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CNN Live Event/Special

President Obama Holds News Conference

Aired March 24, 2009 - 20:00   ET

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

LOU DOBBS, CNN ANCHOR: CNN's special coverage of the president's primetime conference continues right now, with my colleague Wolf Blitzer.

Wolf?

WOLF BLITZER, CNN ANCHOR: 16 minutes and 26 seconds to go until the president of the United States walks into the east room at the white house for this, the second primetime presidential news conference.

We want to welcome back our viewers in the United States and around the world. I'm Wolf Blitzer. Together, we're the best political team on television. Anderson cooper is here, Campbell Brown, Ali Velshi, Gloria Borger, our own John King is here, Ed Henry is over at the white house, we have Bill Bennett and Roland Martin standing by. We'll assess what's gong as the president of the United States gets ready to have an opening statement and then answer reporters' questions. Excerpts of that opening statement have already been released to the news media. I want to bring over our John King to come over.

John, come on over here. Because we have a brand-new way, and I want to get our viewers excited a little bit, about what we're seeing. Take a look at this. I want our viewers to see all these words up there in yellow and in orange and in blue, big words and little words and, John, explain to our viewers what this is all about. Because it's called word cloud.

JOHN KING, CNN CORRESPONDENT: Some may find it cool, some may find it confusing, Wolf, but the bigger the word, the more often the president will say it. These are from the excerpts. The white house released some of his statement that he will give at the top of the news conference. Look at budget. Budget is big. One of the reasons it's big is because the president is trying to convince the American people his budget plan is the best budget plan, as many in congress, including democrats say, we need to make big changes. What will the president say? He will say his budget, investment look how big invest is compared to some other words. Invest in what? Sideway sideways, jobs. Building confidence in his approach. Smaller words, pessimistic, he won't say that much. Government, pretty small. And in between new, prosperity, the bigger the word, the more times the president says it in his prepared remarks that the white house has already released, his opening statement, and this is our way of showing you what the president's trying to do tonight. This is his goal, to emphasize that his budget will invest in a renewed economy and bring jobs and prosperity and a foundation for future growth. That's the president's plan.

BLITZER: Look how small the words government and congress are, as you point out. Not by accident, he's not going to be emphasizing government and congress.

KING: Not going to spend as much time on those. If you do look, family is down, that's a priority of the president. He just doesn't say it that many times in what they have released of his opening statement. You take this word cloud, you know what the president wants to accomplish going in. It will be interesting to match this up from questions from reporters. You don't see Iraq, you don't see Afghanistan. Those are likely to come up. You don't see taxes, if you do, it's pretty small. You do see entitlements up there, it's pretty small. That's social security and Medicare.

BLITZER: After the news conference we'll try to do exactly the same thing with a word cloud of all the words expressed by the president during the course of the question-and-answer session, as well as introductory remarks. We'll see what comes up big, what comes up little, it's a new way of seeing written words on television, if you will.

KING: The larger the word, the more the president will emphasize it. What we've seen so far we'll match up before and after and see how they match up.

BLITZER: I believe this is the first time this has ever been done on television.

Let's go to the east room of the white house now. Our senior white house correspondent Ed Henry is standing by.

Ed set the scene for us, because it's a jam-packed room right now, isn't it?

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: That's right. The president is more up beat and more hopeful than the first primetime news conference. He was trying to sell --

BLITZER: Ed, hold on a second. Ed Henry, hold on, unfortunately, we're not hearing you. Something is wrong with the technology over there. We'll fix that microphone of yours. I'm going to walk over and bring in the rest of our team over here. We've got a lot to digest, Anderson, as we move forward with coverage of this.

ANDERSON COOPER, CNN CORRESPONDENT: I wish I suggested the word cloud.

BLITZER: Leave it to our David Boarman. He comes up with technology that presents the news in a little different way.

COOPER: Yeah.

BLITZER: Remember the hologram?

COOPER: Yeah. I'm still trying to wrap my mind around that, a word cloud.

BLITZER: Let's talk a little bit about what we anticipate unfolding tonight. Because a lot of these questions, these reporters have been thinking long and hard about their one opportunity, one question they're each allowed to ask, at least the ones he calls on, to ask the president a request.

COOPER: Let's talk about what the president has to do tonight and what you anticipate. Obviously most of the questions are going to be on the economic front, important testimony by Tim Geithner today on the hill. A move by this administration to extend their power, really, to be able to take over other institution institutions, other than administration to -- to extend their power really to be able to take over other institutions other than banks. John, what does the president have to do?

KING: An inside Washington challenge to sell his agenda and his team and to sell the new proposal to give the treasury department more authority to reach into the economy and take over private entities. Very controversial in the country. And it's especially, feed into the republican argument right now this president is trying to use too much government power. An inside Washington, some may say process question. The rules, treasury department's powers. There is an outside Washington question which is simply credibility and trust. Can this team, will this program actually revive the economy? Can you trust this president to go through it at a time his critics are beginning to find more of a voice?

COOPER: Campbell, for folks who are critical of the president talking socialism hearing the government wants more power to take over other institutions is not going to play well.

CAMPBELL BROWN, CNN ANCHOR: Yeah, look. He has had probably the most difficult week if not the most difficult two weeks of his presidency. John saying his critics have found their voice in a way. The challenge is really simple. It's what any leader faces in a time of crisis which is connecting emotionally with people. Letting them know we understand your anger, your problems, at the same time leading with sort of unemotional certainty and clarity because the challenge he has is to say to people, those people you are so angry at right now, the bankers, the financial community, those are the people we have got to get in bed with to solve this crisis.

COOPER: He did get a break yesterday in hearing that 15 of the top 20 AIG executives will give back their bonuses.

GLORIA BORGER, CNN CORRESPONDENT: He got a break, Anderson. Wall Street seemed to welcome his, his bailout plan for the banks. So that is important to him. What he has got to do. He has done so many things. What he has got to do, say to the American public. Here is my plan. Let me connect the dots for you. Here is how we get from a to b to c to d and explain to the American public why he thinks we should do e and f. which is health care and energy because there is some skepticism. You see it in the polls. He's more popular than some of his programs. He has got to tell people why that is important to the economic future of the country. BROWN: Let's bring in one skeptic, Bill Bennett in Washington, conservative Bill Bennett with your take on what you think he has to do tonight.

Bill, what do you think?

BILL BENNETT, CNN CONTRIBUTOR: Did you get the wrong address, it's in Washington not in New York. You have got the board up there. That's what it is?

BROWN: We have the cloud. Word cloud.

BENNETT: All right, only encouragement I had in the last two weeks, you said, Campbell its the word government is small s the word is small. The reality I think is something else. Look, the guy has tremendous ability. Natural political talent. Charm, an Irish definition of charm, ability to elicit the answer yes before the question is asked. He has got that when he starts if you want to agree with him. He had a rough couple weeks. There are big questions he has to answer. On the specific thing you are talking about -- has the treasury department and Obama administration given sufficient confidence to the American people that they are prepared to give the -- prepared to give them more to do and trust them with the assignment. That is at least an open question.

BROWN: Ali?

ALI VELSHI, CNN CORRESPONDENT: One of the things that is interesting that stood out for me with the word cloud is the word invest is certainly bigger than government. One of the things at issue here is whether this government is spending too much money. What this administration is trying to do is convert the idea of spending, bank, stimulus, anything else into the idea they're investing in the future. That is going to be a challenge for this administration. They have lost track of the message.

COOPER: Explain for folks who haven't been following the news cycle, based on testimony today what is it they're talking about doing?

VELSHI: One issue is regulation, the idea that if there is a company that is too big to fail like AIG, the treasury secretary would like the power to move in to regulate that. To do something with it. Before everybody gets too carried away with the idea that is too much government control there has been one governmental agency that worked this entire time, the FDIC. They have the power to go in, shut a bank down, sell the bank, rip up any contract at all. That is out there. Frankly most Americans will tell you, that one has worked. What they're saying they want more of that power.

BLITZER: The SEC, Securities and Exchange Commission and the FDIC and government agencies supposed to regulate a lot of this?

VELSHI: Supposed to and regulate have not been two words that worked well together in Washington the past several years. BORGER: They make the point if they had, had this authority you wouldn't have seen the AIG bonuses. They would have nipped it in the bud. Sorry can't do that.

VELSHI: The head of the FDIC, a woman to watch. One regulator has been on the case has not stood in the way of the business of regulating.

COOPER: Can't the companies declare bankruptcy and move in and do the same thing.

VELSHI: These are systemically important companies. Most companies can declare bankruptcy. Ones are important, too many jobs will be lost. The government steps in. These are too big. You can't operate like private companies. That's what government is trying to say.

COOPER: There are more and more conservatives disagree with that. They bought night in the final days of the Bush administration. Remember in defense of this president if you don't like the financial institution bailout. It started under the last president. The bigger question for the president, a, he get defensive. His administration put lack wage in the stimulus bill that protected the bonuses. An interesting question. Some times he gets defensive. When challenged. The bigger issue, people don't like big, AIG, big company. More money for banks, businesses. They don't trust that. They trust the president. What he wants to do policywise is at odds where he is politically. He has to convince people. I know you don't like this. Trust me. It's necessary.

KING: Yes his popularity is high. He seems to be everywhere on every channel every day. Sunday, "60 Minutes." now this press conference. The "Leno Show" last week.

BROWN: If his popularity is his greatest strength. And the fact people like him shouldn't he be out there conveying confidence as much as possible.

BLITZER: Not a whole lot of others inside the administration has to connect with the American public. Timothy Geithner has been disappointing so far. Ali you cover this on a daily basis convincing the American people he is on top of this.

VELSHI: The administration needs a magic wand. Break down one of their plans. Show people what they mean. Gloria said this.

BORGER: The president, truth of the matter. One of the reasons he is out there because he is the best salesman that they have. Tim Geithner obviously has not been a terrific salesman. I do think there is a tipping point. When you see the president too much you start to listen a little bit less. So this is a fine line they have to walk. Because they're doing what Ronald Reagan did. Go over our heads directly to the American people.

BLITZER: The administration is facing a problem right now, not just the republicans, an increasing number of democrats, centrist, moderate, chairman of the senate budget committee, Senator Conrad saying this may be great. It is too much money, too expensive. John, how big of a problem potentially does the president have with moderate democrats?

KING: He has a big issue with them. The Senate Budget Committee, Senate Finance Committee, talking spending plans, they go through the two committees. Both democratic chairman have said we support everything you want to do, Mr. President. We can't afford it all. You might have to wait a little bit on health care. We don't think you cut the deficit enough. It is not a crisis. These democrats, number one, don't think the congress was assertive enough under president Bush. When the last democratic president came to Washington they tried to give him most of what he wanted. In the first midterm election, '93, in '94 the democrats were crushed.

BLITZER: Let me ask Bill Bennett a quick question on the republicans. How are the republicans, leadership in the house, John Boehner, Mitch McConnell and allies, how are they dealing with Barack Obama so far?

BENNETT: Well actually I think they're dealing well. They're in better shape than they were three months ago. Obviously he's got the ball, the action. They're mostly reacting. What we have found is that. You have seen the generic ballots, Wolf, Rasmussen, some others show, republicans are favored by independents. Simply by being the un-cola. I would love to say because of all the great things we have done. The one thing I think republicans did that was notable was stand, every man, woman, shoulder to shoulder on the stimulus rejecting it. Mostly it's been because they have not been involved in this Geithner thing, a photo-op, problem with Chris Dodd, treasury department. So they are the beneficiary of that. Obviously they need to put forward plans of their own. At the moment, since this president has said so much about how he will fix it. Take the responsibility. That's where the focus is. Republicans can't live off that forever. But for the time being it's done very well by them.

BLITZER: There is no doubt, Anderson, as we take a look at the president of the United States, what he says tonight could have a huge impact in generating political support. In many respects he wants to go around the established democratic leadership in congress and go to the American people.

COOPER: Why we are seeing the appearance on the "Leno Show" same thing to Iran he is doing to the United States. Trying to go around in Iran talking to them on the Iranian new year in that message the other day.

BLITZER: It can be very, very effective. Let me set the stage for our viewers. Right now, what is about to happen. Only about a couple minutes away, at 1:30 after the top of the hour the president will be introduced, will walk into the east room of the white house. He will have an opening statement. Then he will begin to answer questions. He has a list of seating chart in front of him of the reporters he is going to ask questions. Trust me, these are carefully considered decisions who gets to ask a question. And who does not. We're going to have coverage of this throughout the night here on CNN. We want to welcome our viewers in the United States and around the world.

I'm Wolf Blitzer here with the best political team on television.

We are only seconds away from the president of the United States being introduced over in the East Room of the White House.

That's where our senior White House correspondent, Ed Henry, is standing by.

Quickly, Ed, set the stage for us.

HENRY: Well, Wolf, clearly, two goals for the president at the top, when he has his opening remarks.

In the short term, he wants to say there are hopeful signs of recovery. He doesn't want to raise optimism too much. But he wants to suggest that it's starting to show hopeful signs.

But then he wants to make a turn to the long-term, talk about his priorities, education, energy, and health care, and basically try to say that that is going to be the most pivotal part of a recovery, is to make long-term structural changes.

But, as you were noting, the problem right now is, he is getting pushback, not just from Republicans, but some Democrats on the Hill as well, who are concerned about the price tag.

And that's why, very quickly after this press conference, tomorrow, in fact, the president is going right to Capitol Hill to talk to Democrats, not Republicans, but lobby some of his fellow Democrats, Senate Democrats, that caucus he used to be in, in fact, just a few months ago, to try to convince him to vote -- to convince them to vote for his budget -- Wolf.

BLITZER: The president of the United States has a full, full agenda ahead of him.

Here, he is being introduced walking in.

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

Good evening.

Now, before I take questions from the correspondents, I want to give everyone who's watching tonight an update on the steps we're taking to move this economy from recession to recovery, and ultimately to prosperity.

Now, it's important to remember that this crisis didn't happen overnight and it didn't result from any one action or decision. It took many years and many failures to lead us here. And it will take many months and many different solutions to lead us out. There are no quick fixes, and there are no silver bullets.

That's why we've put in place a comprehensive strategy designed to attack this crisis on all fronts. It's a strategy to create jobs, to help responsible homeowners, to restart lending, and to grow our economy over the long term. And we're beginning to see signs of progress.

The first step we took was to pass a recovery plan to jump-start job creation and put money in people's pockets. This plan's already saved the jobs of teachers and police officers. It's creating construction jobs to rebuild roads and bridges.

And yesterday, I met with a man whose company is reopening a factory outside of Pittsburgh that's rehiring workers to build some of the most energy-efficient windows in the world.

And this plan will provide a tax cut to 95 percent of all working families that will appear in people's paychecks by April 1st.

The second step we took was to launch a plan to stabilize the housing market and help responsible homeowners stay in their homes. This plan's one reason that mortgage interest rates are now at near historic lows.

We've already seen a jump in refinancing of some mortgages, as homeowners take advantage of lower rates. And every American should know that up to 40 percent of all mortgages are now eligible for refinancing.

This is the equivalent of another tax cut, and we're also beginning to see signs of increased sales and stabilizing home prices for the first time in a very long time.

The third part of our strategy is to restart the flow of credit to families and businesses. To that end, we've launched a program designed to support the markets for more affordable auto loans, student loans, and small-business loans, a program that's already securitized more of this lending in the last week than in the last four months combined.

Yesterday, Secretary Geithner announced a new plan that will partner government resources with private investment to buy up the assets that are preventing our banks from lending money.

And we will continue to do whatever is necessary in the weeks ahead to ensure the banks Americans depend on have the money they need to lend, even if the economy gets worse.

Finally, the most critical part of our strategy is to ensure that we do not return to an economic cycle of bubble and bust in this country. We know that an economy built on reckless speculation, inflated home prices, and maxed-out credit cards does not create lasting wealth. It creates the illusion of prosperity, and it's endangered us all.

The budget I submitted to Congress will build our economic recovery on a stronger foundation so that we don't face another crisis like this 10 or 20 years from now.

We invest in the renewable sources of energy that will lead to new jobs, new businesses, and less dependence on foreign oil. We invest in our schools and our teachers, so that our children have the skills they need to compete with any workers in the world.

We invest in reform that will bring down the cost of health care for families, businesses and our government.

And in this budget, we have -- we have to make the tough choices necessary to cut our deficit in half by the end of my first term, even under the most pessimistic estimates.

At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led us to a narrow prosperity and massive debt. It's with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest.

And that's why clean energy jobs and businesses will do all across America. That's what a highly skilled work force can do all across America. That's what an efficient health care system that controls costs and entitlements like Medicare and Medicaid will do.

That's why this budget is inseparable from this recovery: because it is what lays the foundation for a secure and lasting prosperity.

The road to that prosperity is still long, and we will hit our share of bumps and setbacks before it ends. But we must remember that we can get there if we travel that road as one nation, as one people.

You know, there was a lot of outrage and finger-pointing last week, and much of it is understandable. I'm as angry as anybody about those bonuses that went to some of the very same individuals who brought our financial system to its knees, partly because it's yet another symptom of the culture that led us to this point.

But one of the most important lessons to learn from this crisis is that our economy only works if we recognize that we're all in this together, that we all have responsibilities to each other and to our country.

Bankers and executives on Wall Street need to realize that enriching themselves on the taxpayers' dime is inexcusable, that the days of outsized rewards and reckless speculation that puts us all at risk have to be over.

At the same time, the rest of us can't afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity, and it is what will ultimately get these banks lending and our economy moving once more.

We'll recover from this recession, but it will take time, it will take patience, and it will take an understanding that, when we all work together, when each of us looks beyond our own short-term interest to the wider set of obligations we have towards each other, that's when we succeed, that's when we prosper, and that's what is needed right now.

So let's look towards the future with a renewed sense of common purpose, a renewed determination, and, most importantly, renewed confidence that a better day will come.

All right. With that, let me take some questions. And I have got a list here.

Let's start off with Jennifer Loven, AP.

QUESTION: Thank you, Mr. President. Your treasury secretary and the Fed chairman were on Capitol Hill today asking for this new authority that you want to regulate big, complex financial institutions.

But given the problems that the financial bailout program has had so far -- banks not wanting to talk about how they're spending the money, the AIG bonuses that you mentioned -- why do you think the public should sign on for another new sweeping authority for the government to take over companies, essentially?

Well, keep in mind that it is precisely because of the lack of this authority that the AIG situation has gotten worse.

Now, understand that AIG is not a bank. It's an insurance company. If it were a bank and it had effectively collapsed, then the FDIC could step in, as it does with a whole host of banks, as it did with IndyMac, and in a structured way renegotiate contracts, get rid of bad assets, strengthen capital requirements, resell it on the private marketplace.

So we've got a regular mechanism whereby we deal with FDIC- insured banks. We don't have that same capacity with an institution like AIG. And that's part of the reason why it has proved so problematic.

I think a lot of people understandably say, "Well, if we're putting all this money in there, and if it's such a big systemic risk to allow AIG to liquidate, why is it that we can't restructure some of these contracts? Why can't we do some of the things that need to be done in a more orderly way?"

And the reason is, is because we have not obtained this authority. We should have obtained it much earlier so that any institution that poses a systemic risk that could bring down the financial system we can handle and we can do it in an orderly fashion that quarantines it from other institutions.

We don't have that power right now; that's what Secretary Geithner was talking about. And I think that there's going to be strong support from the American people and from Congress to provide that authority, so that we don't find ourselves in a situation where we've got to choose between either allowing an enormous institution like AIG, which is not just insuring other banks, but is also insuring pension funds and potentially putting people's 401(k)s at risk if it goes under, that's one choice, and then the other choice is just to allow them to take taxpayer money without the kind of conditions that we'd like to see on it.

So that's -- that's why I think the authority is so important.

QUESTION: Why should the public trust the government to handle that authority well?

OBAMA: Well, as I said before, if you look at how the FDIC has handled a situation like Indy bank, for example, it actually does these kinds of resolutions effectively when it's got the tools to do it. We don't have the tools right now.

OK. Chuck Todd?

QUESTION: Thank you, Mr. President. Some have compared this financial crisis to a war. And in times of war, past presidents have called for some form of sacrifice.

Some of your programs, whether for Main Street or Wall Street, have actually cushioned the blow for those that were irresponsible during this -- during this economic period of prosperity or supposed prosperity that you were talking about.

Why, given this new era of responsible that you're asking for, why haven't you asked for something specific that the public should be sacrificing to participate in this economic recovery?

OBAMA: Well, let me -- let me take that question in a couple -- couple of phases.

First of all, it's not true that we have not asked sacrifice from people who are getting taxpayer money. We have imposed some very stiff conditions. The only problem that we've had so far are contracts that were put in place before we took over.

But moving forward, anybody -- any bank, for example, that is receiving capital from the taxpayers is going to have to have some very strict conditions in terms of how it pays out its executives, how it pays out dividends, how it's reporting its lending practices, so we want to make sure that there's some stiff conditions in place.

With respect to the American people, I think folks are sacrificing left and right. I mean, you've got a lot of parents who are cutting back on everything to make sure that their kids can still go to college. You've got workers who are deciding to cut an entire day -- an entire day's worth of pay so that their fellow co-workers aren't laid off.

I think that, across the board, people are making adjustments large and small to accommodate the fact that we're in very difficult times right now.

What I have said here in Washington is that we've got to make some tough choices. We've got to make some tough budgetary choices. What we can't do, though, is sacrifice long-term growth, investments that are critical to the future, and that's why my budget focuses on health care, energy, education, the kinds of things that can build a foundation for long-term economic growth, as opposed to the fleeting prosperity that we've seen over the last several years.

I mean, when you have an economy in which the majority of growth is coming from the financial sector, when AIG selling a derivative is counted as an increase in the gross domestic product, then that's not a model for sustainable economic growth.

And what we have to do is invest in those things that will allow the American's capacity for ingenuity and innovation, their ability to take risks, but make sure that those risks are grounded in good products and good services that they believe they can market to the rest of the country, that those models of economic growth are what we're promoting, and that's what I think our budget does.

QUESTION: (OFF-MIKE) you've described this as -- as an economic crisis like nothing we have seen since the Great Depression.

OBAMA: Well, as -- as I said, the American people are making a host of sacrifices in their individual lives. We are going through an extraordinary crisis, but we believe that, taken -- if you take the steps that we've already taken, with respect to housing, with respect to small businesses, if you look at what we're doing in terms of increasing liquidity in the financial system, that the steps that we're taking can actually stabilize the economy and get it moving again.

What I'm looking from the American people to do is that they are going to be doing what they have always done, which is working hard, looking after their families, making sure that, despite the economic hard times, that they're still contributing to their community, that they're still participating in volunteer activities, that they are paying attention to the debates that are going on in Washington.

And the budgets that we're putting forward and some of the decisions that we're having to make are going to be tough decisions, and we're going to need the support of the American people. And that's part of why what I have tried to do is to be out front as much as possible explaining in very clear terms exactly what we're doing.

OBAMA: Jake?

QUESTION: Thank you, Mr. President.

Right now on Capitol Hill, Senate Democrats are writing a budget. And according to press accounts and their own statements, they're not including the middle-class tax cut that you include in the stimulus, they're talking about phasing that out, they're not including the cap- and-trade that you have in your budget, and they're not including other measures.

I know when you outlined your four priorities over the weekend, a number of these things were not in there. Will you sign a budget if it does not contain a middle-class tax cut, does not contain cap-and- trade?

OBAMA: Well, I have emphasized repeatedly what I expect out of this budget. I expect that there's serious efforts at health care reform and that we are driving down costs for families and businesses, and ultimately for the federal and state governments that are going to be broke if we continue on the current path.

I have said that we've got to have a serious energy policy that frees ourselves from dependence on foreign oil and makes clean energy the profitable kind of energy.

We've got to invest in education, K through 12 and beyond, to upgrade the skills of the American worker so we can compete in -- in the international economy.

And I have said that we've got to start driving our deficit numbers down.

Now, we never expected, when we printed out our budget, that they would simply Xerox it and vote on it. We assume that it has to go through the legislative process. I have not yet seen the final product coming out of the Senate or the House, and we're in constant conversations with them.

I am confident that the budget we put forward will have those principles in place.

When it comes to the middle-class tax cut, we already had that in the recovery. We know that that's going to be in place for at least the next two years. We had identified a specific way to pay for it. If Congress has better ideas in terms of how to pay for it, then we're happy to listen.

When it comes to cap-and-trade, the broader principle is that we've got to move to a new energy era, and that means moving away from polluting energy sources towards cleaner energy sources. That is a potential engine for economic growth.

I think cap-and-trade is the best way, from my perspective, to achieve some of those gains, because what it does is it starts pricing the pollution that's being sent into the atmosphere.

The way it's structured has to take into account regional differences. It has to protect consumers from huge spikes in electricity prices. So there are a lot of technical issues that are going to have to be sorted through.

Our point in the budget is: Let's get started now. We can't wait. And my expectation is that the Energy Committees or other relevant committees in both the House and the Senate are going to be moving forward a strong energy package. It will be authorized. We'll get it done. And I will sign it.

OK?

QUESTION: (OFF-MIKE) willing to sign a budget that doesn't have those two provisions?

OBAMA: No, I -- what I said was that I haven't seen yet what provisions are in there. The bottom line is, is that I want to see health care, energy, education, and serious efforts to reduce our budget deficit.

And there are going to be a lot of details that are still being worked out, but I have confidence that we're going to be able to get a budget done that's reflective of what needs to happen in order to make sure that America grows.

OK, Chip Reid?

QUESTION: Thank you, Mr. President. At both of your town hall meetings in California last week, you said, quote, "I didn't run for president to pass on our problems to the next generation."

But under your budget, the debt will increase $7 trillion over the next 10 years. The Congressional Budget Office says $9. 3 trillion. And today on Capitol Hill, some Republicans called your budget, with all the spending on health care, education and environment, the most irresponsible budget in American history.

OBAMA: Yes.

QUESTION: Isn't that kind of debt exactly what you were talking about when you said "passing on our problems to the next generation"?

OBAMA: First of all, I suspect that some of those Republican critics have a short memory, because, as I recall, I'm inheriting a $1. 3 trillion deficit, annual deficit, from them. That would be point number one.

Point number two. Both under our estimates and under the CBO estimates, both -- the most conservative estimates out there, we drive down the deficit over the first five years of our budget. The deficit is cut in half. And folks aren't disputing that.

Where the dispute comes in is what happens in a whole bunch of out-years. And the main difference between the budget that we presented and the budget that came out of the Congressional Budget Office is assumptions about growth.

They're assuming a growth rate of 2. 2 percent; we're assuming a growth rate of 2. 6 percent. Those small differences end up adding up to a lot of money. Our assumptions are perfectly consistent with what Blue Chip forecasters out there are saying.

Now, none of us know exactly what's going to happen 6 or 8 or 10 years from now. Here's what I do know: If we don't tackle energy, if we don't improve our education system, if we don't drive down the costs of health care, if we're not making serious investments in science and technology and our infrastructure, then we won't grow 2. 6 percent, we won't grow 2. 2 percent. We won't grow.

And so what we've said is, let's make the investments that ensure that we meet our growth targets that put us on a pathway to growth as opposed to a situation in which we're not making those investments and we still have trillion-dollar deficits.

And there's an interesting reason why some of these critics haven't put out their own budget. I mean, we haven't seen an alternative budget out of them.

And the reason is because they know that, in fact, the biggest driver of long-term deficits are the huge health care costs that we've got out here that we're going to have to tackle and we -- that if we don't deal with some of the structural problems in our deficit, ones that were here long before I got here, then we're going to continue to see some of the problems in those out-years.

And -- and so what we're trying to emphasize is, let's make sure that we're making the investments that we need to grow to meet those growth targets, at the same time we're still reducing the deficit by a couple of trillion dollars, we are cutting out wasteful spending in areas like Medicare, we're changing procurement practices when it comes to the Pentagon budget, we are looking at social service programs and education programs that don't work and eliminate them.

And we will continue to go line by line through this budget, and where we find programs that don't work, we will eliminate them.

But it is -- it is going to be an impossible task for us to balance our budget if we're not taking on rising health care costs, and it's going to be an impossible task to balance our budget or even approximate it if we are not boosting our growth rates. And -- and that's why our budget focuses on the investments we need to make that happen.

QUESTION: But even under your budget, as you said, over the next four or five years, you're going to cut the deficit in half, then, after that, six years in a row, it goes up, up, up. If you're making all these long-term structural cuts, why does it continue to go up in the out-years?

OBAMA: Well, look, it is going to take a whole host of adjustments, and we couldn't reflect all of those adjustments in this budget.

Let me give you an example. There's been a lot of talk about entitlements in Medicare and Medicaid. The biggest problem we have long term is Medicare and Medicaid. But whatever reforms we initiate on that front -- and we're very serious about working on a bipartisan basis to reduce those deficits or reduce those costs -- you're not going to see those savings reflected until much later.

And so a budget is a snapshot of what we can get done right now, understanding that, 8, 10 years from now, we will have had a whole series of new budgets and we're going to have to make additional adjustments.

And once we get out of this current economic crisis, then it's going to be absolutely important for us to take another look and say, are we growing as fast as we need to grow? Are there further cuts that we need to make? What other adjustments are -- is it going to take for us to have a sustainable budget level?

But, keep in mind, just to give one other example, as a percentage of gross domestic product, we are reducing non-defense discretionary spending to its lowest level since the '60s, lower than it was under Reagan, lower than it was under Clinton, lower than it was under Bush, or both Bushes.

And so, if we're growing, if we are doing what's necessary to create new businesses and to expand the economy, and we are making sure that we're eliminating some of these programs that aren't working, then, over time, that gap can close.

But I'm -- look, I'm not going to lie to you. It is tough. As I said, that's why the critics tend to criticize, but they don't offer an alternative budget. Because even if we were not doing health care, we were not doing energy, we were not doing education, they'd still have a whole bunch of problems in those out-years, according to CBO projections. The only difference is that we will not have invested in what's necessary to make this economy grow.

Is Lourdes here from Univision?

QUESTION: Thank you, Mr. President. Today, your administration presented a plan to help curb the violence in Mexico and also to control any or prevent any spillover of the violence into the United States.

Do you consider the situation now a national security threat? And do you believe that it could require sending national troops to the border? Governor Perry of Texas -- Texas has said that you still need more troops and more agents. How do you respond to that?

OBAMA: Well, first of all, let's focus on what we did today. It's very significant.

We are sending millions of dollars in additional equipment to provide more effective surveillance. We are providing hundreds of additional personnel that can help control the border, deal with customs issues.

We are coordinating very effectively with the Mexican government and President Calderon, who has taken on an extraordinarily difficult task of dealing with these drug cartels that have gotten completely out of hand.

And so the steps that we've taken are designed to make sure that the border communities in the United States are protected and you're not seeing a spillover of violence and that we are helping the Mexican government deal with a very challenging situation.

Now, we are going to continue to monitor the situation. And if the steps that we've taken do not get the job done, then we will do more. One last point that I want to make about this. As I said, President Calderon has been very courageous in taking on these drug cartels. We've got to also take some steps, even as he is doing more to deal with the drug cartels, sending drugs into the United States, we need to do more to make sure that illegal guns and cash aren't flowing back to these cartels.

That's part of what's financing their operations. That's part of what's arming them. That's what makes them so dangerous. And this is something that we take very seriously and we're going to continue to work on diligently in the months to come.

Kevin Baron, Stars and Stripes? Is Kevin here? There you go.

QUESTION: Mr. President, where do you plan to find savings in the Defense and Veterans Administration's budgets when so many items that seem destined for the chopping block are politically untenable, perhaps?

OBAMA: I'm sorry. So many...

QUESTION: When so many items that may be destined for the chopping block seem politically untenable, from major weapons systems, as you mentioned procurement, to wounded warrior care costs, or increased operations in Afghanistan, or the size of the military itself.

OBAMA: Well, a couple -- a couple of points I want to make. The budget that we've put forward reflects the largest increase in veterans funding in 30 years. That's the right thing to do.

Chuck asked earlier about sacrifices. I don't think anybody doubts the extraordinary sacrifices that men and women in uniform have already made. And when they come home, then they have earned the benefits that they receive. And, unfortunately, over the last several years, all too often the V. A. has been under-resourced when it comes to dealing with things like post-traumatic stress disorder or traumatic brain injury, dealing with some of the backlogs in admission to V. A. hospitals.

So there are a whole host of veterans issues that I think every American wants to see properly funded, and that's what's reflected in our budget.

Where the savings should come in -- and I have been working with Secretary Gates on this, and we'll be detailing it more in the weeks to come -- is, how do we reform our procurement system so that it keeps America safe and we're not wasting taxpayer dollars?

OBAMA: And there is uniform acknowledgement that the procurement system right now doesn't work. That's not just my opinion. That's John McCain's opinion. That's Carl Levin's opinion.

There are a whole host of people who are students of the procurement process that will say, if you've got a whole range of billion-dollar, multibillion-dollar systems that are -- where we're seeing cost overruns of 30 percent or 40 percent or 50 percent, and then still don't perform the way they're supposed to or are providing our troops with the kinds of tools that they need to succeed on their missions, then we've got a problem.

Now, I think everybody in this town knows that the politics of changing procurement is tough, because, you know, lobbyists are very active in this area. You know, contractors are very good at dispersing the jobs and plants in the Defense Department widely.

And so what we have to do is to go through this process very carefully, be more disciplined than we've been in the last several years.

As I've said, we've already identified potentially $40 billion in savings just by some of the procurement reforms that are pretty apparent to a lot -- a lot of critics out there. And we are going to continue to find savings in a way that allows us to put the resources where they're needed, but to make sure that we're not simply fattening defense contractors.

One last point. In order for us to get a handle on these costs, it's also important that we are honest in what these costs are. And that's why it was so important for us to acknowledge the true costs of the Iraq war and the Afghan war, because if -- if those costs are somehow off the books and we're not thinking about them, then it's hard for us to make some of the tough choices that need to be made.

OK, Ed Henry. Where's Ed? There he is.

QUESTION: Thank you. Mr. President. You spoke again at the top about your anger about AIG. You've been saying that for days now. But why is it that it seems Andrew Cuomo seems to be in New York getting more actual action on it?

And when you and Secretary Geithner first learned about this 10 days, two weeks ago, you didn't go public immediately with that outrage. You waited a few days. And then when -- you went public after you realized Secretary Geithner really had no legal avenue to stop it.

And, more broadly, I just want to follow up on Chip and Jake. You've been very critical of President Bush doubling the national debt. And, to be fair, it's not just Republicans hitting you. Democrat Kent Conrad, as you know, said, quote, "When I look at this budget, I see the debt doubling again."

You keep saying that you've inherited a big fiscal mess. Do you worry, though, that your daughters, not to mention the next president, will be inheriting an even bigger fiscal mess if the spending goes out of control?

OBAMA: Of course I do, Ed, which is why we're doing everything we can to reduce that deficit.

Look, if this were easy, then, you know, we would have already had it done, and the budget would have been voted on, and everybody could go home. This is hard.

And the reason it's hard is because we've accumulated a structural deficit that's going to take a long time, and we're not going to be able to do it next year or the year after or three years from now. What we have to do is bend the curve on these deficit projections.

And the best way for us to do that is to reduce health care costs. That's not just my opinion. That's the opinion of almost every single person who has looked at our long-term fiscal situation.

Now, how do we -- how are we going to reduce health care costs? Because the problem is not just in government-run programs. The problem is in the private sector, as well. It's experienced by families. It's experienced by businesses.

And so what we've said is, look, let's invest in health information technologies. Let's invest in preventive care. Let's invest in mechanisms that look at who's doing a better job controlling costs while producing good quality outcomes in various states and let's reimburse on the basis of improved quality, as opposed to simply how many procedures you're doing. Let's do a whole host of things, some of which cost money on the front end, but offer the prospect of reducing costs on the back end.

OBAMA: Now, the alternative is to stand pat and to simply say, "We are just going to not invest in health care. We're not going to take on energy. We'll wait until the next time that gas gets to $4 a gallon. We will not improve our schools. And we'll allow China or India or other countries to lap our young people in terms of their performance. We will settle on lower growth rates, and we will continue to contract, both as an economy and our ability to -- to provide a better life for our kids."

That, I don't think, is the better option. Now, am I completely satisfied with all the work that needs to be done on deficits? No. That's why I convened a fiscal responsibility summit -- that started in this room -- to start looking at entitlements and to start looking at the big drivers of costs over the long term.

Not all of those are reflected in our budget, partly because the savings we anticipate would be coming in years outside of the 10-year budget cycle that we're talking about.

OK?

QUESTION: But on AIG, why did you wait -- why did you wait days to come out and express that outrage? It seems like the action is coming out of New York and the attorney general's office. It took you days to come public with Secretary Geithner and say, "Look, we're outraged." Why did it take so long?

OBAMA: It took us a couple of days because I like to know what I'm talking about before I speak.

(LAUGHTER) All right.

Major?

QUESTION: Good evening, Mr. President. Thank you.

Taking this economic debate a bit globally, senior Chinese officials have publicly expressed an interest in international currency. This is described by Chinese specialists as a sign that they are less confident than they used to be in the value and the reliability of the U.S. dollar. European countries have resisted your calls to spend more on economic stimulus.

I wonder, sir, as a candidate who ran concerned about the image of the United States globally, how comfortable you are with the Chinese government, run by communists, less confident than they used to be in the U.S. dollar and European governments, some of them center-left, some of them socialist, who say you're asking them to spend too much?

OBAMA: Well, first of all, I haven't asked them to do anything. What I've suggested is, is that all of us are going to have to take steps in order to lift the economy.

We don't want a situation in which some countries are making extraordinary efforts and other countries aren't with the hope that somehow the countries that are making those important steps lift everybody up. And so somebody's got to take leadership.

It's not just me, by the way. I was with Kevin Rudd, the prime minister of Australia, today, who was very forceful in suggesting that countries around the world, those with the capacity to do so, take the steps that are needed to fill this enormous hole in global demand.

Gordon Brown, when he came to visit me, said the exact same thing.

So the goal at the G-20 summit, I think, is to do a couple of things, number one, say to all countries: Let's do what's necessary in order to create jobs and to get the economy moving again. Let's avoid steps that could result in protectionism, that would further contract global trade. Let's focus on, how are we going to move our regulatory process forward, in order so that we do not see the kinds of systemic breakdowns that we've already seen?

And that requires -- that means not just dealing with banks, but also some of the other financial flows that are out here that are currently unregulated. We've got to update regulations that date back to the 1930s, and we're going to have to do some coordination with other countries in order to accomplish that.

As far as confidence in the U.S. economy or the dollar, I would just point out that the dollar is extraordinarily strong right now. And the reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world. So you don't have to take my word for it. I think that there is a great deal of confidence that, ultimately, although we are going through a rough patch, that the prospects for the world economy are very, very strong.

And -- and last point I would make, in terms of changing America's image in the world, Garrett, I -- you know, I haven't looked at the latest polling around the world, but I think -- I think it's fair to say that the response that people have had to our administration and the steps that we've taken are ones that are restoring a sense of confidence and the ability of the United States to assert global leadership.

QUESTION: (OFF-MIKE) OBAMA: That will just strengthen -- excuse me?

QUESTION: (OFF-MIKE) global currency?

OBAMA: I don't believe that there's a need for a global currency.

Mike Allen, Politico? Hi, Mike.

QUESTION: Mr. President, are you -- thank you. Thank you, Mr. President. Are you reconsidering your plan to cut the interest rate deduction for mortgages and for charities? And do you regret having proposed that in the first place?

OBAMA: No, I think it's -- I think it's the right thing to do, where we've got to make some difficult choices. Here's what we did with respect to tax policy.

What we said was that, over the last decade, the average worker, the average family have seen their wages and incomes flat. Even in times where supposedly we were in the middle of an economic boom, as a practical matter, their incomes didn't go up. And so, well, we said, "Let's give them a tax cut. Let's give them some relief, some help, 95 percent of American families."

Now, for the top 5 percent, they're the ones who typically saw huge gains in their income. I -- I fall in that category. And what we've said is, for those folks, let's not renew the Bush tax cuts, so let's go back to the rates that existed back in -- during the Clinton era, when wealthy people were still wealthy and doing just fine, and let's look at the -- the level at which people can itemize their deductions.

And what we've said is: Let's go back to the rate that existed under Ronald Reagan. People are still going to be able to make charitable contributions. It just means, if you give $100 and you're in this tax bracket, at a certain point, instead of being able to write off 36 percent or 39 percent, you're writing off 28 percent.

Now, if it's really a charitable contribution, I'm assuming that that shouldn't be the determining factor as to whether you're giving that $100 to the homeless shelter down the street. And so this provision would affect about 1 percent of the American people. They would still get deductions. It's just that they wouldn't be able to write off 39 percent.

In that sense, what it would do is it would equalize -- when I give $100, I'd get the same amount of deduction as when some -- a bus driver who's making $50,000 a year, or $40,000 a year, gives that same $100. Right now, he gets 28 percent -- he gets to write off 28 percent. I get to write off 39 percent. I don't think that's fair.

So I think this was a good idea. I think it is a realistic way for us to raise some revenue from people who've benefited enormously over the last several years.

It's not going to cripple them. They'll still be well-to-do. And, you know, ultimately, if we're going to tackle the serious problems that we've got, then, in some cases, those who are more fortunate are going to have to pay a little bit more.

QUESTION: It's not the well-to-do people. It's the charities. Given what you've just said, are you confident the charities are wrong when they contend that this would discourage giving?

OBAMA: Yes, I am. I mean, if you look at the evidence, there's very little evidence that this has a significant impact on charitable giving.

I'll tell you what has a significant impact on charitable giving, is a financial crisis and an economy that's contracting. And so the most important thing that I can do for charitable giving is to fix the economy, to get banks lending again, to get businesses opening their doors again, to get people back to work again. Then I think charities will do just fine.

Kevin Chappelle (ph)? Hi, Kevin.

QUESTION: Thank you, Mr. President. A recent report found that, as a result of the economic downturn, 1 in 50 children are now homeless in America. With shelters at full capacity, tent cities are sprouting up across the country.

In passing your stimulus package, you said that help was on the way. But what would you say to these families, especially children, who are sleeping under bridges and in tents across the country?

OBAMA: Well, the first thing I'd say is that I'm heartbroken that any child in America is homeless. And the most important thing that I can do on their behalf is to make sure their parents have a job. And that's why the recovery package said, as a first priority, how are we going to save or create 3.5 million jobs?

How can we prevent layoffs for teachers and police officers? How can we make sure that we are investing in the infrastructure for the future that can put people back to work right away? How do we make sure that, when people do lose their jobs, that their unemployment insurance is extended, that they can keep their health care? So, there are a whole host of steps that we've done to provide a cushion for folks who have fallen on very hard times and to try to spur immediate projects that can put people back to work.

OBAMA: Now, in the meantime, we've got to work very closely with the states to monitor and to help people who are still falling through the cracks. And, you know, the homeless problem was bad even when the economy was good.

Part of the change in attitudes that I want to see here in Washington and all across the country is a belief that it is not acceptable for children and families to be without a roof over their heads in a country as wealthy as ours.

And so we're going to be initiating a range of programs, as well, to deal with homelessness. One area in particular I want to focus on is the issue of veterans. The rate of homelessness among veterans is much, much higher than for non-veteran populations.

And so we've got -- a number of the increases that we're looking for in our budget on veterans funding directly addresses the issue of homeless veterans. That, I think, can provide some real help.

Ann Compton? Hey, Ann. You sound surprised.

QUESTION: I am surprised. Could I ask you about race?

OBAMA: You may.

QUESTION: Yours is a rather historic presidency. And I'm just wondering whether, in any of the policy debates that you've had within the White House, the issue of race has come up or whether it has in the way you feel you've been perceived by other leaders or by the American people? Or has the last 64 days before a relatively color- blind time?

OBAMA: I -- I think that the last 64 days has been dominated by me trying to figure out how we're going to fix the economy, and that affects black, brown and white.

And, you know, obviously, at the inauguration, I think that there was justifiable pride on the part of the country that we had taken a step to move us beyond some of the searing legacies of racial discrimination in this country, but that lasted about a day.

And -- and, you know, right now, the American people are judging me exactly the way I should be judged. And that is: Are we taking the steps to improve liquidity in the financial markets, create jobs, get businesses to re-open, keep America safe? And that's what I've been spending my time thinking about. OK. John Ward, Washington Times? Where's John?

QUESTION: Thank you, sir.

OBAMA: There you go.

QUESTION: Thank you, Mr. President.

OBAMA: Sure.

QUESTION: In your remarks on stem cell research earlier this month, you talked about a majority consensus in determining whether or not this is the right thing to do, to federally fund embryonic stem cell research.

I'm just wondering, though, how much you personally wrestled with the morality or ethics of federally funding this kind of research, especially given the fact that science so far has shown a lot of progress with adult stem cells, but not a lot with embryonic?

OBAMA: OK. No, I think it's -- I think it's a legitimate question. I -- I wrestle with these issues every day.

As I mentioned to -- I think in an interview a couple of days ago, by the time an issue reaches my desk, it's a hard issue. If it was an easy issue, somebody else would have solved it and it wouldn't have reached me.

Look, I believe that it is very important for us to have strong moral guidelines, ethical guidelines, when it comes to stem cell research or anything that touches on, you know, the issues of possible cloning or issues related to, you know, the human life sciences.

I think those issues are all critical, and I've said so before. I wrestle with it on stem cell; I wrestle with it on issues like abortion.

I think that the guidelines that we provided meet that ethical test. What we have said is that, for embryos that are typically -- about to be discarded, for us to be able to use those in order to find cures for Parkinson's or for Alzheimer's or, you know, all sorts of other debilitating diseases, juvenile diabetes, that -- that it is the right thing to do.

And that's not just my opinion. That is the opinion of a number of people who are also against abortion.

OBAMA: Now, I am glad to see progress is being made in adult stem cells. And if the science determines that we can completely avoid a set of ethical questions or political disputes, then that's great.

I have -- I have no investment in causing controversy. I'm happy to avoid it if that's where the science leads us. But what I don't want to do is predetermine this based on a very rigid ideological approach, and that's what I think is reflected in the executive order that I signed.

QUESTION: I meant to ask -- just to follow up -- do you think that scientific consensus is enough to tell us what we can and cannot do?

OBAMA: No. I think there's -- there's always an ethical and a moral element that has to be -- be a part of this. And so, as I said, I -- I don't take decisions like this lightly. They're ones that I take seriously, and -- and I respect people who have different opinions on this issue.

But I think that this was the right thing to do and the ethical thing to do. And as I said before, my hope is, is that we can find a mechanism, ultimately, to cure these diseases in a way that gains 100 percent consensus. And we certainly haven't achieved that yet, but I think on balance this was the right step to take.

STAFF: Last question.

OBAMA: OK.

Stefan Collison (ph), AFP?

QUESTION: Mr. President, you came to office pledging to work for peace between Israel and the Palestinians. How realistic do you think those hopes are now, given the likelihood of a prime minister who is not fully signed up to a two-state solution and a foreign minister who has been accused of insulting Arabs?

OBAMA: It's not easier than it was, but I think it's just as necessary.

We don't yet know what the Israeli government is going to look like, and we don't yet know what the future shape of Palestinian leadership is going to be comprised of. What we do know is this: that the status quo is unsustainable, that it is critical for us to advance a two-state solution where Israelis and Palestinians can live side by side in their own states with peace and security.

And by assigning George Mitchell the task of working as special envoy, what we've signaled is that we're going to be serious from day one in trying to move the parties in a direction that acknowledges that reality.

How effective these negotiations may be, I think we're going to have to wait and see. But, you know, we -- we were here for St. Patrick's Day, and you'll recall that we had what had been previously sworn enemies celebrating here in this very room.

You know, leaders from the two sides of Northern Ireland that, you know, a couple of decades ago -- or even a decade ago -- people would have said could never achieve peace, and here they were, jointly appearing, and talking about their commitment, even in the face of violent provocation.

And what that tells me is that, if you stick to it, if you are persistent, then -- then these problems can be dealt with.

That whole philosophy of persistence, by the way, is one that I'm going to be emphasizing again and again in the months and years to come as long as I'm in this office. I'm a big believer in persistence. I think that, when it comes to domestic affairs, if we keep on working at it, if we acknowledge that we make mistakes sometimes, and that we don't always have the right answer, and we're inheriting very knotty problems, that we can pass health care, we can find better solutions to our energy challenges, we can teach our children more effectively, we can deal with a very real budget crisis that is not fully dealt with in my -- in my budget at this point, but makes progress.

I think, when it comes to the banking system, you know, it was just a few days ago or weeks ago where people were certain that Secretary Geithner couldn't deliver a plan. Today, the headlines all look like, "Well, all right, there's a plan." And I'm sure there will be more criticism, and we'll have to make more adjustments, but we're moving in the right direction.

When it comes to Iran, you know, we did a video, sending a message to the Iranian people and the leadership of the Islamic Republic of Iran. And some people said, "Well, they did not immediately say that we're eliminating nuclear weapons and stop funding terrorism." Well, we didn't expect that. We expect that we're going to make steady progress on this front.

We haven't immediately eliminated the influence of lobbyists in Washington. We have not immediately eliminated wasteful pork projects. And we're not immediately going to get Middle East peace. We've been in office now a little over 60 days. What I am confident about is that we're moving in the right direction and that the decisions we're making are based on, how are we going to get this economy moving? How are we going to put Americans back to work? How are we going to make sure that our people are safe? And how are we going to create not just prosperity here, but work with other countries for global peace and prosperity?

And we are going to stay with it as long as I'm in this office, and I think that -- you look back four years from now, I think, hopefully, people will judge that body of work and say, "This is a big ocean liner. It's not a speedboat. It doesn't turn around immediately. But we're in a better -- better place because of the decisions that we made."

All right? Thank you, everybody.

BLITZER: The second presidential prime time news conference. The president of the United States spending nearly an hour with an opening statement followed by questions from 13 reporters who were invited to ask questions to the president of the United States, going through mostly on economics on the economic crisis facing the United States and making the case for his policies both at the Treasury Department and elsewhere.

Anderson Cooper, a lot of wonkish stuff coming up. But all -- all of this --

COOPER: Are you saying it was boring?

BLITZER: No, I'm not saying it's boring at all. I love the wonkish stuff, but some viewers might hear words like out years.

UNIDENTIFIED MALE: Yes.

BLITZER: And they might get a little confused.

COOPER: We're going to talk to Ali Velshi about what exactly the out years are.

BLITZER: Out years are years following this year. But let's talk a little bit about what we heard because he was trying to project as best as he could, hope that, you know what, it's tough right now. Everybody knows it's tough, but the country eventually is going to get out of this economic slump and the best days are yet to come.

COOPER: While expressing confidence, he was certainly sober, careful in what he had to say. I got to say I thought he looked tired at some point and maybe in some of the deliveries seemed a little tired. Let's just quickly go around there with our panel and see your thoughts, Campbell.

BROWN: Well, I thought in many ways, it was an opportunity to turn the page, where I think at least that's what he was hoping to do away from what we've had over the last week, which is a week of enormous anger directed at AIG, directed at the banks, and sort of tamping down the emotion a little bit and being very serious and trying to get beyond it and not have to address those issues. And when he was asked about it, he didn't want to talk about it.

COOPER: Right. When Ed Henry asked him about his delay on expressing angry, he basically said I'd like to know what I'm talking about before I talk.

BROWN: Right.

BLITZER: And the only answer to that question had followed up and said well, I asked you about why it took so long to express that anger. He said well, you know, before I talk about these kinds of issues I want all the facts.

COOPER: Yes.

KING: I'm struck by two things, and three things, I guess. Obviously, the economy dominated the day and the night as it has dominated his administration. The diversity on who he called on was quite interesting. That's a deliberate strategy.

Univision, "Ebony" magazine, "Stars and Stripes" -- three organizations not normally called on at a prime time White House news conference. That's a deliberate choice by the White House to reach out politically. And he spoke for 50 minutes plus.

The words Iraq were never spoken. There are more than 140,000 troops there. The war hit the six-year anniversary this past week. He never mentioned the word "Afghanistan." There are thousands of U.S. troops there. He never mentioned Osama bin Laden. He never mentioned terrorism. You want to talk about a sea change from George W. Bush to Barack Obama, the tone, the tenor and the lexicon of that news conference was striking.

(CROSSTALK)

BORGER: But he wouldn't talk about it.

BROWN: Gloria...

BORGER: You know, he didn't talk about it.

KING: He mentioned Iran only at the end. He brought it up.

BORGER: Right. He had to bring up -- it was clear that in briefing him, that his staff was saying to him, you know, you're going to be asked why you did that video to the people in Iran. And he raised it himself at the end to talk about -- why he did it because he wasn't asked that by the press corps. Clearly, preoccupation with the economy.

BLITZER: Let me -- let me tell our viewers what they can expect in the course of this night. We're going to digest what we've just heard from the president of the United States. We've got the best political team on television standing by.

I want to alert everyone, coming up very soon, a special edition of LARRY KING LIVE. He has an exclusive interview -- a rare interview with the new White House chief of staff, Rahm Emanuel.

In one hour from now, "ANDERSON COOPER 360" will come up. He's got an excellent program, an excellent lineup you have getting ready.

So we're -- we're just beginning our coverage of what we've just heard from the president, because I want our viewers to know -- not only the United States, but around the world -- the words he uttered tonight probably will have a significant impact in the days and weeks to come.

COOPER: And if you're just tuning in and you missed the bulk of the press conference, we're going to be taking the most important excerpts from the last hour's news conference and playing them throughout this -- these next two hours, both with LARRY KING LIVE and also on "360" at 10:00 p.m. Eastern -- Gloria, what did you think in terms of what the president set out to try to do and how it actually ended up coming across?

BORGER: I think he set out to convey the message that his administration is not overwhelmed by the number of problems it has on its plate.

At the beginning of the press conference, he outlined these are the things we've done -- one, two, three, four. And then when he was asked about other things, he said we can do those in the context of saving the economy. It was very clear that he just wanted to let the American people know I'm on the job, I'm doing what you elected me to do and I've got a plan.

BROWN: And, also, his grasp of details. It was very clear he wanted to demonstrate that...

BORGER: Yes.

BROWN: ...because of the criticism, I think.

BORGER: Growth numbers.

(CROSSTALK)

BROWN: Going on "Leno," doing these town hall meetings, being sort of too bit and out there...

VELSHI: It sounded wonky but he got it.

BROWN: He wanted to sound wonky.

VELSHI: Yes. Yes.

BORGER: The difference between his growth numbers and the Congressional Budget Office...

VELSHI: Right. The percentage differences...

BORGER: ...growth projections, .3 percent difference. Right.

VELSHI: But what's interesting is that he set out to talk about the budget. Now, if you asked most Americans, I don't know that they would tell you that's the topic du jour. They would tell you about AIG. They would tell you about the bank plan. They might tell you about the stock market or jobs or housing.

And so he set out to talk about his budget priorities. And he seemed to convince everybody, at least for a good half an hour, to go along with him on that discussion.

So to me, it looked like a taking back the agenda conversation. And he got there for a while.

KING: Right. And that's important inside Washington. People out in the country who maybe didn't have their question answered, Washington this week will take up the budget resolution. It's what Congress passes to say here's the parameter of what we will have in the next year's budget. The president doesn't even have to sign it. But they put the math together there and they say this is what we're going to do. And Congress is bound by that.

So it's an important discussion inside Washington. And in the end, it's obviously a very important discussion for the American people because of what's in the budget.

(CROSSTALK)

BLITZER: On that point, though, it's very significant, I thought, when he was asked, would you go ahead and sign this -- support this if it didn't include two of his centerpiece elements -- continuation of a middle class tax cut, make that permanent, and this cap in trade. This would be a new tax on polluters, if you will, which, in effect, will raise the price of electricity, raise the price of gasoline.

On both of those points, he said you know what...

KING: Yes.

BLITZER: ...I'm going to -- I've got education, I've got energy, I've got health care reform, I've got other issues. But he sort of left open the possibility, you know, if we can't afford it, we can't afford it.

COOPER: Bill Bennett has been listening in Washington and so has Roland Martin from Chicago.

We want to go to both of them -- Roland, your thoughts?

ROLAND MARTIN, CNN POLITICAL ANALYST: Well, first of all, the president -- it was very interesting. A lot of his critics have been saying he should drop all of this stuff when it comes to energy, health care, education. He should focus on the economy.

But he's absolutely insistent that this is a part of the overall problem. And I think that's why he kept coming back to it.

Also, his closing line, I thought, was very interesting, when he said look, this is an ocean liner, it is not a speedboat. He kept reiterating that you are not going to see things happen immediately.

And I think, in many ways, you've got folks in our country -- we're so used to having things done at the snap of a finger in terms of this sort of microwave philosophy, he is making the point that it has to take time. And as Campbell said earlier, that's causing people to say, look, you can be outraged, you can be all upset, but, look, it's going to take time to fix it.

So that is a very smart strategy for the president to say, look, slow it down. We have to get things done right.

COOPER: Bill Bennett?

BENNETT: Well, that's still a huge non sequitur. There's a terrible budget problem. The deficit. We may be going into a depression and you're going to spend all this money. And the problem has been we haven't spent enough money on education. It just doesn't follow.

But let me tell you what I think happened tonight. There is a conservative strain of thinking that says the press is in love with Barack Obama. Not tonight. He went through a murderer's row, from Jake Tapper to Chip Reid and CNN's own Ed Henry. And you saw a flash of anger by the president at Ed Henry.

Ed repeated the question. He was right to. The president said something that wasn't true in response. He said well, I wanted -- I wanted to wait a couple of days until I knew what I was talking about.

When he responded on that, he didn't know what he was talking about. He said we've got to find some way to stop these bonuses. He and Geithner of this administration had set up those bonuses.

He had a rough night. And Anderson said he was tired. I think tonight he learned that no matter how many times he beats up Republicans, some of the press -- a lot of the press is not going to buy it. They're going to hone in on his arguments.

Most of what he did tonight, in response to very sharp, pointed questions, was to give that same speech. And I don't think it cut. I do not think he had a good night.

BROWN: Let's bring in Ed Henry on that point, who is still at the White House in the East Room there, Ed -- and, Ed, you may have just heard Bill Bennett say that he thought he had observed a flash of anger from the president in response to your question.

What did you think?

HENRY: Well, he certainly was angry at end when I followed up and pressed him on why he didn't come out sooner with that outrage and basically, said, you know, I want to know what I'm talking about, suggesting that I was pushing him to come out with the outrage sooner.

My question was really about the fact that, as we have now learned in recent days, obviously, this administration knew much sooner about these bonuses.

BENNETT: Right.

HENRY: And it took them a while to get -- you know, out with that outrage.

I think the broader point, in some of the tough questions you saw tonight from several people, is the bottom line of how is this president going to pay for this agenda?

He kept coming back to his key priorities. And that's his right and that's why he was trying to get this forum, to keep saying I want to push the tax cut, I want to push energy, health care, etc. etc.

But when we pushed -- several of us pushed him on adding $7 trillion or more of new debt, he really did not have an answer on how he is going to pay for all these programs.

It's going to be a huge question, not just with Republican critics. There's a growing chorus of Democrats. And that's why he's going to Capitol Hill tomorrow to lobby his own party, not the other side, to vote for this budget. It's going to be a tough vote.

BORGER: And, you know, the president kind of offered on his own sort of a shot at the Republicans on this. He said, you know, they haven't offered an alternative of their own to my budget, because he knows that he's getting a lot of heat. (CROSSTALK)

BORGER: Now, he can't say that about his own Democrats, right?

KING: And one of the most -- one of the most fascinating subplots -- and, again, sometimes we end up in the weeds here. But, Ali, I'd like you to jump in and help explain this.

The president's own budget says the recession will end this year and start to grow. Now, that matters because the growth of the economy means tax revenue for the government, which means the money to pay for health care, the money to pay for education, the money to pay for all of these other things.

And the president doesn't agree with the Congressional Budget Office about what the economy is going to do five or six years from now. But if you talk privately to his economic team, they actually now are more pessimistic than they were just a month or two ago when they wrote their budget.

VELSHI: Right.

KING: They can't say it publicly, because that would undercut the argument of the president.

BENNETT: Right.

KING: And they don't want to compromise and negotiate -- to your point, Wolf...

(CROSSTALK)

KING: ...they don't want to compromise now.

But, Ali, when he says people agree with me -- the blue chip forecasters agree with him, that's a debatable point.

VELSHI: Right. And we can all find blue chip forecasters who agree with many of the points we have. The Congressional Budget Office, bipartisan...

BROWN: Sure.

COOPER: And by the way...

VELSHI: ...is...

COOPER: ...have the blue chip forecasters been right?

(CROSSTALK)

VELSHI: Well, that's the big issue. And...

(CROSSTALK)

VELSHI: ...by the way, those forecasts indicate a rougher recovery than the White House. And that's what John is getting at, that if the White House really doesn't believe their own numbers, that's an issue, because just a shift of a few months or a few fractions of a percentage point make a big difference in the recovery of this economy and how many more millions of people might be out of work.

BLITZER: Because even when the president, Ali, says I'm going to make sure that I live up to my commitment by the end of a first term...

KING: Yes.

BLITZER: ...I will cut the annual budget deficit -- the annual budget deficit -- in half. What we're talking about now is...

VELSHI: It's almost a trillion dollars.

BLITZER: It's probably true...

(CROSSTALK)

BLITZER: ...that right now, their budget deficit could go up to $2 trillion a year.

VELSHI: Right.

BLITZER: By cutting it in half, it would still be $1 trillion...

VELSHI: Which would still get us into...

BLITZER: ...which is still twice -- more than twice as big as it's been over these many, many years in the United States.

VELSHI: And while he said the dollar was strong, ultimately, that is a major problem for -- for the U.S. dollar and for the strength of the United States, if we end up not with an $11 trillion deficit, but a $20 trillion deficit inside of the next few years.

UNIDENTIFIED MALE: Right.

BORGER: But when -- when you talk to White House advisers, they will tell you that they've been advised by economists that the danger right now, in order to get ourselves out of this ditch is, is in not spending too much, but in spending too little to get us out.

VELSHI: Right. And that was Tim Geithner's line.

BORGER: Right.

VELSHI: And the fact is there are many people who believe that, that this is an economy that is run by consumer spending.

And if the consumers are not spending, the government has to step...

BLITZER: I thought... VELSHI: ...at the moment.

BLITZER: I thought he was very effective during the top of the news conference, Ali, in explaining in simple terms -- relatively simple terms -- why the federal government now needs new authority to regulate these non-bank financial institutions like AIG and these hedge funds...

VELSHI: Yes.

BLITZER: ...because -- to regulate them the way the FDIC, in effect, has regulated banks over the years.

COOPER: Roland Martin, what do you say to those who say the president is cherry picking what numbers and what economists he wants to listen to?

MARTIN: Well, first of all, in looking at what presidents have done over the last several years, all presidents do that. It's very rare you're going to have a president who agrees with the Congressional Budget Office. They're going to say that my office, the OMB, is much different than the CBO.

So the president -- any president wants to project their reality. And, look, Congress has their job to do. That's why they're there. They are the lawmakers. They are supposed to, frankly, counter what the president is doing. That's why we have three branches of government.

And so, but look, what's going to happen here is he is going to have to face the reality of his own Democrats. And that is, you have moderates, you have centrists and they are looking at 2010. And they want to make sure that they are not going to be saddled with the same criticism Republicans had. And that is, you went along with the president. They spent, spent, spent, deficit increase. And the Republicans paid for it. Democrats don't want to pay for it.

COOPER: Bill Bennett, how serious is this unhappiness among some Senate Democrats?

BENNETT: Oh, I think it -- it's very serious.

What was it, 16 tonight are forming this group?

And, again, this really blunts the president's criticism, saying it's all partisan conservative criticism.

There's also been a shift in the punditry. I don't mean your table, particularly, but people in the middle -- the Stuart Taylors of the world, the Robert Samuelsons of the world. Even Krugman on the left, Frank Rich in "The New York Times.

He has -- he succeeded in the campaign by painting a lot of his opposition as this very hard conservative right. But now, people are asking the same questions no matter where they come from politically. And he's got to do better than tonight. But I'll say again, the drama of this thing there was before Ed Henry and after Ed Henry.

(LAUGHTER)

BENNETT: I thought -- I agree with Wolf. He started pretty well. He was upbeat. After Ed Henry, he looked like he wanted to go home. Get out of there.

(LAUGHTER)

BLITZER: That AIG story is a haunting story for a whole lot of people.

Our coverage is only just beginning.

Larry King is getting ready to do an exclusive interview with the new White House chief of staff, Rahm Emanuel. You haven't seen him or heard from him a whole lot since President Obama took office.

We'll take a quick break.

Remember, CNN.com -- go there. You have a whole lot of additional information, as well.

Our coverage of this second prime time presidential news conference will continue after this.

(COMMERCIAL BREAK)

BLITZER: You're probably wondering -- we're going to show you what's on the screen right now, what all the words are. And we told you earlier, we have a new technology -- the words from the news conference, how they played, how often they played. This is called word cloud, John King. And you take a look at some of the words that were used most often. The bigger the words are on the screen, the more often we heard them from the president of the United States.

KING: And this is a compilation, Wolf, of the questions and the answers. So all of the words spoken up until during the second to the last question, I believe, was about the stem cell decision -- or right near the end of the questions. So this is most of the news conference.

Now you see the largest word there is the word "going" -- a pretty common word -- we're going forward, we're going to deal with this, we're going to tackle that. And maybe it was in the questions, as well. So the president mentioned that the most.

But look at the other big words. We see budget. Obviously, that's constituent with, remember, before the press conference, we had some of the president's prepared remarks in the opening statement. Budget was a big word. It continued to dominate. That was his main goal tonight -- to sell his budget -- not just his plan, but his priorities, the philosophy behind his budget. That's a big word.

People -- obviously, this is a president who's trying to connect his priorities to the American people. He used that word quite a bit and it came up.

And look at the words. Percent. We were talking earlier, there's a lot of talk about the financial plans and what would happen in the budget and the size of the budget deficit as related to the larger economy. So you see percent it large. Economy is large.

Right?

Well, sure. Those are above each other there. It's just because of how they came in. There's a little saying there. But if you look around, you see deficit is a pretty prominent word. Growth is a pretty prominent word. And this essentially -- what this tells you, if you look at the compilation of it, is that these are economic words that dominate the discussion here -- government authority, investments. Veterans came up at the end about spending.

One thing you'll notice, if you look even at those little tiny words up there, Wolf, what was striking to me is how much this was dominated by the economy, the bailout plans, the budget plan.

You won't find Iraq and Afghanistan no matter how tiny you go down and look at those words.

BLITZER: Yes, it's interesting. It's fascinating -- Gloria Borger, as we take a look at the president tonight, he was very, very effective, I thought, when he was asked some of the questions that have nothing to do with the economy -- for example, when Ann Compton asked about race, for example. It was a -- it was a strong question and it underscored where he's coming from on that.

BORGER: Right. I mean he said that -- that he's being judged the way he ought to be judged, which is by performance. And he said, yes, the American people were very moved that they had turned this page in American history. He said but that lasted about a day and now I'm president and that's how I'm being judged, by my performance.

BLITZER: And he did, Campbell, also make a strong statement about leaving open -- he's not sending U.S. troops to the border with Mexico now. But if -- if things get worse, he said he'll do whatever is necessary to protect America's security.

BROWN: Yes. And interesting to make -- to follow up on John's point from earlier, that that was only -- the real only foreign policy moment of this press conference. He, of course, are heading down there tomorrow, because this has become such a surprising issue. Hillary Clinton making the trip down, as well.

BLITZER: All right, guys, we're going to -- we've got a full night of coverage.

Coming up, Larry King is standing by.

He's got an exclusive interview with the White House chief of staff -- Larry, set the stage.