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The Situation Room
President Obama Vows to Slash Deficit; Fiscal Health of Nation
Aired February 23, 2009 - 15:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
WOLF BLITZER, CNN ANCHOR: Happening now, President Obama leads a brainstorming session on ways to slash the federal deficit that's ballooning, even bigger on his watch. We're standing by to carry his remarks live. Also, he's facing some stimulus backlash from both Republican governors and some conservative Democrats.
Plus, the federal government may claim a bigger stake in America's largest financial services company. Could the nationalization of banks be next?
And from Wall Street to the White House, is anyone giving the public confidence that the economy can indeed be fixed? This hour, trust issues revealed.
I'm Wolf Blitzer. You're in THE SITUATION ROOM.
Right now, President Obama making an ambitious promise to cut the nation's budget deficit in half by the end of his first term. He's wrapping a White House summit on ways to do that nearly a week after he signed the stimulus package that set taxpayers back by $787 billion.
We're going to go to the White House and hear what the president has to say momentarily, but let's go to our White House correspondent, Dan Lothian. He's got more now on what is going on.
A really very busy day for the president today, Dan.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: A real busy day. And you know, he was talking about the federal deficit, about the budget. He was also talking about the stimulus package. And the president said that on Wednesday, he plans to release $15 billion from that $787 billion to go to states to help them deal with the rising Medicaid costs. But today, he also challenged his critics.
(BEGIN VIDEOTAPE)
LOTHIAN (voice-over): President Obama has already signed the stimulus bill, but he's still fighting opposition to it.
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: Most of the things that have been the topic of argument over the last several days amount to a fraction of the overall stimulus package that sometimes get lost in the cable chatter.
LOTHIAN: The so-called "cable chatter" has been growing louder.
GOV. HALEY BARBOUR (R), MISSISSIPPI: There's some we will not take in Mississippi.
GOV. BOBBY JINDAL (R), LOUISIANA: This isn't free money.
UNIDENTIFIED MALE: We're digging yet another hole.
LOTHIAN: Republican governors threatening to turn down some federal dollars, like money for unemployment aid, because, they say, it could lead to tax increases down the road.
Speaking to the nation's governors, the president said a healthy debate is good, but politics should not get in the way.
OBAMA: But what I don't want us to do, though, is to just get caught up in the same old stuff that inhibits us from acting effectively and in concert.
LOTHIAN: As the Obama administration tries to right the economy, key officials are deconstructing the crisis and searching for solutions. At the Fiscal Responsibility Summit, economists, congressional leaders and White House officials are looking at challenges facing health care and Social Security, tackling the deficit and the overall economy.
MARK ZANDI, MOODYSECONOMY.COM: Whether from a natural disaster, a terrorist attack, or a financial calamity, crises of the magnitude of the current only end with overwhelming government action.
LOTHIAN: And that, says the president, will take time.
OBAMA: And that's why the budget I will introduce later this week will look ahead 10 years and will include a full and honest accounting of the money we plan to spend and the deficits we will likely incur.
(END VIDEOTAPE)
LOTHIAN: The president wants to cut the federal deficit by half over the next four years. That deficit expected to be around $1.3 trillion this year. And Wolf, White House Press Secretary Robert Gibbs saying today that everyone's going to have to share in the pain.
BLITZER: Are they giving any indication on his address before a joint meeting of the U.S. Congress tomorrow night? That's going to be a major address on his part, the first time he's going before both chambers of Congress.
LOTHIAN: That's right, Wolf. And the indication we're getting, it's going to be more about the economy again. The president will be taking a little bit about the budget deficit as well, and talking about everything that he has done to try and jump-start the economy. That's pretty much what we'll be expecting to hear tomorrow night.
BLITZER: All right. Dan Lothian, thanks very much for that
Gloria Borger is here.
We're going to be hearing the president of the United States. There you see live pictures of the president, Gloria. He's thanking some of the folks there. He's at this economic stimulus Fiscal Responsibility Summit, as it's called, and he's just getting ready to speak.
In fact, let's listen in right now.
OBAMA: I understand you guys had great breakout sessions, and my advisers just filled me in on some of the issues that came up. I want to just provide a few opening remarks, and then I'll just open it up for questions and comments.
The idea here was to bring everybody together because it's been a long time since we had this conversation. And over the last eight years, I think we've seen a continued deterioration in the government's balance sheets.
My sense is that, despite partisan differences, despite regional differences and different priorities, everybody is concerned about the legacy we're leaving to our children. And the hope was that if we had a forum like this, to start talking about these issues, that it would turn out that the real opportunities for progress -- there are going to be some areas where we can't make progress, but that we have more in common than we expect. And I appreciate that while we may have different opinions, there's a renewed willingness to put some concrete ideas on the table, even on those issues that are politically tough, and that's real progress.
A couple of takeaways that my staff indicated to me.
There was a healthy debate on Social Security, but also a healthy consensus among some participants, including Congressmen Boehner and Hoyer, as well as Senator Graham and Senator Durbin, that this was a moment to work in a bipartisan way to make progress on ensuring Americans' requirement security. And I think one of the things we want to do is to figure out, how do we capture that momentum?
Over the long run, putting America on a sustainable fiscal course will require addressing health care. That seemed to be an issue that there was a lot of consensus around. Many of you said what I believe, that the biggest source of our deficit is the rising cost of health care. It's a challenge that impacts businesses, workers, and families alike. And voices as varied as Senator Alexander, Douglas Holtz-Eakin, to Senator Baucus and Senator Dodd and Representative Waxman, all agreed to try to tackle health care this year, which -- I think that offers extraordinary promise, although peril as well.
The tax reform discussion underscored a clear agreement that the tax process has to be simplified for all Americans. The task force on the budget process yielded some unanimous agreement that the existing process wasn't working. The question is whether we'll have the commitment and discipline to do what we know needs to be done and whether we need to create some new mechanisms to deal with these challenges.
Now, I want to make sure that the conversation doesn't end when we go home today. We've got a lot of hard choices to make, we need to build off this afternoon's conversation and work together to forge a consensus. So one of the things that I'm hoping to do is that my team, each of whom were taking copious notes during the course of these respective breakout sessions, will issue a report or a summary of the conversation.
It will be distributed to each of the participants in those respective discussions. We will then ask for concrete ideas, either about substance or process, and we will ask that you get those back so that we can then issue a final report coming out of this conversation in 30 days.
And I think somebody just dubbed this the Fiscal Sustainability Project. So that's as good of a name as any. And the idea then, is that there will be a constant loop between the White House and all of you about how we should move forward on this. And hopefully, this will start breaking down into some concrete takeaways and tasks.
Some of the recommendations that have been made are already reflected in the budget that we're proposing. Some new ideas may have arisen that we did not think of, and that can be incorporated as the budget process moves forward in Congress.
And so we are very much looking forward to hearing from your ideas, both about process and about substance. And then we will, in 30 days' time, be able to come out with a series of recommendations.
In some cases, there may be some things that we can do by executive order that don't require legislation, but there seems to be some consensus, are smart things to do. In other cases, it's going to require some legislative decisions, and we're going to collaborate closely with the relevant chairs and committees that have jurisdiction.
So, with that, let me just stop. And what I want to do is just get some comments.
A lot of you have been working hard on this, but I'm going to use my presidential prerogative and call on a couple of people first. And then if other people have comments that they want to offer, please raise your hands.
And I'm going to start with John McCain because -- and you know, he and I had some good debates about these issues.
(LAUGHTER)
But -- and I mean what I say here -- I think John has also been extraordinarily consistent and sincere about these issues.
And I want to see, John, if you've got some thoughts about where we need to go and some priority areas. I know you were in procurement, for example, which is an area I know we would like to work on, together with you.
SEN. JOHN MCCAIN (R), ARIZONA: Well, thank you, Mr. President. And thank you for doing this. I think it's very important, particularly the breakout session that we had. Our secretary of homeland security was our leader, and so we got -- I think it was a very fruitful discussion. Just one area that I wanted to mention that I think consumed a lot of our conversation on procurement. It was the issue of cost overruns in the Defense Department.
We all know how large the defense budget is. We all know that the cost overruns. Your helicopter is now going to cost as much as Air Force One.
I don't think that there's anymore graphic demonstration of how good ideas have cost taxpayers an enormous amount of money. So the -- we will -- and I know that you've already made plans to try to curve some of the excesses in procurement. We really have to do that.
We're going to have to pay for Afghanistan, as you well now, and we're not done in Iraq. But most importantly, we have to make some tough decisions -- or you, Mr. President, have to make some tough decisions about not only what we procure, but how we procure it.
And I thank you for the opportunity of sharing thoughts with a lot of very smart people.
OBAMA: Well, John, this is going to be one of our highest priorities.
By the way, I've already talked to Gates about a thorough review of the helicopter situation. The helicopter I have now seems perfectly adequate to me.
(LAUGHTER)
OBAMA: Of course, I've never had a helicopter before. You know?
(LAUGHTER)
OBAMA: Maybe -- maybe I've been deprived and I didn't know it. But I think it is a -- it is an example of the procurement process gone amuck, and we're going to have to fix it.
Our hope is, is that you, Senator Levin, and others can really take some leadership on this.
And one of the promising things is I think Secretary Gates shares our concern and he recognizes that simply adding more and more does not necessarily mean better and better, or safer and more secure. Those two things are not -- they don't always move in parallel tracks, and we've got to think that through.
Steny, you participated in the Social Security panel.
REP. STENY HOYER (D), MAJORITY LEADER: First of all, I think that the Social Security section was a very, very productive section. I think that some obviously (INAUDIBLE), but as was indicated earlier, John Boehner, myself, Dick Durbin...
(CROSSTALK)
HOYER: Lindsey Graham. South Carolina is not Louisiana; right? I got you.
But Lindsey Graham.
Everybody gave a very solid recommendation. And I think there was in fact a consensus from understanding the different perspectives and ways and means to get there. An objective was essentially that getting to an objective served a number of purposes. Obviously from a fiscal standpoint it served a purpose, but also in giving both seniors and young people confidence that benefits would be available to them in the short term (INAUDIBLE).
OBAMA: Thank you.
(CROSSTALK)
HOYER: I think your comment that follow through is going to be essential, if we come and have a good discussion where that's -- as John McCain said, a lot of bright people who had the (INAUDIBLE) from various different interest groups that represent large constituencies. If it just stops there, then it won't have been as useful as you want it to be and as the country wants it to be.
OBAMA: Speaking of bright people with large constituencies, Bill Novelli?
Where's bill? Is he still here?
There you are.
I know you participated in the health care panel. Bill, your thoughts on Medicare and the interest of your membership in getting an equitable solution to what is an unsustainable situation?
BILL NOVELLI, CEO, AARP: The whole entitlement thing is as you've characterized it. We have a real sustainability problem, but I think you've put the right frame on this, Mr. President, by saying that the path to sustainability is health care reform. And our group, I think, had tremendously good ideas.
Most of the policy ideas that we all know and share were on the table today. There's a lot of hard policy work that's going to have to go on, but I think we have some momentum.
And I think one of the things that also came out of the session was, we need to engage the American people. Yes, we have to think of them as patients, we have to think of them as insured or uninsured, but we also have to think of them as taxpayers and as voters. They need to understand what the tradeoffs are, what they might lose, what they might gain.
We can all do that, but nobody can do it as well as you can. You've got the bully pulpit to really carry the message to the public.
OBAMA: Bill, I appreciate that.
This is the only area where we have done a little prejudging of what needs to be done. We've scheduled a health care summit next week.
It's not that I've got summititis (ph), but rather, it's actually exactly the point that you're making, Bill, which is that everybody here understands a lot of the tradeoffs involved in health care and that there are no perfect solutions, but in the sound bite political culture that we've got, it's very hard to communicate that. And we think that it's very important to have some forms, and I talked about this way during -- way back in the primary campaign, that there is a process that the public can listen to about what these tradeoffs are, because I think some of us get on our high horse and say, we've got the answer to health care.
Well, it turns out that there are costs involved on the front end, even as the benefits accrue, you know. In the out years, there are situations in terms of people -- if they've got health insurance, sort of like what they've got now, they just want it for cheaper. There are issues in terms of providers and them feeling like they're getting squeezed. And so making sure all that stuff has surfaced in public, and we're educating the public on some of these issues, can be very important if we're going to make progress, because, you know, some of these things will ultimately involve some tough decisions and some tough votes.
Budget process.
Kent, you participated. And I want to get both your views and John Spratt's views on -- I don't know if John's still here -- there he is -- on budget process and how you think we're going to need to clean this stuff up.
SEN, KENT CONRAD (D), NORTH DAKOTA: Well, first of all, thank you for doing this. I thought it was a terrific start in the White House.
I think Bob Greenstein said it very well when he talked about us being on an unsustainable course, the debt being the threat, because we've doubled the debt in the last eight years, tripled foreign holdings of the debt last year. And we went out to finance this debt. Sixty- eight percent came from foreign entities, so that creates a vulnerability.
How do we address it? That is the $64,000 question, and that's what we addressed in our group.
I think it's fair to say there were different views. Many of us believe it's going to take some special process to bring all of the players together to write a plan so that we see the tradeoffs between what's available for health care reform, which without question is the 800-pound gorilla; Social Security, which also has to be addressed in the long term; and revenue.
Revenue is a thing almost nobody wants to talk about, but I think if we're going to be honest with each other, we've got to recognize that is part of the solution as well. And it's very hard to know, what are you going to do with Medicare unless you know what revenue's going to be? It's very hard to know what you're going to do with Social Security without knowing what revenue's going to be. So somehow, we've got to come together around the plan. And of course, that depends on presidential leadership, which you certainly provided here today.
OBAMA: All right. Thank you.
John?
REP. JOHN SPRATT (D), SOUTH CAROLINA: I participated in the 1997 balanced budget negotiations. That was the last time we were at the White House to discuss in common, Democrats and Republicans, some kind of ground where we could both (INAUDIBLE).
Thank you for doing this again. This is only a beginning.
I would agree with Kent that we need a special process. We didn't come to final agreement on exactly what that process would be. Would it be a task force or a steering committee within the Congress, or a commission from without the Congress? That's still an issue to be resolved.
I don't think it's an issue we can't resolve. And we moved towards discussion of some sort of hybrid of the two.
Clearly, that's important. I think everyone in that room would agree that, if we just (INAUDIBLE) what we're setting out to do, we need a special process about which we can accomplish it.
We need to force the issue, have some assurance that whatever we agree upon can indeed be brought to the floor of each House and brought to a vote. Many of us think it's too draconian to compare this to the Brach (ph) process where you'd get an up-or-down vote, no amendments, but there needs to be some sort of pact practice special procedure to ensure that whatever the entities come up with, it will be duly considered.
OBAMA: Thank you, John.
Since I see her sitting right next to you, Susan, you were in the procurement task force?
SEN. SUSAN COLLINS (R), MAINE: Yes.
OBAMA: Did you have any thoughts on...
COLLINS: Yes. If you look across the federal government, there are problems in IT contracts no matter where you look. And one recommendation that our group talked about is to establish some kind of (INAUDIBLE) law to apply to IT contracts.
In general, we also talked about the need for more competition and contracts for justification for cost-plus contracts. My favorite pet peeve is we don't have enough skills contracting officers. We've had an enormous increase in the volume of contracts at a time when the acquisition work forces actually declined by 22 percent. So those were some of the issues that we discussed in addition to what Senator McCain said.
OBAMA: Good.
Charlie, you're right here in front. Kent talked about revenue, you were participating in the tax reform panel.
REP. CHARLES RANGEL (D), NEW YORK: First, let me thank you for bringing us together. The secretary of the Treasury provided a lot of leadership, and making certain that we recognize how important it was to the country and the world that we do something.
The court report of the tax structure, people thought it was relatively easy to dramatically reduce the rates to make us internationally competitive. The problems, of course, were the different views they had in how you handled the individual rates.
I don't think there's any committee in the House that would be more anxious to bring forth a product whether it's in health or tax reform of Social Security, to bring forth something in a bipartisan way. And I think this is a dramatic first step to see where we're going.
As I said, I don't want to seem to be corny, but it would appear as though if America recognized the crisis, that they're not looking for a Democratic or Republican solution. And in order for us to be politically successful, they're going to have to believe that it was done in a bipartisan way.
So I think this initiative is a strong first step. I only hope at the end of the day, we can come out, maybe not in total agreement, but certainly in a bipartisan way.
OBAMA: Just a quick thought on taxes, Charlie.
My instinct is, is that you're absolutely right that the individual tax rate is always the hardest thing. There are some philosophical differences between the parties on this, and I understand that.
On the corporate side, I, at least, have always maintained that if we try and think in the same ways that we thought about in 1986, and if you closed loopholes, you could actually lower rates.
RANGEL: No question about it.
OBAMA: And that's an area where there should be the potential for some bipartisan agreement, you know, because I think on the books, the rates in the United States are high. In practice, depending on who it is that you can -- you know, what kind of accountant you can hire, they're not so high. And that's an area where we can work on.
Simplification, same thing. You know, I don't think there's anybody out here who thinks that we are making it customer-friendly for the taxpayer. And that's an area where we can make some great progress.
RANGEL: Well, if you're looking for a fight, and a partisan fight, every loophole you close is a tax increase. We have to get over that to make certain that the vast majority of businesses recognize it's in their best interest to do the right thing as it relates to those who are taking unfair advantage of...
(CROSSTALK)
OBAMA: Well, ,you were here in '86. It's been done before. We might be able to get it done this time.
RANGEL: Well, with your leadership, I'm looking forward to it.
OBAMA: Eric, you got some thoughts?
UNIDENTIFIED MALE: Mr. President, I, too, want to thank you very much for having us. It's a great opportunity, I think, for us to really come together on some of these very, very big issues.
You said before when we were in discussions on the stimulus debate that we're going to have some very tough choices to make. And we look forward to your address tomorrow night and, you know, working through some of these very big issues, as well as trying to address what's on Secretary Geithner's plate in the immediate as far as the bank fix, the housing fix, and others.
OBAMA: Good. Thanks.
Max, you were on the health care panel, but obviously you've got jurisdiction over everything.
(LAUGHTER)
OBAMA: I know how the Finance Committee Works.
SEN. MAX BAUCUS (D), MONTANA: Well, Mr. President, first, all of us are enormously grateful for what you're doing here. Not only on the specific issues, but also our fiscal problems. It needs to be done, and we deeply appreciate your taking this on together.
I'd like to make a little bit of a pitch, if you will, again on health care reform.
I think it's very symbolic and very interesting that the first person you called upon was John McCain. And that's the approach I think we need to take here generally, and specifically with health care reform.
You had a different view during the campaign on health care reform. John McCain had a different view during the campaign on health reform. But here's an opportunity for us to come up with something that's uniquely American, it's public and private. And I do believe we just keep that working together approach and keep at it, (INAUDIBLE), et cetera, and take advantage of this opportunity where the stars are now aligned. As to health care, we'll get it done.
But I was very pleased that you called on John first, because that, I think, is the tone that we have to take here to make sure we're working together.
Thank you.
OBAMA: Thank you, Max.
Jim, you got any thoughts on this?
Well, first of all, thank you very much, Mr. President, for doing this.
REP. JAMES CLYBURN (D), SOUTH CAROLINA: I was thinking when you called upon Senator McCain, I came to this Congress working for four governors, two Democrats and two Republicans. And remarkable the things we were able to do in South Carolina with (INAUDIBLE), Carol Campbell (ph), John West (ph, Dick Reilly (ph), simply because we started thinking about what we needed to do for the people of our state.
I think that what we're doing here today provides a framework for us to really get some things done for the people of our great nation, that we can do this. And I am so pleased that you set this tone yesterday. And I think (INAUDIBLE).
OBAMA: Mike, were you on the health care panel? Do you want to add some thoughts?
UNIDENTIFIED MALE: Mr. President, I too appreciate the efforts bringing these people together. We had both a number of associations, as well as the House and Senate. And one of the things I want to emphasize is (INAUDIBLE) Senator Baucus has pointed out to be bipartisan and to start at the beginning of the process, rather than at the end of the process to do that.
And we do have a task force set up in the Senate that Senator Baucus is heading up, that has had several meetings already that brought out the issues that -- all of the issues to be put on the table. And the words not to use (ph), because (INAUDIBLE).
OBAMA: Socialized medicine. Isn't that one of them?
(LAUGHTER)
There are words from both sides of the aisle.
The bigger thing is that they get principals together and then talk to the stakeholders, and then take us through the Senate process as soon as possible to do that sort of thing. Senator Kennedy and I and Senators Baucus and Grassley were at the pensions debate, and that took an hour of time on the floor, plus two amendments, to get that result, because it is (INAUDIBLE) difficult process.
So I appreciate you including that.
OBAMA: Good.
Did we have some representatives from the Chamber of Business participating?
UNIDENTIFIED MALE: Mr. President, I'm (INAUDIBLE).
OBAMA: We saw each other the other day.
UNIDENTIFIED MALE: I was in the health care discussion, and the one thing that we all agreed on was that it is absolutely imperative for both fiscal reasons, as well as personal reasons and competitive reasons, to move forward on health care. We simply cannot afford as a nation, and we certainly cannot afford as businesses, to maintain the status quo, because it is unsustainable.
And I think as Bill pointed out, and as certainly been pointed out by the people that wer participating, all the senators and members, there are a lot of good ideas out there. The time is now to put those good ideas down on a piece of legislation and move forward so we have something that delivers quality health care to everybody in this country in a way that everybody can afford it.
OBAMA: Well, business leadership I think is going to be critical.
Andy Stern is sitting right next to you.
Andy, you've been working on this front for a long time. You've got some thoughts?
ANDY STERN, PRESIDENT, SERVICE EMPLOYEES INTERNATIONAL UNION: Yes, I mean, I just wanted to say that I am sitting next to John, because he and I and Bill Novelli and others really have built a relationship over a long period of time, because we don't see this as a Democratic problem or a Republican problem. It's just an American problem, and it's time to solve it.
And if Lee Scott, and I, and business, and labor, and others can come together outside the Congress, it really is time for the Congress to get this job done, because the American people need it.
OBAMA: Nice scarf, by the way.
STERN: Thanks.
(LAUGHTER)
OBAMA: David Walker, where -- where is David at?
DAVID WALKER, FORMER UNITED STATES COMPTROLLER GENERAL: Mr. President, it's an honor to be here. Thank you for your leadership.
You touched in your remarks on our balance sheet. As a former comptroller general of the United States, I can tell you we're $11 trillion in the hole on the balance sheet. And the problem's not the balance sheet. It's off-balance sheets, $45 trillion in unfunded obligations.
You mentioned in January about the need to achieve a grand bargain involving budget process, Social Security, taxes, health care reform. You're 110 percent right. We need to do that. The question is, how do we do it?
Candidly, I think it's going to take some type of an extraordinary process that engages the American people, it provides for fast-track consideration. And with your leadership, that can happen, but that's what it's going to take (OFF-MIKE)
OBAMA: OK. Well, I appreciate that.
And, again, when we distribute the notes coming out of these task forces, I want to make sure that people are responding both in terms of substance, but also in terms of process, because we're going to need both in order to make some progress on this.
REP. DARRELL ISSA (R), CALIFORNIA: Mr. President, kind of a surprise from the procurement group that was together. We had almost universal recognition that, over the last decade or so, we've overdone, in some cases, outsourcing of critical federal requirement. And that means that, in many cases, we spend more to hire a contractor or a non- federal worker than we would pay to invest in federal workers.
And so there was -- there was universal -- Republicans, Democrats, House and Senate even...
(LAUGHTER)
OBAMA: That's not...
ISSA: (OFF-MIKE) need to assess where we can re-federalize some parts of the work force, particularly when it came to people who do the procurement and oversee the procurement.
OBAMA: This (OFF-MIKE)
ISSA: Also that we do have a system which is disadvantageous to someone remaining in the federal work force. Our retirement system pays you less and less the longer you stay. Yours is flat, by the way. One day and you get your retirement.
(LAUGHTER)
But the accrual system, in fact, causes people to leave the federal work force, to double dip, rather than being encouraged either during your working time or if we ask them to stay on past their retirement. So those areas were areas I think we had good common -- your folks, Janet, took a lot of notes. So I think you're going to see that -- that we have areas where our committees could work with you to make those changes. And they are legislative changes that could save us money.
OBAMA: Which I think would be perfect. I mean, that's the kind of stuff that's not sexy, but it ends up over time making enormous progress.
Anybody else that just want to -- go ahead.
UNIDENTIFIED FEMALE: Thank you. Thank you, Mr. President.
I just wanted to bring up that, in the health care, we talked a lot about individuals and the systems of health care that we have and looking for places that we can cut. But as a community organizer, I know that you know that investing in the community, if we look at the models across the world and the models in our country, where health care (OFF-MIKE) to be the strongest and where people live the longest, is because they have a community that has a support and a community- wide of health care.
And I think, as we look at access issues for those from Native American communities like mine, or rural America, or other places, to create that access with a community of support and have the right mid- level service providers and others that can reach the smaller communities across America.
OBAMA: That's important.
UNIDENTIFIED FEMALE: Mr. President?
OBAMA: Yes, go ahead.
REP. JOE BARTON (R), TEXAS: Mr. President, thank you for having us here at the White House. I'm going to take a little bit different approach.
Senator Baucus mentioned it and Chairman Rangel mentioned it, the need for bipartisanship. I think the House Republicans have shown that, when we're not included in the decision-making, we're disinclined to sign off on the solution.
And it's very easy in the House, since it's set up to get things done quickly if the majority's united, to forget about the minority. But if you really want consensus, I would encourage you to encourage the speaker to have a true, open process.
This is a good first step. But if this is all we do, it's a sterile step. On the other hand, if you really follow up and include everybody in the process, you're more than likely to get a solution that everybody signs off on.
And I have set or stood behind every president since Reagan in this room at bill-signing ceremonies that were the result of consensus. So I commend you for this.
OBAMA: (OFF-MIKE) I think -- I think you're making an important point. And, you know, my response, first of all, is, you know, I'm not in Congress, so I don't want to interject myself too much into congressional politics...
(UNKNOWN): (OFF-MIKE)
OBAMA: ... but -- but I -- I do want to make this point, and I think it's important. On the one hand, the majority has to be inclusive. On the other hand, the minority has to be constructive.
And so to the -- to the extent that on many of these issues we are able to break out of sort of the rigid, day-to-day politics and think long term, then what you should see, I think, is the majority saying, "What are you ideas?" The minority's got to then come up with those ideas and not just want to blow the thing up.
And, you know, I think that, on some of these issues, we're going to have some very real differences, and, you know, presumably the majority will prevail, unless the minority can block it. But you're just going to have different philosophical approaches to some of these problems.
But on the issue that was just raised here on -- on procurement, on the issues -- some of the issues surrounding health care, the way it cuts isn't even going to be Democratic-Republican. It's going to be -- you know, there may be regional differences. There may be a whole host of other differences.
And if that's -- if we can stay focused on solving problems, then I will do what I can through my good offices to encourage the kind of cooperation you're encouraging.
(OFF-MIKE) back there, and then I will -- we'll go -- we'll go right here to Tom, and then -- and then probably that's going to be it, because I think I'm already over time.
HEIDI HARTMANN, PRESIDENT, INSTITUTE FOR WOMEN'S POLICY RESEARCH: Thank you, Mr. President. Heidi Hartmann, Institute for Women's Policy Research.
I just wanted to point out that, in the Social Security group, I think there was a fair amount of consensus that, given the demographic trends, we're actually going to need to do some benefit increases for those at the bottom, where may -- we may see poverty increase, because we're going to have more older, unmarried women, more older minority people. And there was even, I think, a fair amount of consensus that, therefore, we will need to see revenue increases going into the system.
So I thought there was a surprising amount of consensus in the Social Security group.
OBAMA: Tom?
REP. TOM CARPER (D), DELAWARE: To echo (OFF-MIKE) thanks very, much for bringing us together. A couple of people said to me coming in to the meeting today, why -- why is the president continuing to -- to reach out to the -- to the minority?
And I think the answer lies, in part, in -- a couple of weeks ago, the minister in our church gave a sermon that was based on the "Parable of the Sower," sower of seeds. You may recall that, you know, some of the seeds were sown in stony ground and rough ground, and some of the seeds were sewn in places in the thorn. Some of the seeds were sewn in the -- in shallow soil and nothing much came out of those, but some of the seeds were sown in fertile soil and multiplied a hundredfold.
I urge you to continue to reach out, not just to Democrats in the House and Senate, but to continue to reach out to Republicans in both chambers, as well, because some of that will fall in -- in fertile soil. And when it does, the minority has a responsibility... (CROSSTALK)
OBAMA: Well, I -- I will certainly do that, Tom, because I'm just a glutton for punishment.
(LAUGHTER)
I -- I'm going to keep on talking to Eric Cantor. Some day, sooner or later, he's going to say, "Boy, Obama had a good idea."
(LAUGHTER)
It's going to happen. You watch. You watch.
Well, look, the -- just in closing, again, the sooner everybody can respond to our report coming out of each of these groups, the sooner than we can circulate a -- a summary of everything that happened and then start speaking with you individually and in groups about moving the process forward.
One last point I want to make, just because I think that, from the press perspective, there -- I was reading some of the newspapers today, and there was this sense of -- that maybe we were doing a pivot because we had just moved forward on the recovery package, now we're talking about fiscal responsibility. How do those two things match up?
I just want to be very clear about this. I have said it to the governors this morning, and I have said it to my staff in the past.
We chose to move forward on a recovery package because there was a strong sense among the vast majority of economists that if we did not try to fill a $1 trillion-a-year hole in demand, because of the drastic pulling back of businesses and consumers, that the recession would get worse, unemployment would increase, and as a consequence tax revenues would go down and the long-term deficit and debt projections would be even higher.
That was the basis for the decision. It was not ideologically driven. I have no interest in making government bigger for the sake of it. I have got more than enough on my plate, as Lindsey knows, between Afghanistan and Iraq, and -- and issues of terrorism, that if -- if the private sector was just humming along and we could just make government more efficient and not have to worry about this financial crisis, I would love that, but that's not the circumstance we find ourselves in.
So I made the best judgment about the need for us to move forward on a recovery package. There were some differences, significant differences between the parties about this. I would suggest that, if you look at the differences, they amounted to maybe 10 percent, maybe 15 percent of the total package.
There wasn't a lot of argument about countercyclical payments to states to make sure that people had extended unemployment insurance or food stamps. There wasn't a lot of disagreement about some of the infrastructure that needs to be repaired, and there wasn't a lot of disagreement on the tax cut front. Fifteen to twenty percent of it, there were some disagreements about.
But the reason I -- I make this point is that, if we're going to be successful moving forward, it's important for us to distinguish between legitimate policy differences and our politics. And the reason that I -- there is no contradiction from my perspective in doing the recovery package first, but now focusing on the medium and long term, is because our hope is that this economy starts recovering.
We will have taken a hit, in terms of our debt and our deficit, but, as Bob Greenstein said, the recovery package will account for about 0. 1 percent of our long-term debt. The real problems are the structural deficits and the structural debt that we've been accumulating and all of us are complicit in.
So we've got to get that taken care of. We would have had to take -- get it taken care of whether or not there was a recession. This just underscores the urgency of it. And I'm hopeful that we move forward in that spirit in the days and weeks and months to come.
So thank you, everybody. Appreciate it.
All right.
(APPLAUSE)
WOLF BLITZER, CNN ANCHOR: Truly extraordinary moment at the White House for the past 40, 45 minutes or so, the president of the United States letting the cameras inside as he meets with lawmakers and others, gets their input on what needs to be done in the short, medium, and long term when it comes to fiscal responsibility.
We have a lot to digest. And we have the best political team on television getting ready to assess what happened.
Dan Lothian is our White House correspondent.
Dan, we did learn that, among -- in addition to everything else, the president is now organizing a health care summit to deal with health care reform next week.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: That's right.
And, as you heard over the past 45 minutes, that was one of the issues that had been brought up, the rising cost of health care, and the president announcing that there would be this health care summit next week.
I sent an e-mail to one of the senior administration officials to get a bit more details on that. Have not gotten back any information yet, but it just shows the kind of focus that this White House wants to put on health care, Wolf.
And one other thing I thought was kind of interesting, the president calling on John -- Senator John McCain. He was the first one that he called on, and Mr. McCain talking about the cost overruns at the Defense Department, and then bringing up this whole helicopter controversy that you -- now the president's replacement helicopter is expected to cost about $11 billion, and the president saying that he's quite comfortable with the helicopter he currently has, and joked, well, he really doesn't have anything to compare it to.
He doesn't -- doesn't -- didn't have any other helicopters in the past. So, those were just some of the highlights I found from this interesting event here at the White House today -- Wolf.
BLITZER: Yes, it was interesting, as you point out, that the first question, the first comment he wanted was from his rival, John McCain.
LOTHIAN: That's right.
BLITZER: And John McCain, as you point out, noted -- noting his experience on military matters, the procurement overruns, the cost overruns at DOD, at the Department of Defense, are historic over the years. And he made mention of Marine One vs. Air Force One. Hard to believe that a new Marine One helicopter could wind up costing as much as a giant Air Force One.
All right, Dan, I'm going to have you stand by.
Gloria Borger, Candy Crowley, they're standing by as well.
We will take a quick break. We will continue our coverage of what is going on at the White House right after this.
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN breaking news.
BLITZER: Another awful day on Wall Street.
The breaking news we're following, stock market -- stock market indices have plunged to their lowest level now in more than 10 years, amidst all of this, what's going on.
Let's go to CNN's Susan Lisovicz. She's watching the New York Stock Exchange for us.
How bad was it today, Susan?
SUSAN LISOVICZ, CNN CORRESPONDENT: Well, I mean, it was a rout.
We have grown accustomed to them of -- unfortunately, Wolf, you know, where the three major averages each lost at least 3.5 percent, but, more importantly, new lows for the bear market. And just how low can you go? Well, the Dow and S&P 500 closed at levels last seen in the spring of 1997.
What were some of the things that really spooked investors today? Well, this afternoon, there was a report, unconfirmed, that AIG is going -- which is already 80 percent owned by the government, has -- will need additional funds from the government to begin -- to continue operating after next week, when it may report, according to CNBC, the worst corporate losses in U.S. history.
That is not something that really inspires a lot of confidence. And -- and that really accelerated the downturn.
BLITZER: Yes.
LISOVICZ: Wolf.
BLITZER: This not moving in the right direction on Wall Street. We will see what happens in the coming days.
Susan, thanks very much.
Let's get to an expanded edition of our "Strategy Session" right now.
Joining us are Gloria Borger, our senior political analyst, Candy Crowley, our senior political correspondent. Donna Brazile, she's joining us, the Democratic strategist, and Alex Castellanos, the Republican strategist. They're all part of the best political team on television.
It was pretty extraordinary, what we just saw at the White House, when the president let the cameras in to hear that little conversation, after several hours of discussion amongst the president and his team, Democrats, Republicans, on what needs to be done to bring some fiscal responsibility to the U.S. government.
GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: I -- I have not seen anything like it, Wolf.
On the one hand, it was kind of academic, talking about breakout groups, about these economic problems. On the other hand, it was kind of like a parliamentary Q&A system, where the president called on John McCain, the leader of the opposition, if you will, although some would question whether...
(LAUGHTER)
BORGER: ... he really is, and then started having a conversation with Republicans and Democrats about the dire financial situation that we're in, in front of the American public.
It was a little stilted at times, but -- but, on -- on the whole, we haven't seen anything like this in years and years.
BLITZER: And he's showing a lot of ambition, Candy, the president. One day, it's the economic stimulus package, the bailout of the financial sector.
And, today, he announces, next week, he's having a health care reform summit at the White House. He's -- he's not going away from trying to get some more health care for Americans who are without health insurance
CANDY CROWLEY, CNN SENIOR POLITICAL CORRESPONDENT: He's not. And they think they have made a down payment in the stimulus bill, by the way, by offering Medicaid to the unemployed. But, you know, beyond the policy of this, there's also a message going out, saying: I am on the job.
I think that's why you saw this particular meeting. They clearly didn't need to have it in front of the cameras. But this is the message. A, I promised I would be open, and here I am being open. But, B, I am on all of these things I told you I would work for -- because, as we all know, we really need to settle down the American consumer. And that's what this is about.
BLITZER: And it was interesting, Donna, that he brought in these Republicans, not only John McCain and Lindsey Graham, but a -- a conservative Republican congressman like Darrell Issa of California, among others. He wanted them to weigh in. And they certainly did.
DONNA BRAZILE, CNN POLITICAL ANALYST: I think it's very important, Wolf, that the president reach out to Republicans and to once again offer them an invitation to help leaders out of this fiscal nightmare.
The president is clearly interested in -- in listening to their ideas. He wants to try to get this budget under control. And the only way for the country to get back on this fiscal feet, so to speak, is to -- to get everybody in the room and to start talking to each other, not at each other.
BLITZER: And -- and they want to talk also about some of the long- term issues as well.
Alex, as you well know, unless they deal with these long-term entitlements, as they're called, like Secret Service and Medicare, especially as the baby boomer generation begins to take part in all of that, the budget deficits of today and the national debt of today will look like small potatoes in five or 10 years, or certainly 15 years, unless they -- they start taking action now.
ALEX CASTELLANOS, CNN POLITICAL CONTRIBUTOR: Well, that's going to be one of the real big tests for Democrats.
So far, President Obama has asked Republicans to spend more. And that's, of course, tough for Republicans to do...
(LAUGHTER)
CASTELLANOS: ... once -- once -- once Republicans remember who they're supposed to be.
(LAUGHTER)
CASTELLANOS: But it's going to be interesting when he asks Democrats to cut entitlements, when he asks Democrats to look at these big government programs that we're all addicted to. And Democrats traditionally haven't shown a bit willingness to do that.
We saw some wonderful, I think, bipartisan politics today, that spirit of reaching out and getting everybody in the room. I think Gloria's exactly right. We haven't seen that in a while. But that doesn't mean we have seen bipartisan government or policy. This stimulus package is very partisan, is very ideologically left of center.
So, how do you move -- you know, you -- you're not going to have bipartisan politics succeed unless you get some government and policy that is just not so far left.
BORGER: But -- but, you know, Wolf, I think the president made it very clear.
He said, we're going to have different philosophical approaches. And he understands that. He said, OK, you want the majority to be inclusive? Then the minority has to be constructive.
So, it was very clear that he was laying down the gauntlet there. I will work with you, but I just don't want to hear no, no, no.
BLITZER: But, you know, Donna, Eric Cantor, the number-two Republican in the House of Representatives, the minority whip, he -- he made it clear he want to find areas where they can cooperate.
BRAZILE: You know, Wolf, 22 Republican lawmakers spent time during their congressional recess talking about the stimulus package and how they helped to shape it.
Now, you can't have it both ways. You cannot say that this is a bad deal or a bad prescription, and then go around the country and say that there are good parts of it.
There are wonderful parts of this bill that the president is urging Republicans to embrace the stimulus package, to sit down with him, to meet it halfway, so that we can get this country back on its feet again.
BLITZER: Why do you think, Candy -- and it's hard to understand Wall Street -- despite all these efforts to reach out and bring the country together, find this bipartisanship, Wall Street continues to slide and slide and slide?
CROWLEY: I have -- I have -- I'm going to venture a guess here. There are not -- are not a lot of true believers on Wall Street.
(LAUGHTER)
CROWLEY: I mean, I think they have to see it to believe it. They look and say -- and change -- and Wall Street doesn't like change. I mean, that's the other thing.
Every time somebody talks about changing something, it goes down. So, I think it -- the proof is a little later on, six months.
BLITZER: All right, I'm going to have all of you guys stand by, because we have a lot more to discuss. We will take a quick break right now. President Obama agreed to hold what he's calling that fiscal responsibility summit after having his feet held to the fire by some fellow Democrats. We're going to introduce you to some of those Democratic conservatives within his own party who are trying to pressure him to cut the deficit.
Stick around. You're in THE SITUATION ROOM.
(COMMERCIAL BREAK)
BLITZER: As you just saw live here in THE SITUATION ROOM, President Obama briefly turned the White House into a think tank of sorts today to try to tackle America's enormous budget deficit.
He's just wrapped up a meeting with leaders from the worlds of politics, business, academia, a meeting that some conservatives within his own Democratic Party asked him to go forward with.
Let's go to our senior congressional correspondent, Dana Bash. She's working this part of the story for us.
An intriguing sidebar, if you will, to what's going on.
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: That's right.
You know, we certainly have seen and heard about a lot of pressure from Republicans on President Obama to rein in spending, but the truth is, a lot of this agenda really depend on keeping conservative Democrats happy.
(BEGIN VIDEOTAPE)
BASH (voice-over): On the walls of her Washington office, Congresswoman Stephanie Herseth Sandlin displays pictures from her youth in South Dakota, a constant reminder she's a Democrat with conservative roots, especially on spending taxpayer money.
REP. STEPHANIE HERSETH SANDLIN (D), SOUTH DAKOTA: Government can't solve everybody's problems. And if government can't afford to do it, then it's not good for anyone, especially the next generation, who may have to foot the bill.
BASH: That's the mantra of the Democrats Blue Dog Coalition.
HERSETH SANDLIN: Yes, I inherited the Blue Dog.
BASH: Which Herseth Sandlin leads. It wields a lot of power, with its 50 members, many newly elected Democrats who come from conservative districts.
HERSETH SANDLIN: Here we go.
BASH: Before voting for the president's $787 billion stimulus package, Herseth Sandlin and other Blue Dog Democrats met privately with White House officials, and made a demand.
HERSETH SANDLIN: We need a seat at the table, and we will support traditional Democratic priorities, so long as they are paid for.
BASH: We road along with her to the White House for the president's fiscal responsibility summit.
Driving down Pennsylvania Avenue, she insisted, the event and his new promise to reduce the deficit were the direct result of pressure from conservative Democrats in Congress to keep his promises.
(on camera): Do you feel that that is the result of the lobbying that you and your fellow Blue Dogs have done?
HERSETH SANDLIN: Yes, I do, based on the meetings that we have had, on the conversations, on the meeting with him just a week-and-a-half ago.
BASH (voice-over): She realizes cutting spending to cut the deficit won't be easy, but warns, Democrats will pay politically if they don't do it.
HERSETH SANDLIN: I don't think it's going to happen in a month or a year, but perhaps, over the course of one presidential term, we will start to see the change.
(END VIDEOTAPE)
BASH: That may be the hope, but, Wolf, House Democrats just released a $410 billion spending package left over from last year. It has an increase in spending and also a hefty amount of earmarks, pet projects, from Democrats and Republicans -- Wolf.
BLITZER: Dana Bash, on the Hill, thank you.
