National Journal's Ron Fournier and Ronald Brownstein interviewed President Obama on October 19. The full transcript follows.
NJ Let me start by asking you about the issue that’s most on the minds of Americans: the economy. I’m wondering, absent any big change in policy, is there anything you see on the trajectory that would cause the economy, particularly jobs, to grow faster in the next year than they have been growing in the last year?
OBAMA Well, the American economy is massive, it’s complicated, and so anybody who says they know exactly what the economy will do is probably overestimating their foresight. What we know is that we’re coming out of the worst financial crisis and the worst recession since the Great Depression. So we’ve suffered a significant body blow. Because of the steps we’ve taken, the economy is now growing again, and we’ve seen nine consecutive months of private-sector job growth. Businesses are profitable and consumers are cautious, but they’re spending. If businesses got more confident about demand being out there to justify their investments, and in turn that led to slightly increased spending, which then created a virtuous cycle, then you could see significant improvement in 2011 over 2010. But given the hole that we’re in, it would still take a significantly long time to make up for the 8 million jobs that have been lost, so that’s why we think it’s still important to take those extra measures that can improve demand, give small businesses more confidence in terms of their ability to get financing. The steps we took in terms of cutting capital gains tax for start-ups, trying to accelerate business investment, allowing them to depreciate faster if they make those investments next year, those kinds of measures can potentially make a difference because even if all goes well, we lost 8 million jobs. The housing market is still very weak. And those headwinds are going to keep on blowing for some time to come.
NJ You talk a lot about how this is the worst financial crisis since the Depression. We’re also going through an economic restructuring unlike anything we’ve seen in 100 or so years, going from one type of economy to another. Given those two pillars, is either party, is either your party or the Republican Party really doing enough to address this? Even if you get everything you want in the stimulus package, is that enough going forward?
OBAMA Well, here’s what’s true. We’re not just going through a restructuring over the last couple years; we’ve been going through a restructuring for the last decade, the last 15 years.
NJ Fair point.
OBAMA It got papered over because of the housing bubble and easy credit. So we now know that between 2001 and 2009, middle-class families lost 5 percent of their income. It’s part of the reason why they maxed out on their credit cards and took out so many home-equity loans. We know that job growth was more sluggish between 2001 and 2009 than at any time since World War II. But the housing boom in a lot of places across the country put folks who had lost their jobs in manufacturing to work in construction, and now the tide’s washed out, and those folks are really suffering. So you’re exactly right that we’ve got some structural issues that we put off for a long time, and we’re not going to transform overnight. What we have tried to do is to make sure we get started on some of those, that we get started addressing some of those structural issues knowing that the payoff is not going to be immediate, it’s not going to be next year. The best example of that is probably the education issue. We used to rank first in the proportion of college graduates; we now rank ninth. We used to be at the top of the heap in math and science; we’re now 21st and 25th in math and science when you look at the performance of 15-year-olds. So what we’re doing with Race to the Top, what we’re doing in terms of expanding student-loan programs, all those steps are designed to make sure that in this highly competitive environment, we’re going to be better positioned. When it comes to manufacturing, the investments we made in research and development, particularly in sectors like clean energy that show promise for the future. Those aren’t going to pay off immediately, but if we start positioning ourselves so that we’re a leader in advanced battery manufacturing, we’re a leader when it comes to solar and wind energy, then we have the opportunity once again to make up some of that ground that we lost over the last decade.
NJ But when you look at The Atlantic [story about] "the end of jobs"–when you think about what you’re trying to get done, is it enough?
OBAMA Here’s what I’d say, is that it took us several decades of neglect to get to where we are. It’s going to take us time to get out of the hole that we’re in. I would still not trade our position with any other countries in the world because we still have these enormous assets–the best universities and colleges in the world, the most productive workers in the advanced world, the most entrepreneurial culture in the world. Those advantages can make up for a lot. And you know, you’ll recall that back in the '80s, everybody was sure that Japan was going to clean our clock. We had a similar sense of distress about America’s position in the world. And next thing you know, in the mid-'90s, we took off again and left everybody else behind. I have confidence in our ability to adapt again. It does mean, though, that this election matters, precisely for the reason that you’re pointing out. If we make a decision right now that we potentially cut education spending by 20 percent, that’s going to make a difference in terms of how well we’re positioned to compete 10 years from now.
NJ Let’s talk about that, because the Republican candidates in both the Senate and the House are running on an agenda divergent from your own. Pretty consistent: Extend the Bush tax cuts for all earners; most of them are talking about a balanced-budget amendment; repealing the health care law, virtually every Republican Senate candidate; opposing cap-and-trade legislation. In your view, what would be the cumulative impact of that agenda if implemented?
OBAMA Well, let me be very specific on some of these promises that they’re making. When it comes to repealing the health care law, the question to ask these Republicans are, “Do you want to go back to a time where people can’t get health insurance if they’ve got preexisting conditions?” And if you ask them that question, almost all of them will say, “Oh no no no, we don’t mean that provision.” Well, how about closing the doughnut hole for senior citizens? “Well no, that part of it we like.” Well, OK, do you think it’s a good idea that young people should be able to stay on their parents’ health insurance til they’re 26 years old? “Yeah, that’s sensible.” Well, how about the notion that there are no lifetime limits and insurance companies can’t drop your coverage when you get sick? “No no, we support that.” What is clear to me is that in the abstract, everybody on the Republican side is for repeal. What’s going to be tested after the election is these specific provisions and how do they feel about them? Because it turns out that those provisions are hugely popular and they’re the right thing to do. More importantly, they’re going to have to answer the fact that, according to the Congressional Budget Office, not according to me, implementing health care will save us a trillion dollars over the course of two decades. They will have to answer where we’re going to make up that trillion dollars and how do they square that with their claim that they want to balance the budget. When you ask them about a balanced-budget amendment–everybody’s for a balanced-budget amendment in the abstract. I have yet to hear anybody, with the exception, to his credit, of Paul Ryan, give me any specifics on what exactly do they want to cut. They’ll say, “Well, we’re going to eliminate the last part of the stimulus.” Well, when you actually look at the amount of money that’s not already out the door, turns out a big chunk of that are tax cuts to middle-class families. Do they really want to raise taxes on middle-class families? Do they think it’s wise for us not to make investments in clean energy? Does anybody think that our infrastructure is adequate to compete with the 21st century? I do not know a single person who’s been to Shanghai or Beijing or Singapore and comes back and says, “We’re doing great when it comes to infrastructure.” When it comes to education, part of their suggestion to pay for a fraction of the high-income tax cuts, which would cost $700 billion, they don’t answer how they’d get all the way there. But a small sliver of the answer is to roll back some of the increases that we’ve made on things like education. And as I’ve said before, if we are not able to produce more scientists and more engineers, and more highly skilled technical workers, then other countries are going to clean our clock.
NJ Let me ask you a couple of follow-ups to that really quick. If there are the votes in the next Congress to extend the Bush tax cuts for all earners, would you veto such an extension of the tax cuts for all earners?
OBAMA I think it’s premature to talk about vetoes because maybe I’m a congenital optimist, but I feel as if postelection, regardless of how it plays out, the most important message that will be sent by the American people is, we want people in Washington to act like grown-ups, cooperate, and start trying to solve problems instead of scoring political points. And it is going to be important for Democrats to have a proper and appropriate sense of humility about what we can accomplish in the absence of Republican cooperation. I think it’s going to be important for Republicans to recognize that the American people aren’t simply looking for them to stand on the sidelines; they’re going to have to roll up their sleeves and get to work. In that context, my hope is that a lot of these tax issues can be resolved. The one thing I will insist upon, though, is an honest accounting of how to resolve them. If the Republicans are insisting on a permanent extension of the high-income tax cuts, then they have to explain to me how we’re going to pay for them. And so far, at least, we have not gotten such an explanation. And I don’t think it’s sufficient for them to say that we feel confident that the economy, because of these tax cuts, will grow sufficiently to make up for them, which is their usual supply-side argument. It’s been around for four years now; it has been disproved again and again, and at some point we’re going to have to be honest about what our priorities are.
NJ Let me follow up once more there and then take you in a different direction. Another area that a lot of Republicans have been talking about this year is the idea that President Bush attempted [to carve] out individual investment accounts from Social Security. The other day, Sharron Angle, who is one of the proponents of that idea, turned to Harry Reid, and by extension Democrats, in the debate and said that they were not facing the full, long-term challenge of Social Security, and that when it came to Social Security, Reid had to “man up.” That was the phrase that she used, that Democrats had to “man up” on this. What was your reaction when you heard that, the idea that Democrats are not facing, are not being honest with the country about the risk to Social Security, and is there any common ground you can find around an agenda that included diverting part of the payroll tax into private accounts?
OBAMA Well, I think we have to separate out those two questions. I think the Democrats, including me, repeatedly during the course of the campaign have said that it’s important for us to make sure that Social Security is here not just for this generation but for generations to come. That is the most important social program we have. It’s a bedrock of our belief that if people have played by the rules and worked hard, then at the end of their working lives they have some security, some floor beneath which they can’t go. And my hope is, is that the bipartisan deficit commission that I appointed will address Social Security in the context of the broader range of fiscal issues. In fact, Social Security is probably the easiest of the entitlement problems to solve. Medicare, which is the big driver of long-term deficits, is something that we can solve only by changing how we spend our health care dollars generally. That’s part of why health care reform was so important, because if we didn’t get started on that now, by the time we were really in trouble on Medicare, it’d be way too late. Now, let’s go back to the point you made about—
NJ “Man up.”
OBAMA —Sharron Angle. There’s no evidence that carving out a portion of Social Security revenues and putting them in private accounts helps the solvency of Social Security. In fact, the reason that when President Bush proposed it, it died a fairly rapid death, is the recognition at least among honest fiscal conservatives that given the way Social Security is structured, you’d actually have to borrow a trillion dollars to make up for the money that was siphoned into the private accounts, and this would weaken the solvency of Social Security. Moreover, it’s hard to imagine that anybody who is paying attention over the last couple years would feel real confident that putting part of their Social Security into Wall Street accounts, after they’ve been watching what happened to their 401(k)s, would somehow be comforted by that. So I think that that approach is a nonstarter. I do think that you could find a sensible agreement between Republicans and Democrats about a way to strengthen Social Security, much as Ronald Reagan and Tip O’Neill were able to arrive at a sensible solution that didn’t require an overhaul of Social Security’s basic structure. I think that same approach is available to us today.
NJ In 1995, shortly after the midterm debacle for the Democrats, President Clinton began a series of course corrections, starting in the State of the Union when he said, “The era of Big Government is over.” You talk about this election season as having exposed voter unrest, and the Democratic lesson, I think you said, is to have humility about how far you can go. What course corrections can you see yourself making, given that’s the message, and how would you express it? How would it affect your rhetoric and your policies?
OBAMA Look. My first two years in office were essentially characterized by having to deal with emergencies. We had the financial crisis that led to a broader economic crisis, that led to the potential collapse of the auto industry in America, that led to a fiscal crisis, and we had to respond rapidly on each of these fronts. It was a lot for the public to digest. It was also a lot for me to be able to communicate effectively to the public in any coherent way. If you think about it, the amount of work that should have gone into communicating just what was in the stimulus might have taken six months. We didn’t have time. Because right away we had to figure out, how do we apply a stress test to the banking system that stabilizes it, and what are we going to do about autos; and now that the economy is stable and growing–although still much weaker than we want–I think it’s possible for us to be more deliberate, to spend more time building consensus. I’ll take an example like infrastructure, where historically you’ve had a strong bipartisan consensus around roads, bridges, runways, railways, and a reauthorization is going to be coming up. For us to be able to say to the Republicans, "Even in a context of fiscal restraint we can’t let our core infrastructure deteriorate. What’s the best way to do it? Are there ways that we can redesign how we fund infrastructure so that taxpayers are getting better bang for the buck? Are there ways that we can leverage private capital to come in on top of public dollars for investments not only in traditional infrastructure but also new infrastructure like a state-of-the-art air traffic control system, for example, that would cut down delays and increase productivity for people across the country?" That is the kind of conversation that may take a little more time to build that consensus, but I think is possible. On education, the truth of the matter is that we have done probably more in the last two years to push off the old dogmas about what reform looks like, and, under Arne Duncan’s leadership, we’ve been willing to take on some Democratic sacred cows and say, "We’ve just got to get in there and fix the schools." Money matters, but reform matters, making sure we get the best teachers in the classroom matters. So now, as it becomes time for us to renew what has been No Child Left Behind, hopefully we can find some common ground. Those are the kinds of opportunities I’m going to be looking for, areas where I think the American people broadly recognize we can do better than we’re doing right now. But hopefully, we will have more time because we’re not going to be putting out fires day in and day out.
NJ You made a lot of promises in the 2008 campaign that people could tick off by the time they went into the voting booth, and you say you’ve accomplished about 70 percent of them. What are the promises that you can make now to the American public, the things you can get done in the next two years?
OBAMA I just mentioned two that I think we can get done, and those are two pretty big ones: making sure that we’ve got a framework for continuing the education reform that we’ve started that everybody’s confident about. Rebuilding our infrastructure in a serious way that puts people back to work but also lays the foundation for long-term growth. We still need an energy policy in this country. I think that it is not realistic to expect that we have another big omnibus, comprehensive one-size-fits-all energy bill. We’re probably going to have a series of more bite-sized pieces that have to do with renewable-energy standards, that continue to build on the good work we’ve done to improve fuel efficiency in cars, energy efficiency in buildings. I think there are going to be a whole bunch of Republicans who continue to be interested in how we can foster a clean-energy industry here, and how can we do a better job with traditional energy sources like nuclear and natural gas. I think there’s going to be room for us to come up with an intelligent policy there. It won’t be easy, but I think we can get something like that done. But everything we do is going to have to be focused on "how do we kick-start this economy so that it is growing faster?" Because the most important anti-poverty program I can put in place, the most important housing policy I can put in place, the most important deficit-reduction policy I can put in place is to have the economy grow faster.
NJ But when you listen to what you’re hearing from the campaign trail from Republicans, are you seeing mostly opportunities of the sort you’ve mentioned in energy, infrastructure, and education? Or do you think that the policies they’re promoting are mostly going to provoke resistance from you and a belief that they’re taking the country in the wrong direction if they have the power to implement them?
OBAMA It’s always hard to gauge what ends up being campaign rhetoric and what actual governance looks like. It is my hope that Republicans will say to themselves, "We need to get things done. In order to get things done we’re going to have to cooperate with the president." I hope they don’t believe all of their own rhetoric, because, for example, on something like dealing with our fiscal problems, anybody who’s honest and looks at the numbers will know that the reason we have these long-term fiscal problems is not because of stimulus, it’s not because of TARP. It’s because there’s a structural gap between how much money we’ve been spending and how much money we’ve been taking in that’s been going on at least since 2000. And we have an aging population that’s been making more demands on government. What they won’t be able to do, I think, is to say, "We’re going to cut taxes, balance the budget, and not impact on services that we know poll well and people like." If the "Pledge to America" says, "We’re not going to do anything on Social Security, we’re not going to do anything on Medicare, we’re not going to do anything on veterans, and we’re not going to do anything on defense," I don’t know a lot that’s left. Maybe they think that the national parks, they think somehow we can extract enough money out of them, or the Environmental Protection Agency. If that’s the case they’re going to have to look at the budget, and I’ll be happy to sit down with them and we can work through it line by line. Because one of the challenges we have, I think, is making sure that we’re all working off the same baseline of facts when it comes to our budget. I think a lot of people think that if we just eliminated waste and abuse in the system that would solve our fiscal problems. That if we got rid of earmarks that alone would solve our problems. If we eliminated foreign aid then somehow the budget would be balanced. And what will happen for any new arrivals, Democrat or Republican, they’ll run through the numbers and it’ll turn out that it’s not that simple.
NJ You mentioned energy as an area. On the other hand, of the 20 serious Republican Senate candidates who have taken a position, 19 have said that the science of climate change is either wrong, inconclusive, or flat-out fraudulent. I’m wondering, given that, how you react to that, and also if you would be comfortable having the issue of carbon emissions ultimately dealt with by EPA, an approach that I think you’ve always viewed as second and not the preferable one. But given where Republicans are on the science of climate change, can you see any prospects for action on that, and are you comfortable with EPA being the ultimate arbiter of how we deal with it?
OBAMA I think some of the rhetoric you’re hearing on the campaign trail has to do with politics. Again, there’s a bracing reality that hits you when suddenly you’ve got responsibilities on the governance side. I do think that given the weakness of the economy, the American people are skeptical about taking any steps that cost too much or are perceived as reducing job growth. I think on the other hand, when you talk to the average American they are also very mindful that we can’t keep on sending billions of dollars to other countries in terms of foreign oil, that it’s bad for our national security and it’s bad for our economy. What’s also true is that most of the steps that we can take for our national security, for our energy independence, for our economy are ones that would have the side benefit of dealing with climate change. So my approach to Republicans would be to say, "Regardless of what you think about climate change, here are a bunch of things that are smart to do. It will save consumers money, it will save the country as much money going into foreign oil imports, so let’s concentrate on things that we just know are smart to do." If we do that, we can probably get a quarter of the way there in terms of where we need to be in terms of carbon emissions. The other thing we need to do is to make investments in new energy sources, clean-energy sources, because the unit costs for clean-energy [sources] are still higher than they are for traditional fossil fuels. I had a group of businessmen in here led by Bill Gates that said, "Probably the most important thing we might be able to do right now is to triple our R&D budget for energy," because right now it’s about a third of what the NIH gets for health research. Why not boost this so that we can make faster strides? Even when you talk to somebody like Steven Chu, my Energy secretary, who knows the science of climate change and takes it very seriously, as do I, he’s the first one to acknowledge that we’re going to need some transformative technologies in order for us to get all the way to where we need to be on climate change. The point is that there’s things that we can do short-term on that don’t require you to perfectly agree on the science of climate change in order for you to think that it’s beneficial for Americans long-term.
NJ Lot of rumors, kind of spawned by [Bob] Woodward, that Hillary might switch positions, that Secretary Clinton …
OBAMA That’s completely unfounded. They are both doing outstanding jobs where they are.
NJ We’re talking about the rumor that Vice President Biden … that’s completely unfounded?
OBAMA Completely unfounded.
NJ Are you going to run for reelection?
OBAMA Obviously I haven’t made any formal decisions, but I feel like I’ve got a lot of work left to do.
NJ Sounds like you’re in?
OBAMA Take it as you will.
NJ You nodded your head. [Obama laughs]. We’ve talked mostly about domestic issues here, but when you look at the world now, and you have very vexing problems in Afghanistan, Pakistan, and Iran, at this point which one worries you the most?
OBAMA Well, let me start by saying that on Iran we had a theory coming in that we should reach out to Iran and give them the opportunity to do the right thing, but also have some sticks in place and apply them if they didn’t reach back. We have executed on that policy, I think, as well as anybody could’ve anticipated. And independent analysts have been struck by the degree to which the Iranian sanctions have had a significant impact on their economy. But that is a highly ideological regime, and we do not yet know whether the costs of pursuing a nuclear program, in their eyes, is now outweighing the benefits. But we’re going to keep on pushing. I think Afghanistan and Pakistan are the same problem, which is how do we address militant extremist terrorist networks that are embedded in that region, and metastasizing in other parts of the world that are vulnerable? And that will continue to worry me, I suspect, through the duration of my presidency and I think that will worry the next president as well. In order of importance, my most important task is making sure that those extremist networks never get their hands on a weapon of mass destruction, and we organized a nuclear nonproliferation conference that was very successful. And we made strides with a whole range of different countries from the Ukraine and other former Soviet satellites to other countries in the Middle East and Asia to try to lock up loose nuclear materials, and to make sure that there are protocols in place that reduce that danger. My second task is to make sure we’re dismantling and ultimately destroying these networks. The Afghan policy and our approach to Pakistan are both designed to achieve those goals. It is a hard slog, and I think General [David] Petraeus is pursuing the right strategy. We put before the Pakistanis our expectations of them in terms of being a partner with us on this. It’s uneven the help we will get, but I think that we are generally moving in the right direction. But it’s going to keep on worrying me for some time to come.
NJ You’re a student of history. When you look at the enormous economic and social change going on right now, what era in our history can you compare this to, and what have you learned by what presidents in those times did or didn’t do?
OBAMA That’s interesting. There are different pieces of our current challenges that I can draw parallels to. Obviously, we have gone through, in the past, transitions, economic, where we went from an agricultural society to an industrial society, and we had to retrain the population to be able to get those new jobs in the future. Starting with folks like Lincoln, we made investments in human capital that allowed people to equip themselves. And that goes on right to the GI Bill. Each successive shift of the economy meant we were retooling our population, giving them the capacity to adapt in that economic climate. I think we are going through one of those periods right now. I think internationally, I’m not sure there are any parallels right now, because even though the world is more complex than ever, even though you have these emerging countries like China and India that have huge potential and are starting to throw their weight around on the world stage, we are still by far the largest, most powerful country on Earth. And as much as these countries complain about us, when we get in a real bind, when the world gets in a real bind, whether it’s who’s going to help northern and southern Sudan negotiate a referendum, or who’s going to effectively assist Haiti after an earthquake, lo and behold, it turns out that everybody’s expecting the United States to carry the weight on this. So, in that sense, I think we are not like Great Britain, when militarily it was declining. Because that happened fairly quickly, almost overnight, they were supplanted. It is hard to foresee, over the course of the next several decades, any country being able to catch up to us in terms of our ability to influence what’s happening around the world and being willing to take responsibility for the events that are taking place around the world. China, as rapidly as it’s growing, still spends a fraction of what we spend on our military. It still has 700 million people who are in dire poverty that they have to attend to. So when it comes to underwriting an international framework that allows for peace and security and economic stability, they’re still lagging behind and will be for a while. Now, that is both a challenge for us and a responsibility for us. That means we carry an extra burden, and that means that we’ve got to be, again, more humble about what we can accomplish because we have finite resources. On the other hand, it’s also an opportunity. Despite everything we’ve gone through, I think the world still looks to us for leadership. That means we can still shape the world in ways that not only create more peace and more security worldwide for our kids and our grandkids, but it means that we can still attract talent from all around the world to help create new businesses here. It means that the values we care about in terms of democracy and human rights are ones that we still have the ability to promote and extend beyond our shores. As I said before, I don’t know of anybody who wouldn’t want to trade places with us despite of all the challenges we’ve gone through. I do see a historical parallel in what has happened probably every 20 or 30 years in this country. We get down on ourselves, or the existing circumstances. We see other countries maybe doing better; we’ve got some structural problems. Yet each time we’re able to lift ourselves up out of those difficulties and remake ourselves. In fact, part of what I think makes America strong is we do go through these periods of self-reflection and questioning and political tumult. That sparks the desire to do better than we’ve done.