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Quest Means Business
Ireland Voting on Severe New Austerity Budget. European Parliament President Says Solidarity Necessary for EU. European Stocks Up After US Tax Deal Announcement. The Boss Michael Wu Looks for New Products. President Obama Holds Press Conference About Tax Deal With Republicans; President Obama Speaks on Compromise with the Republicans on Tax Cuts
Aired December 07, 2010 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HALA GORANI, CNN ANCHOR: Hi, there. I'm Hala Gorani at the CNN Center, here are your headlines. Arrested WikiLeaks founder Julian Assange remains behind bars in London after a British court denied his request for bail today. The court is determining whether to extradite Assange to Sweden. Swedish authorities want to question him in a sex crimes investigation. Assange denies the allegations and is opposing extradition.
Talks over Iran's nuclear program have ended in Geneva, Switzerland. Iran's top nuclear official says the only decision made was to continue negotiating. But the EU's foreign policy chief describes them as, quote, "substantive." The talks are set to resume next month in Turkey.
British prime minister David Cameron says WikiLeaks revelations will not harm the relationship between the UK, the US, and Afghanistan. He's on a surprise visit to Afghanistan, where he met with Afghan president Hamid Karzai and British troops. Mr. Cameron also said that NATO's goal of ending combat operations in Afghanistan by the end of 2014 is, quote, "achievable."
A new British study reveals a small, daily dose of aspirin helps prevent some cancer deaths. But experts warn, more research is needed before they recommend healthy people start taking a daily pill, because aspirin overuse can cause stomach bleeding in some people.
That is a look at your headlines. I'm Hala Gorani. QUEST MEANS BUSINESS starts now.
RICHARD QUEST, CNN HOST: It is a brute of a budget. Ireland's vote on its new austerity plans.
Solidarity with responsibility, the price of monetary union, says the president of the European parliament on this program.
And President Obama has taxing problems. He's holding a press conference in this hour. I'm Richard Quest. For the next 60 minutes with you, I mean business.
Good evening. It was the second country in Europe requiring a bailout but, tonight, Ireland's parliament is voting late into the night on the harshest budget in the country's history. And, importantly, whether the swingeing cuts could make the difference between an EU rescue package and financial oblivion. We knew that they had to actually pass this budget, but now, join me as we reveal the deck of problems facing the Irish.
Now, let's begin. The Irish budget, $8 billion in new spending cuts and tax increases. That's the core of it, around 6, 6.5 billion euros. It hits every sector of the Irish economy, welfare, job benefits, pensions, public servants are to get pay cuts. You name it, they are going to be hit by it.
But the -- Brian Lenihan, the finance minister, says the scale of adjustment is demanding, the budget needs to pass, because without the budget passing, then the EU, IMF, and everybody else won't stump up the bailout money to the Irish economy.
It's likely to be the Irish government's last measure before an election, and the finance minister has insisted, small though the majority would be, it will pass.
(BEGIN VIDEO CLIP)
BRIAN LENIHAN, IRISH FINANCE MINISTER: We have been through a tumultuous two years, culminating in our application for external assistance. Today's budget is our first step in ensuring that we can get firmly back on our own feet. It is a substantial down payment on the journey back to economic health.
(END VIDEO CLIP)
QUEST: And hours earlier, EU finance ministers have given the final go-ahead to the bailout terms, 30 billion comes from loans from the E -- the financial stability mechanism, 66 billion of that -- dollars, I mean, now -- will be used to cover the budget needs, and the rest goes to help to strengthen the banks' capital requirements.
Not surprisingly, with that money, you see a -- look at that. You don't need me to point out, even the least amongst us, 18 percent, 14 percent, 14 percent, those sort of gains on a single day because of this.
Let's turn immediately if not sooner to Jim Boulden. Are we seeing -- go on. Let's hope the gains don't go quite as quickly. Jim, are we seeing those gains today just because the budget's about to be passed?
JIM BOULDEN, CNN CORRESPONDENT: I think those are dead cat bounces. Those prices are very, very low anyway, and the government has said that part of this whole reorganization, they're going to have to take over control of the banks anyway, so I think that that's a bit -- showing a bit of the problem you've had already in Irish banks. I mean, 41 euro cents is not much for a share price for a bank.
But you remember, as part of all of this, to get this budget passed, they must do that in order to get this money from the IMF, from the European Union, and from the bilateral. So, that's a very important step they're taking today.
But I listened to the press conference. I mean, I listened to the speeches, nothing necessarily shocking in there. So, I think the markets were happy with what they heard, because they didn't hear anything worse than they expected.
QUEST: These are pictures coming to us now from Dublin tonight, where we are watching the press conference taking place, or about to take place in -- from the finance minister. As you can see -- well, nothing's happening at the moment. They're waiting for it to get underway.
OK. Ireland is a done deal. The budget will pass, small majority, they'll get the money. What happens next?
BOULDEN: Well, what they have to do is, they have to follow several years of stringent program by the IMF, of course. I was looking very deeply into this, it's called the Extended Fund Facility. And the IMF will come back twice a year and look at the books.
QUEST: The troika.
BOULDEN: It isn't that they have to say, "OK, you have to have a ten percent, you have six percent, three --" They have to hit certain targets, but the targets are quote-unquote, "adaptable" to economic developments.
QUEST: OK, finally, tonight, are we any closer or further away from a crisis in Portugal and Spain?
BOULDEN: Well, if you look at the stock markets, you'd think we're getting further away from it. So, maybe a bit of a Christmas lull, and then it can all kick off again in January.
QUEST: Oh, thank you. I'm happy to just listen to you, too. Jim Boulden with that.
Ireland's debt problems have been hitting confidence across Europe. Finance ministers have been debating boosting the euro's own bailout fund. Germany, of course, Angela Merkel said she did not believe that it was necessary to put any more money into the stability facility. Luc Frieden, Luxembourg's finance minister, sided with the Germans, saying that the 700- odd billion is sufficient.
The president of the European parliament, Jerzy Buzek, who was in London, told me that the trillion-dollar safety net has given credibility to the euro zone.
(BEGIN VIDEOTAPE)
JERZY BUZEK, PRESIDENT, EUROPEAN PARLIAMENT: Solidarity is a main issue for the European Union. The European Union was built on solidarity value. And it is still working, as you see, because 750 billion euros is a lot of money, and we need, also, the responsibility. So there's no solidarity without responsibility.
It's a quite new idea. Quite new concept, is what the union needs. It's changing a lot of our approach to our relations inside the European Union. So, we are changing ourselves.
QUEST: Let's be clear. You have just taken us right into the deep waters, here, haven't you? Solidarity with responsibility. Economic governance. You're talking about a shift and a change in reality and perspective in the way Europe runs.
BUZEK: Yes. We just -- we have taken some decisions until now. They are very important for some capital requirements or financial supervision. Bankers bonuses as well. And they are, all of them, necessary hedge funds, because we would like to avoid the next crisis.
QUEST: Do you think there is an acceptance, now, that for members of the the euro zone, there has to be some greater fiscal union?
BUZEK: It is acceptance to change the reality today, because we wouldn't like to have a next crisis, and we would like to have exit strategy from the crisis. So, it's acceptance. And we would like to have our citizens to create jobs, to have bigger goal. So, it's necessary to reorganize ourselves from point of view of economic realities.
QUEST: But why is there this feeling that Europe never does anything unless a crisis is on its doorstep?
BUZEK: Don't you think that is not the same in other member states -- members of states all over the world? I think it's rather typical, because it is not very often, all over the world, that we are preparing ourselves for the worst possible environment, economic environment.
QUEST: Let's talk about the budget and the request -- you had originally wanted six percent as an increase --
BUZEK: Yes.
QUEST: For the budget. You'll be lucky if you get three, and you might even get only two, and some can give you, if things go -- Was it wise to ask for six percent when countries are cutting back?
BUZEK: We are ready to agree on the 2.91 percent increase. It is slightly below the inflation, so it's not growth, as a matter of fact, in reality.
QUEST: At a time when member countries are cutting back and are imposing austerity measures, where is your austerity?
BUZEK: I would say that we spent money on the level of the European Union in almost 95 percent for investment. And investments are necessary for growth and for exit strategy from the crisis. So, it's very important, investment in infrastructure, internet, energy, ICT, roads, railways, to create a single market of the European Union. Research, development, new technologies, education, adjust lifelong learning. Many, many points, important for our citizens at creating jobs.
(END VIDEOTAPE)
QUEST: That is the head of the European parliament, the president of the parliament, talking to me earlier. Now, debt fears didn't seem to put investors in Europe off. Strong gains, the DAX is at a two and a half year high. Mining shares soared, copper hit a record 9,000, Antofagasta with a 4.9. Also Mature (ph) up one -- I beg your pardon. Arselo Metow (ph), do forgive me, up one and a half. And Renault, Peugeot, both up more than two percent, BMW up 1.8 percent.
Barack Obama says the deal is not perfect, but it will probably have to do. The US president has struck a deal with Republicans over tax cuts. In a moment, we consider the problem he's now going to have with the people in his own party.
(COMMERCIAL BREAK)
QUEST: Welcome back. President Obama will tonight face a rebellion within his own party. He sealed a last-minute deal to keep all tax cuts from the Bush administration in place. It will put more money into the pockets of Americans over the next two years, whether they're rich or poor.
Now, giving the break to the higher -- and this is the first major compromise he's had to make with Republicans since they won control of the House of Representatives that will assemble in Washington next month. Dan Lothian is in Washington for us tonight and joins me now.
We're waiting for the president to speak, Dan. And when we look at this deal from afar, is it as obvious as just the rich get their tax break, the poor get their unemployment benefit?
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, it's not that obvious. There are a lot of other complicated parts and pieces of this deal but, ultimately, that's what it comes down to.
Why? Because these are sort of the key elements that both Republicans on the unemployment part of it and on the tax cuts of it -- part of it, the president and Democrats had been holding very fast to.
Back when the president was then candidate Obama, he was talking about extending middle class tax cuts, those families making $250,000 a year or less. And as late as a few weeks ago, frankly, right before the midterm elections, the president didn't quite draw that line in the sand, but made a very firm commitment that he did not want to see any extension for the wealthy, those millionaires and billionaires, because he said that this was something that would cost the country billions and billions of dollars, and something that the economy could not support.
But after the election, of course, everything changed, and now this is something that you see the president fully embracing, even though he says it's not something that he really likes. He believes it's something that must be done in order to provide the relief for those who really need it.
I asked one senior official, how do you add that all up at the end of the day when the president was so strongly against something, and now is pushing it forward, and this official telling me we're at a new era of compromise. So, that's what they're using to support this new position by the White House.
QUEST: Let me ask, then, Dan, which I think is crucial. A new era of compromise or a new era of weakness?
LOTHIAN: Wow. That's a very good question, and I think some would say a new era of weakness. And not -- those punches aren't necessarily coming from where you would expect them to be, which is from the right, but now from the left, as well.
I want to read you some of the quotes from Democratic senators, strong supporters of the president in the past, and now saying things like, quote, "He's capitulating under pressure." Another saying, "What do I think of it?" Talking about this deal. "Not much." Another, "What did the American people get for it, meaning the little guy and the real entrepreneur. I don't believe in trickle-down economics, I don't believe it will promote growth. I need to know the consequences to the deficit and to the debt."
QUEST: All right.
LOTHIAN: And, finally, another one simply said, "I'm disappointed." So, yes. There are those, even in the president's own party, who think that this is a sign of weakness, that the president is caving under pressure and this is sort of his new stance of bipartisanship.
QUEST: OK. All right, all right, Dan. Anybody looking at this from overseas looks at the scenario and they says -- and they say, perhaps, "Hang on. The US has a massive deficit. Every other country is raising taxes on the richest people in their societies. Why does the US believe that taxes don't have to go up on the wealthiest people?"
LOTHIAN: Well, I think from the president's point of view, he does not want to see any tax relief for the wealthy Americans. But he believes that, in order to get the relief for the middle class Americans, then he has to provide the same relief for those wealthier Americans. So, it's not a matter of what he likes or doesn't like at this point, it's what he really wants to go for, and that's the middle -- providing the relief for the people who need it during these tough economic times.
The argument is is that no one can sort of sit by and fight this any longer, because the economy is in such a difficult situation --
QUEST: Right.
LOTHIAN: A dire situation, that this is the kind of thing that, A. will provide additional jobs. They're saying that 600,000 jobs will come out of the tax relief. Whether or not that's the case, we don't know, but that's the number they're putting out there. And they believe that that's what this economy needs now in order to jump start it.
QUEST: Dan Lothian, as always, many thanks for your concise way of looking at it and putting it into great perspective for us from the White House. We are awaiting President Obama's press conference where, no doubt that and other things, such as the WikiLeaks and arrest of Julian Assange might be debated.
You're looking at a picture there of the White House press room as we await to see. Judging by the fact that the correspondents are girding their loins, it might be sooner rather than later. Be assured, we will take it, and we will bring it to you when it actually happens.
In a moment, the search for perfection and the desire to give something back. Two of the traits we'll be focusing in on. We're with The Bosses in a moment.
(COMMERCIAL BREAK)
QUEST: It is Tuesday and time for The Boss. Today, we're focusing on Michael Wu and Richard Braddock. In Hong Kong, Micheal's looking for the next big sell, and he thinks he knows what it is. In New York, Richard tells us why giving back is so important.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Previously on The Boss. After months of planning, Richard Braddock took Fresh Direct into a new market.
RICHARD BRADDOCK, CEO, FRESH DIRECT: You can't change without taking risk. You can't grow without taking risk.
UNIDENTIFIED MALE: In Hong Kong, Michael Wu motivated his staff by celebrating their performance.
MICHAEL WU, CHAIRMAN AND MANAGING DIRECTOR, HONG KONG MAXIM'S GROUP: I think recognition is a key element of motivation.
UNIDENTIFIED MALE: Michael Wu is meeting with two of his pastry chefs.
WU: So, tell me we what we have today. What we're trying.
UNIDENTIFIED MALE: We have a new develop like chocolate matisse (ph).
UNIDENTIFIED MALE: He's testing out possible new products, including a new cake that he believes will become Maxim's signature offering.
WU: And then we have three Swiss rolls.
UNIDENTIFIED MALE: For Michael, there's no more important role than being in charge of his product.
WU: The chefs present me with products occasionally, say, monthly. And what I'm looking for in a new product is I expect a cake to be flavorful, rich, authentic, light, and not so sweet for the Hong Kong palate.
UNIDENTIFIED MALE: Michael is the boss. Only he knows what he wants. After all, it's his job to determine what will sell.
WU: Very good. Charcoal sesame roll.
UNIDENTIFIED MALE: For the chefs, it means listening closely to what he has to say.
WU: We've never produced a black cake before, have we?
UNIDENTIFIED MALE: No.
WU: I like to hear the message direct from the front line, particularly things which relate to our core business, such as product development, concept development. I think these things are very important that I get involved in, that I give the right direction.
UNIDENTIFIED MALE: Being in charge is a tremendous responsibility. He has to have the confidence and bravado to know that he's right.
WU: But this one, the sesame flavor is not as rich as it could be.
I think this is a -- acquired taste of knowing what would sell and what people like.
UNIDENTIFIED MALE: Since taking the helm, Michael has helped breathe new life into Maxim's Group. He introduced new concepts and brands, which have attracted a younger crowd.
WU: Very good.
UNIDENTIFIED MALE: By doing so, he's challenged himself and those around him.
WU: I'm excited to try this, because I think this will, if done right, it could be our next signature product.
UNIDENTIFIED MALE: As the chief executive, it's also his prerogative to give it a name.
WU: Then the name would be Chocolate Verona, Verona Chocolate Cake.
UNIDENTIFIED MALE: But a chief executive should not be a dictator. He needs to know when to include his staff. So, he's letting them decide whether the cake should be made with Swiss or French chocolate.
WU: I'm going to do blind testing to our staff at first, particularly our office staff, and see what they think about it. And that's a very subjective comment. And I want to hear those comments. It's good, it's not good. And once I get that feedback, if everyone thinks it's good, which normally is the case, then I think it's time to roll out.
UNIDENTIFIED MALE: Whether it's an expansion into China or a new cake, Michael Wu knows what he wants.
WU: This one's very good. Has a good minty flavor.
(END VIDEOTAPE)
QUEST: And there we are going to leave The Boss for the moment because we are on a warning, a two-minute warning that President Obama is about to speak at a press conference, a news conference. The president is going to be, no doubt, addressing the issue of the tax deal that he has reached with the Republicans.
They get their upper end tax break or continue it for another two years. He gets his tax -- he gets his extension of unemployment benefits for those without work. The deficit gets nothing. It just gets an $800 billion clout over the head.
The president is coming under severe criticism from his own party for the deal as announced. The market as trading at the moment in New York, the big board is currently -- it's behind me, I beg your pardon. It is up 61.2, just over 60 points, 11,423, gain of a half of some one percent.
The market has been, in many ways, running ahead of itself at the moment. They've had economic news in recent days, consumer confidence, they've had some other news that have suggested things are going better than people had particularly feared.
In Europe, the markets have had a strong session, and the DAX was up strongly, mining shares were up strongly, copper is at a high, so commodities are doing extremely well at the moment, 9,000 for commodities.
So, that's the scenario within which we're now going to hear from President Barack Obama at the White House. And no doubt, he will also be asked about Julian Assange who, of course, is the head of WikiLeaks, currently arrested.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Before I answer a few questions, I just want to say a few words about the agreement we've reached on tax cuts.
My number one priority is to do what's right for the American people, for jobs, and for economic growth. I'm focused on making sure that tens of millions of hard-working Americans are not seeing their paychecks shrink on January 1st just because the folks here in Washington are busy trying to score political points.
And because of this agreement, middle class Americans won't see their taxes go up on January 1st, which is what I promised. A promise I made during the campaign, a promise I made as president. Because of this agreement, two million Americans who lost their jobs and are looking for work will be able to pay their rent and put food on their table.
And in exchange for a temporary extension of the high-income tax breaks -- not a permanent, but a temporary extension -- a policy that I opposed but that Republicans are unwilling to budge on, this agreement preserves additional tax cuts for the middle class that I fought for and that Republicans opposed two years ago.
I'll cite three of them. Number one, if you are a parent trying to raise your child or pay college tuition, you will continue to see tax breaks next year. Second, if you're a small business looking to invest and grow, you'll have a tax cut next year. Third, as a result of this agreement, we will cut payroll taxes in 2011, which will add about $1,000 to the take-home pay of a typical family.
So, this isn't an abstract debate. This is real money for real people. It will make a real difference in the lives of the folks who sent us here. It will make a real difference in the pace of job creation and economic growth. In other words, it's a good deal for the American people.
Now, I know there are some who would have preferred a protracted political fight, even if it had meant higher taxes for all Americans. Even if it had meant an end to unemployment insurance for those who are desperately looking for work.
And I understand the desire for a fight. I'm sympathetic to that. I'm as opposed to the high-end tax cuts today as I've been for years. In the long run, we simply can't afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican party may fight to end the middle class tax cuts that I've championed and that they've opposed.
So, we're going to keep on having this debate. We're going to keep on having this battle. But in the meantime, I'm not here to play games with the American people or the health of our economy. My job is to do whatever I can to get this economy moving. My job is to do whatever I can to spur job creation. My job is to look out for middle class families who are struggling right now to get by, and Americans who are out of work through no fault of their own.
A long political fight that carried over into next year might have been good politics, but it would be a bad deal for the economy, and it would be a bad deal for the American people. And my responsibility as president is to do what's right for the American people. That's a responsibility I intend to uphold as long as I'm in this office.
So, with that, let me take a couple of questions. Ben Feller.
BEN FELLER, AP WHITE HOUSE CORRESPONDENT: Thank you, Mr. President. You've been telling the American people all along that you oppose extending the tax cuts for the wealthier Americans.
OBAMA: Yes.
FELLER: You've said that again today.
OBAMA: Yes.
FELLER: But what you never said was that you opposed the tax cuts, but you'd be willing to go ahead and extend them for a couple of years of the politics of the moment demanded. So, what I'm wondering is, when you take a stand like you have, why should the American people believe that you're going to stick with it? Why should the American people believe that you're not going to flip-flop?
OBAMA: Hold on a second, Ben. This isn't a politics of the moment. This has to do with what can we get done right now? So, the issue -- here's the choice. It's very stark. We can't get my preferred option through the Senate right now. As a consequence, if we don't get my option through the Senate right now, and we do nothing then, on January 1st of this -- of 2011, the average family is going to see their taxes go up about $3,000.
Number two, at the end of this month, two million people will lose their unemployment insurance. Now, I have an option, which is to say, you know what? I'm going to keep fighting a political fight, which I can't win in the Senate, and by the way, there are going to be more Republican senators in the Senate next year sworn in than there are currently. So the likelihood that the dynamics are going to improve for us getting my preferred option through the Senate will be diminished.
I've got an option of just holding fast to my position and, as a consequence, two million people may not be able to pay their bills, and tens of millions of people who are struggling right now are suddenly going to see their paycheck smaller.
Or, alternatively, what I can do is I can say that I am going to stick to my position that those folks get relief, that people get help for unemployment insurance, and I will continue to fight before the American people to make the point that the Republican position is wrong.
Now, if there was not collateral damage, if this was just a matter of my politics, or being able to persuade the America people to my side, then I would just stick to my guns. Because the fact of the matter is, the American people already agree with me. There are polls showing right now that the American people, for the most part, think it's a bad idea to provide tax cuts to the wealthy.
But the issue is not me persuading the American people, they're already there. The issue is, how do I persuade the Republicans in the Senate, who are currently blocking that position? I have not been able to budge them, and I don't think there's any suggestion that anybody in this room thinks, realistically, that we can budget them right now.
And in the meantime, there are a whole bunch of people being hurt, and the economy would be damaged. And my first job is to make sure that the economy is growing, that we're creating jobs out there, and that people who are struggling are getting some relief. And, if I have to choose between having a protracted political battle on the one hand, but those folks being hurt, or helping those folks and continuing to fight this political battle over the next two years, I will choose the latter.
QUESTION: Let me follow up quickly, sir.
You're describing the situation you're in right now. What about the last two years when it comes to your preferred option? Was there a failure either on the part of the Democratic leadership on the Hill or here that you -- that you couldn't preclude these wealthier cuts from going forward?
OBAMA: Well, let me say that on the Republican side, this is their Holy Grail, these tax cuts for the wealthy. This is -- seems to be their central economic doctrine. And so unless we had 60 votes in the Senate at any given time, it would be very hard for us to move this forward.
I have said that I would have liked to have seen a vote before the election. I thought this was a strong position for us to take into the election, to crystallize the positions of the two parties. Because I think the Democrats have better ideas. I think our proposal to make sure that the middle class is held harmless, but that we don't make these Bush tax cuts permanent for wealthy individuals because it was going to cost the country at a time when we've got these looming deficits -- that that was the better position to take, and the American people were persuaded by that.
But the fact of the matter is, I haven't persuaded the Republican party. I haven't persuaded Mitch McConnell and I haven't persuaded John Boehner. And if I can't persuade them, then I've got to look at what is the best thing to do given that reality for the American people and for jobs.
Juliana (ph)?
QUESTION: Thank you, Mr. President.
Back in July your budget office's mid-session review forecast that unemployment would be 7.7 percent in the second - in the fourth quarter of 2012. Will this package deal lower that projected rate?
And also, is it going to do more to boost growth and create jobs than your Recovery Act?
OBAMA: This is not as significant a boost to the economy as the Recovery Act was, but we're in a situation then.
I mean, when the Recovery Act passed, we were looking at a potential Great Depression, and we might have seen unemployment go up to 15 percent, 20 percent; we don't know.
In combination with the work we did in stabilizing the financial system, the work that the Federal Reserve did, that's behind us now. We don't have the danger of a double-dip recession.
What we have is a situation in which the economy, although growing, although company profits are up, although we are seeing some job growth in the private sector, the economy is not growing fast enough to drive down the unemployment rate given the 8 million jobs that were lost before I came into office and just as I was coming into office.
So what this package does is provide an additional boost that is substantially more significant than I think most economic forecasters had expected. And in fact, you've already seen some just over the last 24 hours suggest that we may see faster growth and more job growth as a consequence of this package.
I think the payroll tax holiday will have an impact. Unemployment insurance probably has the biggest impact in terms of making sure that the recovery that we have continues and perhaps at a faster pace.
So overall, every economist I've talked to suggests that this will help economic growth and this will help job growth over the next several months. And that is the main criteria by which I made this decision.
Look, this is something that I think everybody has to remember. And I would speak especially to my fellow Democrats who I think rightly are passionate about middle-class families, working families, low-income families who are having the toughest time in this economy.
OBAMA: The single most important jobs program we can put in place is a growing economy. The single most important anti-poverty program we can put in place is making sure folks have jobs and the economy is growing.
We can do a whole bunch of other stuff, but if the economy is not growing, if the private sector is not hiring faster than it's currently hiring, then we are going to continue to have problems, no matter how many programs we put into place.
And that's why, when I look at what our options were, for us to have another three, four, five months of uncertainty, not only would that have a direct impact on the people who see their paychecks get smaller, not only would that have a direct impact on people who are unemployed and literally depend on unemployment insurance to pay the bills or keep their home or keep their car, but, in terms of macroeconomics, the overall health of the economy, that would have been a damaging thing.
QUESTION: Just to follow up, the unemployment rate was just north of 8 percent when your last Recovery Act was put into place.
OBAMA: Yes. Yes.
QUESTION: It's now 9.8 percent. Are you prepared to say today that the unemployment rate is going to do down as a result of this package?
OBAMA: My expectation is that the unemployment rate is going to be going down because the economy is growing. It's -- and even though it's growing more slowly than I'd like, it's still growing.
Now, how fast is it going to go down? How quickly the economy is going to grow. When are private sector businesses going to start making the investments in plant and equipment and actually start hiring people again? You know, there are a lot of economists out there who have been struggling with that question.
So -- so I'm not going to make a prediction.
What I can say, with confidence, is that this package will help strengthen the economy, will help strengthen the recovery. That I'm confident about.
Chuck Todd?
CHUCK TODD, CHIEF WHITE HOUSE CORRESPONDENT, NBC NEWS: Mr. President, what do you say to Democrats who say you're rewarding Republican obstruction here?
You, yourself, used in your opening statement, "They were unwilling to budge on this."
A lot of progressive Democrats are saying they're unwilling to budge --
OBAMA: Right.
TODD: -- and you're asking them to get off the fence and budge. Why should they be rewarding Republican obstructionism?
OBAMA: Well, let me -- let me -- let me use a couple of analogies.
I've said before that I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts. I think it's tempting not to negotiate with hostage takers, unless the hostage gets harmed. Then, people will question the wisdom of that strategy.
In this case, the hostage was the American people. And I was not willing to see them get harmed.
Again, this is not an abstract political fight. This is not isolated here in Washington.
There are people right now who, when their unemployment insurance runs out, will not be able to pay the bills.
There are -- there are folks right now who are just barely making it on the paycheck that they've got. And when that paycheck gets smaller on January 1st, they're going to have to scramble to figure out, "How am I going to pay all my bills? How am I going to keep on making the payments for my child's college tuition? What am I going to do exactly?"
Now, I could have enjoyed the battle with the Republicans over the next month or two because, as I said, the American people are on our side. This is not a situation in which I have failed to persuade the American people of the rightness of our position.
I know the polls. The polls are on our side on this. We weren't operating from a position of political weakness with respect to public opinion.
The problem is that Republicans feel that this is the single most important thing that they have to fight for as a party. And in light of that, it was going to be a protracted battle, and they would have a stronger position next year than they do currently.
So, you know, I guess another way of thinking about it is that, if -- certainly, if we had made a determination that the deal was a permanent tax break for high-income individuals in exchange for these short-term things that people need right now, that would have been unacceptable.
And the reason is, is because, you know, you would be looking at $700 billion that would be added to the deficit with very little on the short term that would help to offset that.
The deal that we've struck here makes the high-end tax cuts temporary. And that gives us the time to have this political battle without having the same casualties for the American people that are -- that are my number one concern.
QUESTION: But if I may follow, aren't you telegraphing, though, a negotiating strategy of how the Republicans can beat you in negotiations all the way through the next year, because they can just stick to their guns, stay united, be unwilling to budge, to use your words, and force you to capitulate?
OBAMA: I don't think so.
And the reason is because this is a very unique circumstance. This is a situation in which tens of millions of people would be directly damaged and immediately damaged, and at a time when the economy is just about to recover.
Now, keep in mind, I've just gone through two years, Chuck, where the rap on me was I was too stubborn and wasn't willing to budge on a whole bunch of issues, including, by the way, health care where everybody here was writing about how, "Despite public opinion and despite this and despite that, somehow the guy's going to bulldoze his way through this thing."
QUESTION: (OFF-MIKE)
OBAMA: Now --
QUESTION: (OFF-MIKE)
OBAMA: Well, but that's my point. My point is I don't make judgments based on what the conventional wisdom is at any given time. I make my judgments based on what I think is right for the country and for the American people right now.
And, you know, I will be happy to see the Republicans test whether or not I'm itching for a fight on a whole range of issues. I suspect they will find I am. And I think the American people will be on my side on a whole bunch of these fights.
But right now, I want to make sure that the American people aren't hurt because we're having a political fight. And I think that this agreement accomplishes that.
And, as I said, there are a whole bunch of things that they are giving up. I mean, the truth of the matter is, from the Republican perspective, the Earned Income Tax Credit, the college tuition tax credit, the child tax credit -- all those things that are so important for so many families across the country -- those are the things they really opposed.
And so, temporarily they were willing to go along with that, presumably because they think they can beat me on that over the course of the next two years. And I'm happy to have that battle. I'm happy to have that conversation. I just want to make sure that the American people aren't harmed while we're having that broader argument.
QUESTION: Thank you, Mr. President.
Last week, the members of your administration were boasting about your willingness to walk away from the Korea negotiations led to a better deal. Can you explain how this (inaudible) different (ph)?
OBAMA: You know, the difference is that if I didn't get the Korea deal done on January 1st, the taxes on middle-class America wouldn't go up. Now, that's pretty straightforward. You know, if we didn't get the Korea deal done by January 1st, 2 million people weren't suddenly looking at having no way to support their families.
And that's why -- you know, this goes to Chuck's question as well about what's going to be different in the future.
I mean, you've got a situation here that was urgent for millions of people. But, you know, as I recall, with the Korea free trade agreement, that was deemed by conventional wisdom as an example of us not getting something done.
I remember a story above the fold on that.
Then, when we got it done with a better deal, that is -- has the endorsement of -- not only of the U.S. auto companies, but also of labor, the story was, sort of, below the fold.
So I -- I would just --
(LAUGHTER)
-- I would just point that out.
I think -- I -- I think -- I think -- I am happy to be tested over the next several months about our ability to negotiate with Republicans.
QUESTION: And having bought that time now, do you hope to use this two-year window to push for a broader overhaul of the tax code --
OBAMA: Yes. And the answer is yes.
I mean, part -- part of what I want to do is to essentially get the American people in a safe place so that we can then get the economy in a stable place. And then we're going to have to have a broad-based discussion across the country about our priorities. And I started doing that yesterday down in North Carolina.
Here's going to be the long-term issue. We've had two years of emergency. Emergency economic action on the banking industry, the auto industry, on unemployment insurance, on a whole range of issues -- on state budgets.
The situation is now stabilized, although for those folks who are out of work it's still an emergency. So we've still got to focus short term on job growth.
But we've got to have a larger debate about how is this -- how is this country going to win the economic competition of the 21st century. How are we going to make sure we've got the best trained workers in the world?
There was just a study that came out today showing how we've slipped even further when it comes to math education and science education. So what are we doing to revamp our schools to make sure our kids can compete?
What are we have doing in terms of research and development to make sure that innovation is still taking place here in the United States of America? What are we doing about infrastructure so that we have the best airports and the best roads and the best bridges?
And how are we going to pay for all that at a time when we've got both short-term deficit problems, medium-term deficit problems and long-term deficit problems?
That's going to be a big debate and it's going to involve us sorting out what government functions are adding to our competitiveness and increasing opportunity and making sure that we're growing the economy, and which aspects of the government aren't helping.
And then we've got to figure out, how do we pay for that?
And that's going to mean, you know, looking at the tax code and saying, you know, "What's fair? What's efficient?" And I don't think anybody thinks the tax code right now is fair or efficient. But we've got to make sure that we don't just paper over those problems by borrowing from China or Saudi Arabia.
And so that's going to be a major conversation.
And in that context, I don't see how the Republicans win that argument. I don't know how they are going to be able to argue that extending permanently these high-end tax cuts is going to be good for our economy, when, to offset them, we'd end up having to cut vital services for our kids, for our veterans, for our seniors.
But I'm happy to listen to their arguments. And, you know, I think the American people will benefit from that debate. And that's going to be starting next year.
QUESTION: Mr. President, thank you.
How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now going in.
Was there ever any attempt by the White House to include the -- raising the debt limit as part of this package?
OBAMA: When you say it would seem they'll have a significant amount of leverage over the White House, what do you mean?
QUESTION: Just in the sense that -- that, you know, they'll say essentially, "We're not going to raise the -- we're not going to agree to it unless the White House is -- is able to or willing to agree to significant spending cuts across the board." They'll probably go deeper and further than what you're willing to do.
OBAMA: Well --
QUESTION: What -- I mean, what leverage would you have --
(CROSSTALK)
OBAMA: Look, here's my expectation. And I'll take John Boehner at his word, that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse; that that would not be a good thing to happen.
And so I think that there will be significant discussions about the debt limit vote. That's something that nobody ever likes to vote on.
But once John Boehner is sworn in as speaker, then he's going to have responsibilities to govern. You can't just stand on the sidelines and be a bomb-thrower.
And so my expectation is, is that we will have tough negotiations around the budget, but that ultimately we can arrive at a position that is keeping the government open, keeping Social Security checks going out, keeping veterans' services being provided, but at the same time is prudent when it comes to the taxpayer dollars.
OBAMA: Last question.
QUESTION: Some on the left have questioned -- have looked at this deal and questioned what your core values are, what, specifically, you will go to the mat on.
I wonder if you can reassure them with some specific things in saying, "All right, this is where I don't budget."
And one -- and along those lines, what's going to be different in 2012, when all of these tax cuts again are up for expiration?
OBAMA: Well, what's going to be different in 2012, we just discussed, which is we will have had two years to discuss the budget; not in the abstract, but in concrete terms.
And over the last two years, the Republicans have had the benefit of watching us take all these emergency actions, having us have -- preside over a $1.3 trillion deficit that we inherited, and just pointing fingers and saying, "That's their problem."
Well, over the next two years, they're going to have to show me what it is that they think they can do.
And I think it becomes pretty clear, after you go through the budget line by line, that if, in fact, they want to pay for $700 billion worth of tax breaks to wealthy individuals, that that's a lot of money and that the cuts -- corresponding cuts that would have to be made are very painful.
So, either they rethink their position or I don't think they're going to do very well in 2012.
So that's -- that's on the first point.
With respect to the bottom line in terms of what my core principles are --
QUESTION: What are your lines in the sand?
OBAMA: Yeah. Well, look, I've got a whole bunch of lines in the sand.
(LAUGHTER)
Not -- not -- not making the tax cuts for the wealthy permanent. That was a line in the sand.
Making sure that the things that most impact middle-class families and low-income families, that those were preserved. That was a line in the sand.
I would not have agreed to a deal -- which, by the way, some in Congress were talking about -- of just a two-year extension on the Bush tax cuts and one year of unemployment insurance, but meanwhile all the other provisions of Earned Income Tax Credit or, you know, other important breaks for middle-class families, like the college tax credit, that those had gone away, just because they had Obama's name attached to them instead of Bush's name attached to them.
You know, so this notion that somehow, you know, we are willing to compromise too much, reminds me of the debate that we had during health care. This is the public option debate all over again.
So I pass a signature piece of legislation, where we finally get health care for all Americans, something that Democrats have been fighting for for a hundred years, but because there was a provision in there that they didn't get, that would have affected maybe a couple of million people, even though we got health insurance for 30 million people and the potential for lower premiums for 100 million people, that somehow that was a sign of weakness and compromise.
Now, if that's the standard by which we are measuring success or core principles, then let's face it: We will never get anything done.
People will have the satisfaction of having a purist position and no victories for the American people. And we will be able to feel good about ourselves and sanctimonious about how pure our intentions are and how tough we are, and in the meantime the American people are still seeing themselves not able to get health insurance because of preexisting condition, or not being able to pay their bills because their unemployment insurance ran out.
That can't be the measure of -- of how we think about our public service. That can't be the measure of what it means to be a Democrat.
This is a big, diverse country. Not everybody agrees with us. I know that shocks people. You know, the New York Times editorial page does not permeate across all of America. Neither does The Wall Street Journal editorial page.
Most Americans, they're just trying to figure out how to -- how to go about their lives and -- and how can we make sure that our elected officials are looking out for us.
And that means because it's a big, diverse country and people have a lot of complicated positions, it means that in order to get stuff done, we're going to compromise.
This is why FDR when he started Social Security it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people. When Medicare was started, it was a small program. It grew.
Under -- under the criteria that you just set out, each of those were betrayals of some abstract ideal.
This country was founded on compromise. I couldn't go through the front door at this country's founding. And, you know, if we were really thinking about ideal positions, we wouldn't have a union.
So my job is to make sure that we have a North Star out there: What is helping the American people live out their lives? You know, what is giving them more opportunity? What is growing the economy? What is making us more competitive?
And at any given juncture, there are going to be times where my preferred option, what I'm absolutely positive is right, I can't get done. And so then my question is, does it make sense for me to tack a little bit this way or tack a little bit that way? Because I'm keeping my eye on the long term and the long fight; not my day-to- day news cycle but where am I going over the long term?
And I don't think there's a single Democrat out there who, if they looked at where we started when I came into office and look at where we are now, would say that somehow we have not moved in the direction that I promised.
Take a tally. Look at what I promised during the campaign. There's not a single thing that I've said that I would do that I have not either done or tried to do. And if I haven't gotten it done yet, I'm still trying to do it.
And -- and so the -- to my Democratic friends, what I'd suggest is let's make sure that we understand this is a long game. This is not a short game.
And to my Republican friends, I would suggest, I think this is a good agreement. Because I know that they're swallowing some things that they don't like as well. And I'm looking forward to seeing them on the field of competition over the next two years.
Thanks very much, everybody.
QUESTION: What about "Don't Ask" in the lame duck?
QUESTION: Is the deal set in stone, sir?
QUESTION: Julian Assange?
(LAUGHTER)
QUEST: Well, it was, at some times, a testy President Obama telling the American people the country was born in compromise; he's in it for the long game, not the short game. But substantially, a 40 minute press conference in which he explained why he was going for the spirit of compromise with his Republican opposition politicians. He says that the tax deal was clearly not the way that he wished things to go, he was having to take decisions out of compromise rather than principle.
But he made it clear it was one of stark choices whether or not to grant the wealthiest their tax break or see unemployed people -- two million unemployed people -- lose their unemployment benefit.
Those were the reality of politics, says President Obama, toward the end, getting somewhat agitated, perhaps even testy, with some of the questions.
A brutally honest assessment of the reality of government from President Obama.
And that's where you and I say good night to each other for tonight.
It is QUEST MEANS BUSINESS for this Tuesday.
I'm Richard Quest in London.
We'll have a full -- a full round-up tomorrow, of course.
But whatever you're up to in the hours ahead, as always, I do hope it's profitable,
"WORLD ONE" starts now.
END
