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FBI Raids Across Northeast in Bomb Probe; Saving Computers and the Planet; President Obama's Town Hall From Buffalo

Aired May 13, 2010 - 14:00   ET

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

(COMMERCIAL BREAK)

ALI VELSHI, CNN ANCHOR: OK. Take a look. There -- it's a room at a company in Buffalo, New York, Industrial Support Incorporated. The podium is ready for the president of the United States, continuing his White House to Main Street your. That's what we're calling it.

He'll be there in a minute, and we'll get back to him.

But before we do that, I want to bring you up to speed on a very, very important story that we are following, FBI raids in several states across the Northeast today. They are tied to the May 1st Times Square bomb plot.

We've got team coverage on this story from all angles. CNN's Drew Griffin is following the leads from here in Atlanta. Jim Acosta is on the scene in Massachusetts, where some of these raids and arrests took place. Susan Candiotti is in New York. Jeanne Meserve is also on the story.

Let's start with you, Susan. What have we got?

SUSAN CANDIOTTI, CNN NATIONAL CORRESPONDENT: Well, it's 12 days into the investigation, and clearly, as a result of the talking that's going on involving the main suspect in this case, Faisal Shahzad, search warrants are being executed in three states: New York, New Jersey, and Massachusetts. So, broadly based, this has to do with a broad look at cash couriers and how money is brought into the United States from overseas.

Now, from what we understand from a federal law enforcement source, so far they're looking at people who might not have had direct knowledge of this particular plot, but certainly may have a broad- based overview of bringing money into the United States. Let me tell you what's happening in the three states briefly.

We know that in Massachusetts, there have been search warrants, raids on two locations. One, a House and one a gas station. And we know that the FBI has been paying particular attention to a car that was parked at one of the -- at that gas station, rather. Two people were taken into custody in connection with the House.

Now, in terms of what's going on in Long Island, we know that there -- the FBI tells us that two locations are also being searched on Long Island. And in New Jersey, two more locations. One is a private home and one is a print shop. That private home is located in Cherry Hill, New Jersey; the print shop, in Camden, New Jersey.

So, again, we know that all of this stems from the cooperation that is being given by the suspect in this case, in the failed plot into that attack on Times Square -- Ali.

VELSHI: All right, Susan. I know you've been working this nonstop since it happened. You'll continue to do that. And just let us know, we'll put you back on here and we'll bring our viewers up to speed on your side of this thing.

We've also got Drew Griffin, who is working another angle in this story.

Tell us what you've got.

DREW GRIFFIN, CNN INVESTIGATIVE CORRESPONDENT: You know, it's just very interesting. The fact that we've been working nonstop is because the FBI, the Joint Terrorism Task Force --

VELSHI: Right.

GRIFFIN: -- has been working nonstop. And this guy, Shahzad, apparently will not shut up. The guy has not had a hearing. That's because he's waived his right to a first appearance in court. As far as we can tell, he doesn't even have a lawyer. And as long as he continues to talk and give information, he will not have a hearing.

VELSHI: And we understand that he was read his rights.

GRIFFIN: Of course.

VELSHI: He was read his Miranda rights. He was offered the right to legal representation.

Do you have any clue as to why he does not get a lawyer and continues to talk?

GRIFFIN: Apparently, they've talked him into keep talking. And like Susan said, like we've been reporting, this is all based on the cash courier system, which is what we're being told is what finances efforts like this guy tried to pull off in Times Square. Again, not saying if it's related.

The only information that I have that can add to what Susan has is two people we know have been under surveillance --

VELSHI: Right.

GRIFFIN: -- since Wednesday, since yesterday. We're not yet sure if the three people under arrest are those same two people. So, we may be looking for two more people out there, or they may be in custody. We're just not sure.

VELSHI: We don't know. So we don't know if the three in custody are --

(CROSSTALK)

GRIFFIN: That's right. So far we're only told they're immigration matters.

VELSHI: OK. So, let's just discuss this for a second. I know that there's so much information coming in to you and Jim and Jeanne and Susan, but let's try to understand this cash courier system for a second.

The idea is that if I ask you to commit some sort of terror offense and give you a check for it, they'll be able to find you. Once they get you, they'll be able to find me, and it's all clean. So, this cash courier system is a way to finance, get money to the guy who needs it through -- by disbursing it, by getting it through places that are hard to track.

GRIFFIN: It's a criminal enterprise. OK? And it's done in drug money, it's done in all kinds of things -- counterfeiting of cigarettes, tax stamps, just everything you can name. The niche is where terrorism comes in.

VELSHI: Right.

GRIFFIN: This is also how many terrorists are funded.

VELSHI: Right.

GRIFFIN: They're funded through drug money, poppies being raised over in Afghanistan. The money flows back and forth. It's a way of cleaning money out of cash businesses.

Let's say that this gas station dealt with cigarettes, or dealt with some kind of cash. Now they've got cash. They don't want to put it in a bank. They don't really deal in banks.

So, they're moving money back and forth. The money goes back to a terrorist organization. Some of it flows back in, it's used to finance operations, and it's used to finance lifestyles.

VELSHI: Just so we're clear, though, just because it's a cash courier system, doesn't mean it's necessarily financing money from overseas. This could be somebody locally financing things. It's the idea that it's unrecorded money.

GRIFFIN: Yes. The only thing is, we've been specifically told by our source close to this investigation that it's a cash courier system. Now, when you're dealing with a cash courier, that usually means you're flying in or out of the country. Otherwise, we're just washing cash in a business.

VELSHI: OK. Now, another other thing I want to clear up -- so we know we have got three arrests, and we've been told that those arrests are on immigration matters.

GRIFFIN: That's right.

VELSHI: That doesn't sound like the same thing as terrorism.

GRIFFIN: No, it's not. And it could be just -- you know, quite honestly, let's be quite factual. We don't know if they're related. All right?

And anything that we would say about that would be speculation at this time. They may be -- it may be an easy way to pick these guys up, get them talking, and then decide if they are involved or not.

Shahzad has clearly led these people -- led the FBI and the authorities to these locations. We don't know if he's led them to these -- directly to these people.

VELSHI: OK. So, you have been -- again, like Susan, you've been covering this since the night it happened. Right after that, soon after that, the attorney general of the United States came out and said this was linked to or backed by the Pakistani Taliban.

Tell me about that versus what we know today.

GRIFFIN: You know, and it's gone back and forth. You have to understand what the Pakistani Taliban is.

Reza Sayah, who is in Pakistan, our correspondent there, said it's a ragtag group. They like to take credit for a lot of things. That's because they so far have not been successful in just about anything.

They don't have a lot of money. They're not well organized. They're nowhere near the status of al Qaeda, and they kind of get off, you might say, on the fact that they're being even talked about here on CNN right now.

VELSHI: Right. Right.

GRIFFIN: It gives them some kind of stature.

Do they have the ability to finance an operation like Faisal Shahzad? Well, it was a pretty -- you know, quite frankly a garbage operation.

VELSHI: I was going to say, a pretty bare-bones operation -- an old, used car.

GRIFFIN: So, you know, a couple of grand and you're in, right? If you can talk somebody into doing something that's silly, pretty much you can do that. But the question is, is the Pakistan Taliban really an entity that we have to deal with on the level of al Qaeda?

VELSHI: Unclear.

GRIFFIN: Maybe, maybe not. Unclear.

VELSHI: OK. You're on it. Our whole team is on it. Thanks, Drew Griffin. We're going to stay on that. We're also staying on top of the president, about to start speaking in Buffalo, New York, part of his White House to Main Street tour.

Buffalo, as you know, has one of the country's highest poverty rates. He's probably going to be addressing that in his speech as well.

There's the picture. We'll be to him in just a moment.

(COMMERCIAL BREAK)

VELSHI: OK. I'm continuing to show you this because the president is running a little late. He's supposed to be giving a town hall speech and then a town hall meeting at this company, an industrial manufacturer in Buffalo, New York. We're staying on top of that.

In the meantime, the other big story that we've been following -- I was just talking to Susan Candiotti and Drew Griffin about that -- is the terror plot and the developments there. Some major, major developments today with the arrest of three people in several different places. Different raids going on, where we're trying to find out whether they've got some connection to this Times Square plot.

Let me just remind you of what happened in Times Square.

Let's take you back to May 1st, at 6:30 p.m. Street vendors alerted the New York Police Department to a smoking SUV. Smoke was actually coming out of the inside of an SUV. It ended up being a Nissan Pathfinder, a green Nissan Pathfinder.

And about 11:40 -- let me just take you back to May 1st.

Then May 2nd, at about 2:20 a.m., Michael Bloomberg, the mayor of New York, and police described the contents of the bomb. They called it lethal, potentially lethal, but amateurish. There was fertilizer and gasoline and fireworks in the car, two propane tanks, 50-gallon gas containers, battery-operated clock, and a gun locker type of metal box.

Now, on May 3rd, at 11:45 p.m. now -- we're two days away from this -- the federal authorities ordered a plane that was bound from New York's JFK, an Emirates Airlines plane. It was going from JFK to Dubai. They ordered it stopped before it took off, came back to the gate, and they arrested Faisal Shahzad, who was a naturalized American citizen. So, this is two days after this happened.

Now, on May 4th, early in the morning -- so this is just hours after he was arrested -- FBI and local police executed a search warrant at Shahzad's last residence, which was in Bridgeport, Connecticut. Later that same day, he was charged in federal court with five charges, including attempting to use a weapon of mass destruction, acts of terrorism, transcending national boundaries, use of a destructive device in connection with criminal violence, transporting and receiving explosives, and damaging and destroying property by means of fire.

The next day, May 5th, the feds say that Shahzad has been cooperative, giving them lots of details. And as we just heard from Drew Griffin, he was read his rights, offered an attorney, chose not to take an attorney, and continued to talk to police, which is what we believe may have led to today's raids and arrests.

On May 6th, high-level U.S. and Pakistani investigators interrogate Shahzad's father, who was in Pakistan, and four people linked to a militant group there are also investigated.

On May 9th, Attorney General Eric Holder publicly says what we had been hearing from law enforcement sources, that an investigation into this indicated that Faisal Shahzad, charged with this crime, was working in cooperation with the Pakistani Taliban. Now, we are unsure about anything more with that relationship.

Today, what we saw were raids in Boston, in New York, in New Jersey. And that's what we continue to follow for you.

So, we will continue to bring you up to speed on what the developments are, who these people are who have been arrested. We don't know.

Drew Griffin did tell us two people have been under surveillance. We don't know whether those two are part of the three who were arrested today.

So, we'll stay on that story. We've got full team coverage on it.

We're also watching the president. He's about to speak, or so we've been told, in Buffalo, New York, right there at that manufacturing company. After he speaks -- he will make a speech, and then he will discuss -- he'll take questions. It's a town hall meeting. Buffalo, New York, is where that's taking place.

We're going to take a break. We'll be back to you in a moment.

(COMMERCIAL BREAK)

VELSHI: Looking at live pictures of a manufacturing facility in Buffalo, New York, where the president, as part of his White House to Main Street tour, is going to be speaking in just a few moments. He will be speaking, and then he'll be hosting a town hall, where he'll be taking questions from about the 200 people who are assembled there.

The factory employs about 70 people. It's a company that started with just five people. It builds electronics for other companies in the U.S. that are manufacturing devices.

So, we're keeping an eye on that. We'll bring you to that very, very shortly.

(NEWSBREAK) VELSHI: And we are always looking for solutions on this show, and one kid has one of them, at least. He's just 16, but he's cleaning up the planet in a way that you would never expect.

Here's Stephanie Elam with tonight's -- with today's "One Simple Thing."

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT (voice-over): Sixteen-year-old Alex Lin likes to go for impact. Besides the rigors of AP classes and competitive sports, the high school senior has made helping others while also protecting the environment an important part of his schedule.

ALEXANDER LIN, WIN FOUNDER: When you are throwing out hundreds of thousands of tons of computers, it all adds up. And especially back when everybody was using CRT monitors. Each of those big monitors had between four and eight pounds of lead. Add that up, and that's a lot of lead going into our landfills, going into our ground, going under water.

ELAM: Driven to find creative solutions for his community's problems, Alex began WIN, Western Innovations Networks, with a galvanized group of peers.

JEFF BRODIE, WIN TEAM MEMBER: It takes up a good amount of time. You really have to be dedicated to do something this big.

UNIDENTIFIED FEMALE: I love helping people. I love that that's what we do.

ELAM: Working with his hometown of Westerly, Rhode Island, he set up a place to recycle old computers and monitors.

LIN: If we can use it, we'll take it in so we can refurbish it. And if not, we'll bring it to the transportation (ph) to recycle it.

Most of the computers have gone to students here, in Westerly, locally. Also, we have a separate section of the computers that we refurbish which have gone overseas to community centers.

ELAM: To places in Kenya, Cameroon, the Philippines, Mexico, and Sri Lanka, where the computer center was named after the WIN team.

LIN: That was the more awesome parts of our project, I would say, when we found out that there is a place pretty literally halfway across the world that was actually named after our product.

ELAM: But WIN wanted to do more, so they introduced an ordinance to ban the dumping of electronics in Westerly.

LIN: Eventually, we did get the law passed statewide. We can hopefully get this out around the entire nation, where there are these systems in place to properly dispose of electronics, just like there are systems to dispose of aluminum, paper, and plastics. UNIDENTIFIED MALE: Look at that.

UNIDENTIFIED MALE: Oh!

ELAM: As Alex heads to Stanford University in the fall, he says he'll keep solving problems.

LIN: I'll find something new or some other way to make myself active and have a lasting impact, but definitely something like this, but maybe not exactly this.

ELAM: Stephanie Elam, CNN, Westerly, Rhode Island.

(END VIDEOTAPE)

VELSHI: Great story. A young guy who is trying to solve a problem that he's not even been part of. Hope that catches on.

All right. Take a look over my left shoulder -- my right shoulder, the way you're looking at me. We're watching a factory in Buffalo, New York, where President Obama is about to speak as part of his White House to Main Street tour. He's been doing these around the country.

Buffalo has one of the country's highest poverty rates. Its unemployment rate, by the way, is lower than the national average.

This is a city that's faced a lot of challenges because it's been a heavy, heavy manufacturing city, losing jobs since the 1970s. But right now it's got an unemployment rate that is lower than the national average, and President Obama is speaking at a company that's actually been doing particularly well.

He's not there yet, so we're going to take a break. When we come back, if he's there, we'll take you to him.

(COMMERCIAL BREAK)

VELSHI: All right. Let's go to the president of the United States. He is in Buffalo, New York. Let's listen in.

(JOINED IN PROGRESS)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is a secret I only told Dave, but then I thought I probably should tell all of you, that I had to go out and try those wings before I came out.

(APPLAUSE)

So, if you see some of the sauce, that's why. And I can vouch for Doug's (ph) crispy medium. That's what I had. Very nice. Outstanding.

A couple of acknowledgements I want to make.

First of all, Buffalo Mayor Byron Brown is here. (APPLAUSE)

Where is he?

Byron, stand up.

Congresswoman Louise Slaughter is here.

(APPLAUSE)

Your own congressman from this district, Brian Higgins, is here.

(APPLAUSE)

Congressman Chris Lee is here.

(APPLAUSE)

And I brought one of my outstanding members of my cabinet who is working hard every day with businesses like this to help grow the economy, Karen Mills, my small business administrator, is here. Please give her a big round of applause.

(APPLAUSE)

So, this is my first visit to western New York as president. And so it is just a thrill to be here. I'm glad that it's not snowing.

Thank you.

Last Sunday, right? You guys still got snow. Sheesh, I thought Chicago was bad. This is worse.

But I'm really thrilled to be here, partly because it gives me a chance to get out of Washington. And I've been trying to make a habit of that. About once a week or so, I try to take a trip outside of Washington.

Now, don't get me wrong, Washington is a beautiful city. I've got a really nice office. And I live above the store, so the commute is really short. But you've heard of being in the bubble.

You know, when you're in Washington, sometimes it's just hard to hear anything else except the clamor of politics. And that clamor can drown out the voices of the American people.

So, I'm not going to give a long speech today. I actually want to take some time to take a few questions from you, hear about your concerns, your hopes, what opportunities you see out there. But before I do, I do want to say a few words about the thing that I know is in the front and center of everybody's minds, and that's the state of our economy.

Now, I don't need to tell all of you that we're still emerging from one of the worst recessions in our history. And it's been tough everywhere. But cities like Buffalo have been especially hard hit. Even before the most recent downturn began, years before, you were seeing jobs disappear and factories shut their doors. Costs, family expenses went up, but wages, they flat-lined, they didn't go up. And that's tough on families, and that's devastating on communities. So, breaking our economic free-fall was job number one when I took office.

I want everybody to remember, because sometimes we've got a selective memory here. When I took office, we were losing 750,000 jobs a month. Our economy had shrunk, the quarter I came in, six percent. Experts of all political stripes were warning of another Great Depression.

That wasn't that long ago, but it's easy to forget just how fragile things are and how scared people were. And so we had to take immediate steps to stop the crisis. And some of those steps weren't particularly popular.

I had just inherited a $1.3 trillion deficit from the previous administration, so the last thing I wanted to do was to spend money on a recovery package or help the American auto industry keep its doors open, or prevent the collapse of Wall Street, banks whose irresponsibility had helped cause this crisis. But what I knew was if I didn't act boldly and I didn't act quickly, if we didn't defy the politics of the moment and do what was necessary, we could have risked an even greater disaster.

And the other thing we weren't going to do is give in to the partisan posturing in Washington, because half the time up there, all everybody's worried about is, what do the polls say? And making calculations based on what's good for the next election instead of what is good for the next generation.

And, frankly, I had one side of the aisle just sit on the sidelines as the crisis unfolded. And if we had -- if we had taken that position, just thinking about what was good for my politics, millions more Americans would have lost their jobs and their businesses and their homes.

But, Buffalo, I did not run for president to preside over America's decline. I didn't run for president to watch the erosion of the middle-class continue. I ran for president to keep the American dream alive in our time, for our kids and our grandkids and the next generation. So, we met our responsibilities. We did what the moment required.

Now, I won't stand here and pretend that we've climbed all the way out of the hole. There are too many folks right here in Buffalo and all across the country who are still hurting. I read too many letters each night from folks who are still hurting. They're still out of work. So, I know things are still tough out there for a lot of folks.

And, you know, economists have all kinds of fancy formulas and mathematical equations to measure the exact moment when the recession ended, and it's great that the stock market's bounced back, but if you're still looking for a job out there, it's still a recession. If you can't pay your bills or your mortgage, it's still a recession, no matter what the economists say. It's not a real recovery until people feel it in their own lives, until Americans who want work can find it, until families can afford to pay their bills and send their kids to college.

So, that's what we're working for. That's our goal. But I want to just say to Buffalo -- I want to say to all of you and I want to say to America -- we can say beyond a shadow of doubt, today we are headed in the right direction.

(APPLAUSE)

We are headed in the right direction.

All those tough steps we took, they're working. Despite all the naysayers who were predicting failure a year ago, our economy's growing again. Last month we had the strongest job growth that we had seen in years. And, by the way, almost all of it was in the private sector and a bunch of it was manufacturing. So, this month was better than last month. Next month's going to be stronger than last -- than this month, and next year's going to be better than this year.

Last month, we gained 290,000 jobs, that was the largest increase in four years.

(APPLAUSE)

We've now gained jobs four months in a row right here in the United States. Last month brought the largest increase in manufacturing employment since 1998, strongest growth of manufacturing in 12 years. That's a good sign for companies like this one.

I was talking to Dave. Dave was telling me about the rebound in orders that we've seen here, right here at this company. The question is now, how do we keep that momentum going? How do we keep adding more and more jobs?

And we know that the government has to play a role in meeting this goal. But we also know that role is limited. Government is not the true engine of job creation and economic growth in this country. Businesses are, especially small businesses like this one.

So, America's small business owners, people like Dave Sullivan, have always been the backbone of America's economy. These entrepreneurial pioneers, they embody the spirit of possibility. Tireless work ethic, simple hope for something better that lies at the heart of the American idea. These are the men and women willing to take a chance on their dream. They've got good ideas, and then they've got the drive to follow through.

They've started mom-and-pop stores, and they've got garages that they open up and they start tinkering and suddenly, that leads to some of America's biggest and most successful businesses. Ordinary Americans with a dream to start their own business, they create most of the jobs that keep our workers employed. In fact, over the past decade and a half, America's small businesses have created 65 percent of all new jobs in this country.

Now, the problem is, is that our small businesses have also been some of the hardest hit by this recession. From the middle of 2007 through the end of 2008, small businesses lost 2.4 million jobs. And because banks shrunk from -- from lending in the midst of the financial crisis, it's been difficult for entrepreneurs to take out the loans that they need to start a business, and for those who do own a small business, it's difficult to finance inventories and make payroll or expand if things are going well.

So, government can't create jobs, but it can create the conditions for small businesses to grow and thrive and hire more workers. Government can't guarantee a company's success, but it can knock down the barriers that prevent small business owners from getting loans or investing in the future, and that's exactly what we've been doing.

When Dave wanted to expand this company last year, he received a loan from the Small Business Administration that was part of the Recovery Act, part of the stimulus. It's a loan that allowed him to pay the bills and purchase new equipment. Last fall, he was even able to increase his workforce. And today he feels optimistic that he'll be able to hire more workers in the near future.

Bill Puglisi and his brother Rick are also here with us today. Where are Bill and Rick? Where are they? There they are right there. All right.

(APPLAUSE)

They run -- good to see you guys. They run a small business called Imperial Textiles, and thanks to the SBA loan that they received, they didn't have to lay any workers off last year. In fact, they were able -- they were even able to purchase a new building. Is that right?

So, today they're starting to look to hire again.

You guys can sit down.

(LAUGHTER)

All across America we've taken steps like these to help companies grow and add jobs. Last year, we enacted seven tax cuts for America's small businesses. As well as what we call the Making Work Pay Tax Credit that goes to the vast majority of small business owners.

So, so far the Recovery Act has supported over 63,000 loans to small businesses. That's more than $26 billion in new lending. More than 1,200 banks and credit unions that had stopped issuing SBA loans when the financial crisis hit are lending again today. More than $7.5 billion in federal Recovery Act contracts are now going to small businesses.

Right now, a series of additional tax incentives and other steps to promote hiring are going to take effect. Because of a bill that I signed into law a few weeks ago, businesses are now eligible for tax cuts for hiring unemployed workers, companies are able to write off more of their investments in new equipment.

And as part of health care reform, 4 million small businesses recently received a postcard in their mailbox telling them that they could be eligible for a health care tax cut this year. That's worth maybe tens of thousands of dollars for some companies, and it's going to provide welcome relief to small business owners who too often have to choose between health care and hiring.

When we stopped over at Duff's (ph) to get our wings, one of the customers there was a woman who was a small business owner, she had a courier service. And I asked her, what is the biggest challenge you got? She said, trying to keep up health care for me and my workers, and she was appreciative that she's going to get a 35 percent tax break on her health care costs this year.

(APPLAUSE)

And I told her that -- and over the next several years, we're setting up an exchange where she as a small business owner will be able to buy into a big pool that all these members of Congress are a part of. So -- with millions of members, that's going to give her more leverage with the insurance companies. That's going to drive down her costs. She offered me to have some of her wings as a consequence. I said, I had already put in an order.

So, all these steps have helped. They're going to help. But I believe we've got to do even more to give our small businesses a boost. And maybe the single most important thing we can do right now is to help ensure that credit-worthy small business owners can get the capital that they need.

So, in my State of the Union Address, I called for a $30 billion small business lending fund. That would help increase the flow of credit to small companies that were hit hard by the decline in lending that followed the financial crisis.

And last week, I sent Congress this legislation, which now includes a new state small business credit initiative, an initiative that will help expand lending for small businesses and manufacturers at a time when budget shortfalls are leading states to cut back on vitally important lending programs, and I've asked Congress to work with us to extend and enhance SBA programs that have helped small business owners get loans so they can create more jobs.

That's our small business agenda, that's our jobs agenda, empowering small businesses so they can hire.

Now, I hear a lot of noise from some of our friends out there that say this is nothing more than big government. I want everybody here to understand -- I don't understand -- I personally don't think that giving tax cuts to businesses is big government. I don't understand how helping businesses get loans so they can grow and hire more workers is big government. I'm not interested in another debate about big government versus small government. I care about whether government's meeting its responsibilities to the people it represents.

Now, I want to unleash the great power of our economy so Americans who are looking for work can find it. And I'm hopeful that our small business agenda doesn't fall victim to the same partisanship that we've seen over the last year. Helping businesses should -- to create jobs should be something that both parties can agree to --

(AUDIO GAP)

OBAMA: -- founded more than a decade ago, you've done all that's asked of Americans who hope to pursue the dream of owning their own business. I mean, you can just tell Dave's just got a lot of energy. You can tell the guy loves his business, he loves his employees. And what he did was, he took a risk on a good idea. Then he worked hard for that success. He's met his responsibilities to his employees and to his customers.

Millions of small business owners and workers across the country have met those same responsibilities. And now it's time that responsibility, that same responsibility, that same success, is rewarded with the opportunity to keep growing, keep hiring. Keep contributing to the success of your communities and your country.

That's the opportunity that we're providing today. That's the opportunity I will continue to fight for as your president in the weeks and the months ahead.

I want everybody here to know, in Buffalo and all across the country, we are on a course that is working. This company makes me want to double down and work even harder, because I'm absolutely confident that if we continue to take responsibility to invest in our future, that our brightest days are still ahead of us.

Thank you very much, everybody. Thank you.

(APPLAUSE)

Thank you!

So -- thank you!

(APPLAUSE)

So, thank you, guys.

(APPLAUSE)

Everybody can have a seat.

So, I've got time for a couple questions.

Yankees fan, right here. Well, hold on a second. You know, we got a mike so everybody can hear you, even though I can tell you've got a decent voice.

Introduce yourself, sir.

QUESTION: Frank Kaperasoso (ph); Depew (ph), New York.

OBAMA: Good to see you.

QUESTION: Good to see you, sir.

My question is, during your term of office, will the Buffalo see the transit system improvement for this country arrive here in Buffalo?

OBAMA: You know, it's a great question. And I know that, you know, the issue of infrastructure and transit, transportation, is big here, but it's big all across the country.

The Recovery Act that we put forward had one of the biggest investments in infrastructure since Eisenhower started the Interstate Highway System, but the backlog of work and projects that need to be done is so big that it's going to be a multiyear process that we've got to embark on.

My hope is that democrats and republicans working together are going to be able to find a long-term financing mechanism and that we start investing, not just in highways but also in mass transit, high- speed rail, and especially along the eastern corridor and, say, where I'm from, Chicago, where you've got Chicago, Detroit, Cleveland, St. Louis, Indianapolis.

You know, you've got all these cities that are pretty close by, they're half hour, 45-minute flights, but if you had a high-speed rail system, a lot of people would end up using the rail system instead of flying. It would be more convenient for a lot of folks, and you wouldn't have to take off your shoes.

(LAUGHTER)

It would be good for businesses, because if we're building infrastructure, that means companies like Dave's potentially have new sources of business.

It would be good for our environment because one of the things, obviously, that we have to recognize is, is that no matter what we do, oil prices are going to be going up over the long term. I mean, year to year, they may vary. Sometimes it's four bucks a gallon at the pump, sometimes it drops back down to 2 1/2. You're not always clear what's going on, but the long-term trend is always going up because countries like China, they're starting to buy cars and countries like India are starting to buy cars, and so the demand on petroleum and fossil fuels is going to be greater and greater.

So, we've got to get a first-class transit system, and we don't have one now. We used to be at the top. Now you've got China, they're building multiple high-speed rail lines all across the country leaving us behind. But it's not just transit; it's our ports, our airports, you know, our sewer systems, our water systems. We're going to have to figure out how do we make those kind of long-term investments, but do so in a way that doesn't increase our deficit. And that's going to be a challenge, but I think it's going to be a priority.

Good question.

(APPLAUSE)

And Yankees are doing pretty good right now, but, you know, I'm a White Sox fan, and we're going to come after you. We got started a little slow.

All right, I'm going to go boy, girl, boy, girl here. I want to make sure that folks know I'm fair.

OK. Hold on a second, let's get the mike.

QUESTION: Thank you very much, Mr. President.

About a month ago, Senator Hatch visited Buffalo, and it was right after the health care bill was passed, and he called it the Europeanization of America, using it as a derogatory term.

What do you make of this?

OBAMA: Well, you know, first of all, Orrin Hatch is a gentleman. He was just visiting with me in the Oval Office, and I enjoy his company.

This is sort of a reporter question, though, isn't it? This is a budding reporter.

(LAUGHTER)

There's been a lot of rhetoric floating around on this health care bill, so I'll just explain very simply what's in the bill, and then you can make your own judgments instead of -- instead of us slapping labels on it. Here's what the health care bill does.

Number one, it's an insurance reform bill, and some of these insurance reforms are starting to take effect this year. So, for example, one of the reforms ensures that all insurance companies have to let you keep your child on your health insurance up until 26 years old. Because, as a lot of you know, when you leave college, sometimes getting that first job, you may not be able to get health insurance right away. And so, we want to be able to make sure that those young people can stay insured until they get a job that has health insurance.

Another insurance reform is making sure that insurance companies aren't drop you when you get sick. Which is a practice, unfortunately, that happens to a lot of people.

Another insurance reform is making sure that you don't find yourself after you've gotten sick having hit what's called the lifetime limit, where, heaven forbid, you've got an illness that's really expensive, and you missed the fine print that said at a certain point the insurance companies stop paying, and so you go bankrupt anyway even though you've been paying premiums all these years.

So, a big chunk of health care reform is just insurance reform. That's number one.

Number two is what I mentioned already, which is tax credits to small businesses so that they can afford to either keep their employees' health insurance or they can start providing health insurance to employees that don't already have it. And for most small businesses, they're going to get up to 35 percent tax break on their health insurance bills. And if you talk to small businesses, that's a big deal.

Number three, for people who don't have health insurance -- and, by the way, the majority of people that don't have health insurance are working people. Really poor folks who don't work, they're on Medicaid. They already have health insurance. It's working families and middle-class families and a lot of sole proprietors and small business owners who don't have health insurance.

So, what we're saying to them is, we are going to set up an exchange, which is basically a marketplace where you can buy your health insurance through this big exchange, and you'll be part of a big pool which gives you better negotiating power with the insurance companies. That will drive down your premiums. And if even with a better rate you still can't afford it, we are going to give a tax credit to help you afford it. All right?

And finally -- now, there are all kinds of other aspects of it in terms of encouraging prevention and funding prevention, but the other big piece of this is we want to work through the Medicare and the Medicaid system to figure out how do we start controlling costs. Because even if you held the insurance companies, you have to insure people with preexisting conditions and you can't drop people if they're sick, and even if you allow people to buy through the exchange so it drives down their costs, if the underlying costs of health care keep on going up, then our costs are still going to go up.

And so we've got to try to encourage the overall health care system to be smarter and use its money more effectively. And I'll just give you one example that probably a lot of you have. Have you ever noticed that doctors' offices are the only place where you still have to fill out forms like three, four times in a row? Well, part of it is just because every other part of our economy is computerized, but somehow that's not true in our health care system.

So what we want to do, for example, is provide the incentives for hospitals and doctors and so forth to get electronic medical records. And we want to tell the doctors, you know what, instead of us reimbursing you every time you take a test so you end up going to -- because of something wrong, you go to the doctor, you get one test, then he sends you to the specialist, then you get another test, then you go to the hospital, you get a third test. We want to -- we're going to pay you for one test and then e-mail it to everybody else.

Those are the kinds of things that help to save money over the long term. Now, we've got to try a bunch of different things in order for us to save money, but that is our basic approach.

So, here's the bottom line to your question. If you've got health insurance that you're happy with, you're going to keep it. Nothing -- you don't have to do anything. The only thing that you're getting is the insurance company can't drop you if, for example, your child turns out, you know, to have a chronic condition. So, it's giving you more security.

If you don't have health insurance, we're building off the free market, off the existing system of private employer-based insurance, and we're saying, this is going to give you a chance to get health insurance that's a little bit cheaper. I don't know what that's called, I just think it's a good idea. All right?

(APPLAUSE)

OK. Gentleman here had a -- had a -- had a question.

QUESTION: I'm going to cheat with a two-part question here.

What, if anything, I guess, other than political talk is being done to eliminate the Alternative Minimum Tax? And what's the argument, if any, to just completely do away with the IRS and have a flat tax that's equitable for everyone?

OBAMA: The -- for those of you who don't know, the Alternative Minimum Tax is something that was instituted a while ago. And basically, what happens is -- the original concept was that people were using all these loopholes, and so some of the wealthiest Americans were paying no taxes.

And so the idea was, you know what, you get all these deductions and as long as you're not abusing them for your home or your, you know, your business expenses and what have you, you can take these itemized deductions. But if at a certain point it leaves somebody who is making $1 million a year to pay no taxes at all, that's a problem, so we're going to have this alternative way of calculating your taxes to make sure you at least pay the same thing as your secretary does or your receptionist does, a portion of your taxes.

Here's the problem, they didn't index it. Meaning that they didn't make sure that the amount got adjusted each year so that it would take into account inflation. And so each year what's happened is, as inflation goes up, you know, what, you know, $250,000 today obviously buys -- doesn't buy the same thing as it bought 20 or 30 years ago. And so more and more families, first in the upper middle- class, but it's starting to creep into the middle-class, are being affected by this Alternative Minimum Tax.

To eliminate it, though, would create this huge hole in the budget. So what happens is, each year Congress slaps on what's called a patch to make sure that it doesn't affect too many middle-class people, and so they appropriate $50 billion a year at a time to close the hole.

That was, by the way, part of the Recovery Act this year was $70 billion of the Recovery Act was just designed to make sure that the AMT didn't affect more people.

But I think the point you're making is, why aren't we just solving this over the long term. Now, that's true for a whole bunch of things in our tax system. And the truth of the matter is, is that we're going to have to spend the next couple of years making some very hard decisions in terms of getting our deficit and our debt under control.

It's not going to be any fun. It's not going to be as painful as it will be if we put it off, but it's still going to be a little bit uncomfortable. It's like going through the family budget, you know, you started getting too many things you couldn't afford and then you're going to have to start making some decisions.

We -- what I've done is I've put together a fiscal commission made up of democrats and republicans, as well as private-sector folks, so we've got some objective people on it. It's chaired by a former senator, Alan Simpson, and Clinton's former chief of staff, Erskine Bowles.

And their job is to report back to me and to Congress over the next five, six months, to give us a package of solutions to start getting the deficit more effectively under control. One of the things I think is going to be tax reform that they'll recommend. And that should include simplification and it's got to make sure that it's more fair.

The main argument -- the last point I'll make on this. On the fair tax, the main argument that people make against the fair tax is right now we've got a Progressive Income Tax. I made a lot of money last year because my book sold a lot. And so, I wrote a really big check to Uncle Sam. My rate was higher than somebody who made $40,000 a year. So, we've got a Progressive Income Tax, meaning that the more you make, the higher --

VELSHI: All right, interesting conversation the president is having in response to a question about Alternative Minimum Tax and tax reform. He says he wants tax reform that simplifies and is more fair, but he did say a fair tax is not a progressive tax. He didn't use the word regressive, but that's a very interesting conversation to have.

We're going to continue to monitor the president's conversation, I want to get ready, though, for "RICK'S LIST." So, let's just take a quick break, we'll keep our eye -- our eyes and ears on the president and we'll be right back.

(COMMERCIAL BREAK)