)

ROESGEN: And if you look at this, Don, like a real defense, a battle, these are the reinforcements. This is a group of high- schoolers who have come from Red Wing, Minnesota. That is five hours away.

They're part of a band that just decided -- the high school band director said we're going to come out here, we're going to help. That's how far this effort stretches across the region.

Here in the Fargo Dome right now, where they usually have rock concerts and football games, and they were supposed to have a rodeo, Don, this weekend, no rodeo today. A little bit more like a monster truck rollout here. This is really the center, the heart and soul of that sandbagging effort to try and get half a million more sandbags between now and Saturday -- Don.

LEMON: Susan, about how many people are you looking at out there? It certainly looks like a big crowd that's pulling together.

ROESGEN: It is a big crowd, Don. It's kind of gone back and forth.

They've had everybody from the North Dakota State University football team out here, to minimum-security inmates from a local jail, church groups, the National Guard. Thousands of people are here, Don, and they're going to keep this thing going 24/7, through the rest of today, through all of tonight, through all of tomorrow, if need be.

And again, Don, you know, the mayor says he only gives this three-to-one odds. Three to one against the city of Fargo. Even so, he wants people out here, he wants to get these sandbags filled. And if not, they've got that evacuation plan. They don't want to use it, but they've got it if they have to get people out.

LEMON: Well, we certainly wish them the very best. Lots of folks there pulling together.

Thank you very much for that, Susan.

(WEATHER REPORT)

LEMON: President Obama gets wired up to hear your concerns. The president holds an Internet town hall meeting. That will happen at the bottom of the hour. We'll carry it for you, of course. He's going to answer questions submitted online from an audience in the East Room.

Our White House Correspondent Suzanne Malveaux joins us now with a preview.

Boy, this is certainly something new. Talk about capitalizing on technology, Suzanne.

SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: And White House aides say, Don, that it's really just an experiment, so we're going to see how this is all going to work. But obviously, they're trying to tap into people who are perhaps younger, Internet-savvy, really a lot of the people who are part of the grassroots movement who don't necessarily get their news from television, but their podcasts, the Internet, that type of thing.

So the president invited people to go on whitehouse.gov, to submit questions, to also vote on questions, the ones that they like the most, the most popular. And White House aides that I spoke with say they will choose those questions that are most popular, and that this is a chance for the president to sit down. It's going to be a live audience, about 100 people or so, who are also going to be able to submit some questions.

But you're going to see a real mix of technology, a mix of people. And this is just one way that they believe that they can reach the American people directly. Don't necessarily have to go through us, as reporters, but use the media in a way, multimedia, to get his point across, get his message across.

LEMON: CNN's Suzanne Malveaux at the White House.

Suzanne, thank you very much for that. We appreciate it.

Meantime, thousands of you submitted questions for President Barack Obama's online town hall meeting. We're watching it here. I'm watching it right here from the set. The White House says the president will answer some of the most popular ones.

Our Josh Levs is also monitoring it down in Atlanta. He's been sorting through some of your questions.

Josh, I'm looking at it. I can't wait for it to start. So are you. What can we expect from this?

JOSH LEVS, CNN CORRESPONDENT: It's going to be very interesting. It is. And in fact, let me give you the latest numbers. Those have actually jumped since what we just saw.

Here it is now for those of you just joining us. This is from WhiteHouse.gov.

Check it out, Don -- 92,918 people submitted questions, but some submitted more than one. You've got 104,000 questions.

And then the number of votes is massive -- 3.6 million votes. And here you had to register in order to vote, so that means people were willing to take that step or had already taken that step and then voted.

Let's go to some of these questions you were just asking about.

"What specifically can the federal government do to lower the cost of providing quality health coverage for small business owners?"

This is one of the most popular questions there. I'm going to click on this blue section here, which shows me how many people like it. It said 1,745 liked that question, and you have 199 who didn't.

And Don, for every question that's on here, all those tens of thousands, you've got the same thing going on, where people could vote and make the determination if it's a question they want to hear asked or not.

Let's zoom back in. I want to show you one more.

"What is the government doing to make higher education more affordable for lower and middle class families?" And here it says close to 7,000 people like it.

So this is interesting, Don, but it's also a little bit risky. We know the White House is saying they're going to answer some of the most popular questions. Are they going to answer them in order of most popular, or look at the top 1,000 and choose which ones they want to answer from that? Will there be popular ones that don't get answered? Will people be upset?

All these dynamics could play out starting in 18 minutes, so we're going to keep a close eye on that.

LEMON: You know, what I want to know, though -- because when you log on, you probably have to give some information in order to get on to that site. You know me, I'm always kind of a conspiracy person, not that this is a conspiracy. But what kind of information are they going to be collecting about people submitting those questions?

LEVS: And that is actually part of the political power of what the White House keeps doing here. Let me show you another screen about this.

Pretty much anything they ever do on WhiteHouse.gov, you're expected to register. You give them your name, your last name, and you give them a password, and then you give them your e-mail address.

Now, when I say "power," I'm not talking conspiracy, I'm talking something very pragmatic and political. What they do is, they create a massive list of people who have signed up there.

And Don, the next time this White House wants to reach out to America and say, call your congressman, right, call your senators, tell them to push my legislative agenda, they can send out a blast e- mail to everyone who has registered here, or if it's they just need to convince someone in California. They can just write to the people who say they're from California. So it gives them political power.

Beyond that, there is a privacy policy people should read. But this registration is part of what is so potent about this Web site -- Don.

LEMON: All right. Josh, thank you very much.

I'm looking at the information here. I'm logged into the same Web site that you are, and looking at some of the questions.

I think I'm going to go ahead and sign up and get the questions. So we'll both be watching. And I appreciate it, Josh, telling us about the information. And I'll let you know what kind of info I have to give myself.

So, Josh is standing by. We're all standing by here at CNN.

We're about 30 minutes away, Josh, from the start of the president's online town hall meeting, and we'll go there live as soon as that begins.

Also, he's back at it. Tim Geithner on the Hill, revealing the president's plan for preventing another financial collapse. We're going to take a look at that.

(COMMERCIAL BREAK)

LEMON: It is a very busy day here in the CNN NEWSROOM. And we are monitoring a hearing right now. It's happening on Capitol Hill. That hearing is focused on how to prevent the current economic crisis from ever happening again.

There you see him right there, Treasury Secretary Timothy Geithner. He is presenting a plan to the House Financial Services Committee. He's calling for more government power to seize troubled financial firms.

(BEGIN VIDEO CLIP)

REP. DAVID SCOTT (D), GEORGIA: This great expansion of power to seize non-bank companies, where in the federal government should that power rest? Should it be with you and Treasury, should it be in the Fed, or perhaps in FDIC?

TIMOTHY GEITHNER, U.S. SECRETARY OF TREASURY: Well, what we're proposing to do is build on the model established for the FDIC for banks and thrifts. That model, we have a lot of experience with it, there is a whole range of checks and balances in that system to limit discretion. So the existence of this does not increase moral hazard, as your colleague said.

And we think that model offers a lot of promise. And we're basically suggesting a model which would substantially rely on the FDIC itself to run this new regime. But you have to have some checks and balances in the system.

(END VIDEO CLIP)

LEMON: Now, here's what Mr. Geithner wants to do. He wants to completely overhaul how the government regulates financial firms. CNN's congressional correspondent, Brianna Keilar, following the hearing.

Brianna, he made big news on the Hill Tuesday. Now he's back at it again. We were talking here, saying he should just set up shop down there.

BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: Yes, twice in three days. He's quite the regular here on Capitol Hill, Don. And you could see he was answering questions there about his controversial proposal on Tuesday that he brought before this committee for the first time, asking for those unprecedented powers to seize and either wind down -- possibly wind down companies like AIG, these non-bank financial institutions, and do it in such a way that the FDIC seizes banks.

That's very controversial, so he is answering questions on that today. But he is also talking about regulating the market.

And the headline today, in particular, one thing he is proposing, and that is starting sort of a position that as someone who would be a system-wide regulator, who would look at the big picture. Because, Don, one of the big questions about this whole financial crisis is how did no one -- how was this missed? How did we not see this coming with these lending practices and all these foreclosures on the horizons leading to these toxic mortgage-backed securities, and then ultimately bringing the financial markets to the -- to its knees? How didn't we see this coming?

He's talking about establishing someone who would be able to see the risk and see the weaknesses. The point being to do it before it becomes a massive problem, as it is now -- Don.

LEMON: Yes, that certainly is a question. How did we get here and nobody know? I'm sure some people did. Maybe the right people just weren't listening to them.

Here is the question, though, Brianna. And especially about Mr. Geithner. It's about confidence.

Some people, you know, they want a sort of superhero kind of figure to bring more confidence to the American people. So in the bigger portrait here, in terms of restoring the economy and restoring confidence, what are we looking at?

KEILAR: Well, the bigger picture in how this fits into rescuing the economy, you see the administration has been doing some things, or at least proposing things to deal with damage that's already done -- housing, freeing up credit, that kind of thing. This is more of a look into the future, how to make sure that history doesn't repeat itself. And we're trying to gauge here exactly the response on Capitol Hill that today's proposal is going to get. But this timing, the timing of this announcement today, Don, it's not a coincidence.

We have seen Timothy Geithner really here on the Hill, but also in other places, talking about his plan. And this is ahead of next week, when President Obama heads to London, going for the G-20 summit.

So while you see Timothy Geithner here trying to send a message, trying to instill some confidence among Americans and American markets, it's also a matter of instilling confidence globally. So that's one of the goals that he is trying to fulfill today.

LEMON: All right. CNN's Brianna Keilar is our congressional correspondent.

Thank you very much for that, Brianna.

She's monitoring that. We'll keep you posted.

(WEATHER REPORT)

LEMON: And just ahead, the Dow, it is still climbing, and a look at why. This is what we'll have for you, why many of us have bigger bank accounts.

(COMMERCIAL BREAK)

LEMON: All right. So much for secure retirement. Many companies are cutting back on their 401(k) contributions, and a new survey says the trend will continue.

Stephanie Elam at the New York Stock Exchange with the details.

Stephanie, not good news for the working class.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Not good news at all, because, you know, we talk about this all the time, Don, 401(k) match. That's free money that people can actually take and invest for their futures that they're getting from the companies that they work for. But now it's increasingly being taken away, taken off the table for a lot of companies.

A survey from Spectrum Group shows 29 percent of employers plan to reduce or stop their 401(k) contributions in the next 12 months. And actually, we have a also of people who have done it - Kodak, FedEx, Sears, have all stopped their 401(k) matches. Meanwhile, the size of nest eggs that people have, they're shrinking.

And here's why. Stocks have been beat up over the past year. That's not big news to almost anyone who hears us talking about this all of the time.

But right now, stocks are rising. Best Buy, also shows that their February profits beat expectations. That stock is on the upside by nearly 16 percent. The Dow up 43 there, 7793. Nasdaq better by nearly two percent at this time, Don.

LEMON: OK, Stephanie, you know, all of this is causing a major shift in lifestyles for everyone. And, you know, especially doing anything they can to delay retirement. If you're close to retirement age, it can be pretty frightening right now. ELAM: It is a scary time for a lot people who are getting towards the end of the time that they thought that they would be working.

But one thing that people are doing to really combat this is that people are saving more than they ever did before. They're putting it in a safe place, they're putting their money in the bank. And according to "The Financial Times," in the first nine weeks of 2009, Americans actually put away nearly $250 billion. That's more than what was put in the bank in all of 2008.

And so basically, we're seeing that some people are pulling their cash out of stocks because they just really don't have confidence in the markets. They want to keep their money safe, keep it accessible, and know that it will be -- you know, won't have those huge growth numbers, but it will be there. And that's what people want to see, Don.

LEMON: Well, at least they're saving. That's good news.

ELAM: It's actually very good news to hear people are saving, especially if 401(k)s are being taken away.

LEMON: Stephanie, appreciate it. Good to see you.

ELAM: Good to see you, too.

LEMON: Logged on and linked up, we're waiting for the start of the president's online town hall meeting, and we'll bring that to you live. It's just really moments away from here. The White House says it's a way for the president to hear from and speak directly to you.

The Internet, really, played a huge role - we know this - in helping Mr. Obama become the president. Now he's continuing to use that tool to get his message out.

At last count, more than 104,000 questions had been submitted. And the president will also take questions from an audience in the East Room of the White House.

The start of that town hall meeting, I'm monitoring it here in Washington. We're monitoring it in Atlanta, New York, worldwide resources of CNN. We're going to check in with the president and his online town hall meeting, just moments away.

(COMMERCIAL BREAK)

LEMON: We've got a weather update. Before we get to Rob Marciano in the Severe Weather Center, Roger (ph), if you could take this, we're looking right here at this online meeting - town hall meeting. You can see they're preparing here. We're watching it online. You can watch it on CNN.com live as well. It's going to be just a few minutes before we get to that, so stay tuned and stand by.

Rob Marciano standing by the in the CNN Severe Weather Center.

Rob, you have got flooding, you've got tornadoes, and you have got snow. You're busy.

All right. We'll get to Rob Marciano in just a little bit.

Rob, as soon as you get set up there, let us know.

But again, standing by for a virtual town hall meeting that the president is holding. Of course, the Internet helped to bring President Barack Obama to the White House. And you see where they're holding that -- I believe it's in the East Room.

Christine Romans is standing by. Christine is also monitoring this. She's in New York.

Christine, you see it's online now. Again, we're monitoring it on CNN.com, also whitehouse.gov. Trying to sign up for questions. It's so busy, I think the website is actually having a bit of trouble. Last time we - you know, 104 almost 105,000 people had signed up for it.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: And you know, earlier, we were getting calls saying, look, I have a really good question for the president but I can't get through. And we were even getting calls from some people who thought it was their closest chance to be able to ask the president a question, like in the presidential press conference yesterday but couldn't get through.

I mean, it's the first time we have seen something like this, so obviously there are going to be some kinks. But a lot of -- it looks like a lot of support.

LEMON: Yes, and it's interesting how they would go through 104,000 questions. And I wonder what they're strategy is behind, you know, selecting the questions. As we listen to the applause, one would think that the president is about to come out, so...

ROMANS: Yes, that's Gerard Bernstein, he's the - he's the vice president's chief economic advisor.

LEMON: All right. Do we want to listen in at this point?

JARED BERNSTEIN, CHIEF ECONOMIC ADVISER TO THE VICE PRESIDENT: This is an exciting moment for the administration and for American people. President Obama is about to convene the first-ever online town hall from the White House.

A few days ago, the president invited Americans from across the country to use a new feature on whitehouse.gov called "Open for Questions." "Open for Questions" allows people to submit questions directly to the president and vote for the ones they would most like him to answer. The goal is to open up the White House to the American people, to give you a direct line to the administration.

In the past two days, over 92,000 people submitted over 100,000 questions and cast over 3.5 million votes. And there is no prescreening moderation of these questions. A question is public as soon as it is submitted by a visitor to whitehouse.gov. Today, the president will focus on the economy, addressing your concerns, your experiences, and telling you about our plans to meet the deep challenges we face. And deep they are. Whether it's your job, your home, your pension, your basic sense of economic security, few of us have been untouched by this recession.

I can tell you, because I meet with him every morning in our daily economic brief, President Obama and Vice President Biden are committed to facing down every dimension of this many-faceted downturn, and they will not rest until this thing gets turned around.

"Open for Question" is a new experiment in getting the perspectives of people outside of Washington, and bringing them into the discussion. Here is how today's online town hall will run. We will ask President Obama some of the most popular questions submitted through whitehouse.gov. Some will be written questions to the president and some will be videos sent to him. Then, President Obama will take questions submitted from folks here in this room.

During his time in had office and throughout the campaign, President Obama has traveled the country to hear people's views on the economy. For the first time, the president hears those views in an online town hall from the White House.

Ladies and gentlemen, please join me in welcoming President Barack Obama.

(APPLAUSE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Hello, everybody. Thank you. Thank you. Please have a seat. Thank you, so much.

Well, it is great to see all of you. And I am thrilled that all of you here in the White House and everybody who is viewing this online is participating in this experiment that we're trying out.

You know, when I was running for president, I promised to open up the White House to the American people. And this event, which is being streamed live over the Internet, marks an important step towards achieving that goal.

And I'm looking forward to taking your questions and hearing your thoughts and concerns, because what matters to you and your families and what people here in Washington are focused on aren't always one and the same thing.

Here in Washington, politics all too often is treated like a game. There is a lot of point-scoring, a lot of talk about who's up and who's down, a lot of time and energy spent on whether the president is winning or losing on this particular day or this particular hour.

But this isn't about me. It's about you. It's about the folks whose letters I read every single day.

And for the American people, what's going on is not a game. What matters to you is how you're going to find a new job, when nobody seems to be hiring, or how to pay medical bills after you get out of the hospital, or how to put your children through college when the money you'd put away for tuition is no longer there.

That's what matters to you. That's what you expect your leaders to be focused on. And that's why I've been working to deliver the changes you sent me here to make, to ensure that we're not only making it through this crisis, but come out on the other side stronger and more prosperous as a nation over the long term. That's the future that I believe is within our reach.

But that future will not come about on its own. It will come because we all, every single one of us, from Main Street to the halls of Congress, do what generations of Americans have done in times of trial. Because we remember that at heart we are one nation and one people and united by a bond that no division of party or ideology can break because we come together as Americans to choose that better day.

And that's what we've already begun to do. We, as a nation, have already begun the critical work that will lead to our economic recovery.

It's a recovery that will be measured by whether jobs are being created and families have more money to pay their bills at the end of each month.

That's why we're preventing teachers and police officers from being laid off and putting Americans to work repairing our crumbling roads and bridges and dams, creating or saving 3.5 million jobs in the coming years.

And that's why we're putting a tax cut into the pockets of 95 percent of working families who will see it -- see that tax cut in their paycheck by April 1st.

It is a recovery that will be measured by whether families can achieve that most American of dreams, and own a home without fear of losing it. That's why we've launched a plan to stabilize the housing market, and help responsible homeowners stay in their homes.

This plan is one of the reasons that mortgage interest rates are now at near-historic lows, and we've already seen a jump in refinancings of mortgages, and homeowners taking advantage of lower rates. And every American, by the way, should know that up to 40 percent of all mortgages right now are eligible for refinancing.

It's a recovery that will be measured by whether families and entrepreneurs can get the loans they need. That's why we're freeing up credit that's frozen with a program that supports the market for more car loans and student loans and small business loans, and with a plan that will partner government resources with private investment to break the logjam that is currently preventing our banks from lending money to even the most credit-worthy customers.

And in the end, it's a recovery that will be measured by whether it lasts, whether it endures, by whether we build our economy on a solid foundation, instead of an overheated housing market or maxed-out credit cards, or the sleight of hand on Wall Street, whether we build an economy in which prosperity is broadly shared.

That's what the budget I expect to sign is intended to do. It's a budget that cuts the things we don't need to make room for the investments we do, a budget that cuts the massive deficits we've inherited in half, by the end of my first term, and offers a blueprint for America's success in the 21st century.

And that success will require preparing every child everywhere in this country to out-compete any worker anywhere in the world because we know that those students who are getting the best education are going to be able to compete. And that's why we're making a historic investment in early childhood education. That's why we're going to make a historic investment in improving K through 12 education, making sure that our children get a complete and competitive education from the cradle up through a career.

It's an investment that will expand and improve not just early learning programs, but reward good teachers, while replacing bad ones, and put college or technical training within reach for anyone who wants it. Our success will also require freeing ourselves from the dangerous dependence on foreign oil by building a clean-energy economy, because we know that with this will not only come better security and a safer environment, but new high-paying jobs of the future to replace those that we've lost.

And our success will also require controlling spiraling health care costs that are bankrupting families and crushing businesses, and driving up skyrocketing deficits.

At the current course and speed, these health care costs are unsustainable. And that's why my budget takes a first big step toward comprehensive health care reform that will reduce costs, improve care and ensure that everyone who works has coverage they can afford.

This is what Americans' success demands and this is what our budget will do. And I'm under no illusions that a better day will come about quickly or easily. It's going to be hard.

But as I said the other night at my press conference, I'm a big believer in the idea of persistence, the idea that when the American people put their mind to something and keep at it, without giving up, without turning back, no obstacles can stand in our way and no dream is beyond our reach.

That's why we're here today, because it will take all of us talking with one another, all of us sharing ideas, all of us working together to see our country through this difficult time and bring about that better day.

So I want to thank all of you for this opportunity to talk with you. And now I'd like to bring Jared back up to the stage, and he's going to open it up for questions.

So, Jared, let's see how this thing works.

MODERATOR: Thank you, Mr. President.

Our first question comes from Boston, Massachusetts, on the topic of education. The founding fathers believe that there is no difference between a free society and an educated society.

Our educational system, however, is woefully inadequate. How do you plan to restore education as a right and core cultural value in America?

OBAMA: Well, it's a great question.

And let me see if this mike works so that I'm not stuck at this podium.

Yes, I'm here only because of the education I've received. I wasn't born into wealth. I wasn't born into fame. But I had parents who cared about education and grandparents who cared about education. And I was lucky enough through scholarships and sacrifice on the part of my family to get the best education that America has to offer.

Too many of our children aren't getting that kind of education.

OBAMA: And it's not because their parents don't believe in the value of education. It's not because these young people are less talented.

(APPLAUSE)

It's because of two reasons.

One, in many cases, our schools are under-resourced. You know, there aren't enough teacher teachers. The teachers aren't getting enough of the training they need for the classroom. There's a shortage of supplies.

Some of the schools that I've visited during the course of traveling around the country just shocked the conscience. There are schools that I've seen that were built in the 1850s that are still being used but haven't been upgraded the way they need to.

Now, there's a second problem, though, and it's -- it's one that money alone cannot solve. And that is that we have a school system that was designed for the agricultural era.

There is a reason why we've got three months off during the summer. That's supposed to be when everybody is working out on the farm...

(LAUGHTER)

... and bringing in harvest.

And it's not just the amount of time our kids are spending, it's how our classrooms are designed, how curriculums are structured, how things like teacher promotion and training happen.

So a lot of times, in Washington, we get an argument about money versus reform. And the key thing to understand about our education system is, we need more resources and we need reform.

If we just put more money into a system that's designed for the 19th century, and we're in the 21st, we're not going to get the educational outcomes we need.

On the other hand, if we talk a lot about reform, but we're not willing to put more resources in, that's not going to work. So let me give you just a couple examples of what we need to do.

Early childhood education, we know, works. Let's invest in that. That's what my budget calls for, substantial investment; every dollar we invest in early childhood education, we get potentially $10 back in improved reading scores, reduced dropout rates, reduced delinquency rates and so forth.

Number two, let's focus on the most important ingredient in the school, and that's the teacher.

Let's pay our teachers more money, let's give them more support, let's give them more training, let's make sure that schools of education that are training our teachers are up to date with the best methods to teach our kids, and let's work with teachers so that we are providing them measures of whether they're effective or not, and let's hold them accountable for being effective.

Now, that doesn't mean just a single high-stakes standardized test. It also means that we're working with teachers to determine, you know, what's the best way to discipline -- maintain discipline in a classroom, what's the best way to get kids excited about science. Giving them the time and resources to improve, but also having high standards of expectation in terms of their performance.

If we do early childhood education, if we focus on teacher training, if we invest in math and science education, which is vital -- and we're falling behind other countries on that front -- then I actually feel pretty confident that we can outcompete any country in the world.

But it's going to take more money and it's going to take more reform -- and it's going to take, by the way, openness to innovation on things like charter schools or performance pay. There are a whole range of things that may work, in some cases may not work, but we've got to try some new things because right now too many of our kids are stuck, and -- and we can't afford to lose them.

MODERATOR: The next question is on home ownership, from Heather from Ohio.

"President Obama, what benefits from the stimulus plan are there to those of us who are paying our mortgages but living paycheck to paycheck?"

OBAMA: Well, I mentioned this in the opening remarks. This is something that I really want everybody to understand.

Our housing plan, and we're devoting $50 billion to it, has a number of different components.

One component is setting up a mechanism where people who just can't afford their mortgage right now are able to renegotiate with banks, and the banks lower their interest, and the homeowner assures that they're going to make a commitment to pay a certain amount every month, and the government helps to step in to bridge the gap. But the point is, it's going to be cheaper not only for that family, but also potentially for the entire community if they stay in their home.

So that's -- that part of the housing plan is targeted for folks who are really in distress. They're getting close to the point where they might be losing their home. But there are a whole bunch of folks out there who are not about to walk away from their home, but are getting killed right now because their home values have dropped drastically. They're still making payments, but they're in trouble.

And for that huge set of responsible homeowners out there, I want people to understand what we've done is created mechanisms in the credit markets that have lowered mortgage rates down to historic levels, and what we've done is we've opened it up so that FHA loans that used to be only for people with a certain mortgage level, that we are using FHA and other mechanisms to open up refinancings to a whole bunch of homeowners who previously weren't qualified.

So now what you've got is a situation where 40 percent of the people sitting here, 40 percent of the people who are participating in this virtual town hall, could potentially refinance their mortgage. And they've got to take advantage of that. We're providing additional support from the government in order to facilitate those refinancings. We're starting to see refinancings go up significantly.

So you have the potential to cut your monthly payments, but you've got to take advantage of it. And if you need more information, you can go on our Web site at whitehouse.gov, or you can contact your local bank and find out whether you qualify to participate in this refinancing.

MODERATOR: Next, we have a video question from Harriet in Georgia about bringing jobs back to America.

QUESTION: Hello, President Obama. Here is my question for your online town meeting.

When do we expect the jobs that have been outsourced to other countries to come back and be made available to the unemployed workers here in the United States?

Thank you so much for all your hard work.

God bless you.

Bye bye. OBAMA: Well, I appreciate that.

Let me talk more, first of all, broadly about what's happening in the job market. We have had just a massive loss of jobs over the last several months, the kind of job losses we haven't seen at least since the early '80s and maybe since the 1930s in terms of how quickly we've seen the economy shed jobs.

A lot of that is prompted by the financial crisis and the locking up of the credit markets. And that's why when we are -- when we talk about dealing with this credit crisis and the banks, I just want everybody to understand, it's not because we're overly concerned about Wall Street or a bunch of CEOs. It's because if we don't fix credit, if we don't get liquidity back to small businesses and large businesses alike who can have that -- use that line of credit to buy inventory and to make products and sell services, then those businesses shrivel up and they start laying people off.

Ultimately, our measure of whether we're doing a good job or not is are we going to be able to create and save jobs. And part of that involves fixing the financial system.

There is a long-term issue, though, that we have to deal with. And this was true even before the current crisis. And that is that so much of our economic activity was in the financial services sector, it was related to an overheated housing market, it was dependent on huge amounts of consumer saving (ph). And we were seeing those steady declines in manufacturing, we were seeing steady declines in a lot of other productive sectors of the economy.

And one of the things that my budget is designed to do is by fixing our education system, by reducing costs of health care, by going after the clean energy jobs of the future, trying to put our economy on a more solid footing.

Now, a lot of the outsourcing that was referred to in the question really has to do with the fact that our economy, if it's dependent on low-wage, low-skill labor, it's very hard to hang onto those jobs, because there's always a country out there that pays lower wages than the U.S.

And so we've got to go after the high-skilled, high-wage jobs of the future. That's why it's so important to train our folks more effectively, and that's why it's so important for us to find new industries, building solar panels or wind turbines or the new biofuel that involve these higher-value, higher-skill, higher-paying jobs.

So I guess the answer to the question is, not all of these jobs are going to come back. And it probably wouldn't be good for our economy for a bunch of these jobs to come back, because, frankly, there's no way that people could be getting paid a living wage on some of these jobs, at least in order to be competitive in an international setting.

So what we've got to do is create new jobs that can't be outsourced. And that's why energy is so promising. We've been talking about what's called a "smart grid." And some of you may have heard of this.

The basic idea is that we're still using an electricity grid that dates back 100, 150 years ago.

(APPLAUSE)

Well, think about all the gizmos you guys are carrying...

(LAUGHTER)

... all the phones and the BlackBerrys and the this, and the that; you're plugging in all kinds of stuff in your house. We've got an entirely new set of technologies, huge demands, in terms of energy, but we've got a grid that's completely outdated.

Now, one of the things that we wanted to do in the stimulus package was to go ahead and start laying a new grid.

And to do that it's like building the transcontinental railroad. You've got a -- it's a huge project involving all 50 states.

The benefits of the grid are that we could reduce our energy costs by billions of dollars. We could set up systems so that everybody in each house have their own smart meters that will tell you when to turn off the lights, when the peak hours are, can help you sell back energy that you've generated in your home through a solar panel or through other mechanisms.

If we get plug-in hybrid cars, can you plug it in at night and sell back the electricity to the utility, and then charge up your car again in the morning before you leave.

All this can be done, but it also creates jobs right now. Our biggest problem, we don't have enough electricians to lay all these lines out there. And these are jobs -- these are union jobs that potentially pay $80,000, $90,000 a year with benefits. But it's a matter of making the investment in infrastructure and also then training the workers to be able to get those jobs. And that's where we're going to be focused on. That's where the job growth is going to occur.

One last point I want it make, and I know I'm not supposed to talk this long. But we're going to have to be patient and persistent about job creation because I don't think that we've lost all the jobs we're going to lose in this recession. We're still going to be in a difficult time for much of this year.