1:45 p.m.-- George Condon has a smart take on Obama's ups and downs at the press conference. Read it here.
12:03 p.m. -- And that's a wrap on the press conference itself. We'll post some analysis as soon as we have it.
12:02 p.m. -- The New York Times asks about what Obama will do to build a “spirit of cooperation” and why he won’t invite Republicans to the negotiating table today.
A: “Well, let me just speak to this generally. It's true that this is my third budget. The first two budgets were in the midst of the worst recession since the Great Depression. So we had a different set of priorities. And I said it at the time, in each of those budgets, what I said was, you know, the deficit's going up, and we are compiling some additional debt. But the reason is because it is so important for us to avoid going into a depression. Or having a longer recession than is necessary. Because the most important thing that we had to do in order to limit the amount of increased debt and bigger deficits is to grow the economy some more. So that was our priority. That was our focus.
“This third budget reflects a change in focus. The economy is now growing again. People are more hopeful. And we've created more than 1 million jobs over the last year. Employers are starting to hire again. And businesses are starting to invest again. And in that environment, now that we're out of the depths of the crisis, we have to look at these long-term problems and these medium-term problems in a much more urgent and much more serious way.
“Now, in terms of what I'm doing with the Republicans, I'm having conversations with them and Democratic leadership, I did it before this budget was released and I will do afterwards. I will not give you a play-by-play of every negotiation that takes place. I expect that, you know, all sides will have to do a little bit of posturing on television, and speak to their constituencies. You know, rally the troops and so forth. But ultimately, what we need is a reasonable, responsible, and initially probably somewhat quiet and toned-down conversation about where can we compromise and get something done. And I'm confident that will be the spirit that congressional leaders take over the coming months. Because I don't think anybody wants to see our recovery derailed. And all of us agree that we have to cut spending. And all of us agree that we have to get our deficits under control and our debt under control. And all of us agree that part of it has to be entitlements. So there's a framework there.
“That speaks, by the way, again, to the point I made with you, Chuck, about the [Simpson-Bowles] commission. I think the commission changed the conversation. I think they gave us a basic framework and within that framework, we're going to have to have some tough conversations and the devil's going to be in the details. But, look, I was glad to see, yesterday, republican leaders say, hey, how come he didn't talk about entitlements? I think that's progress, because what we had been hearing made it sound as if we just slashed deeper on education or, you know, other provisions in domestic spending that somehow that alone was going to solve the problem. So I welcomed -- I thought it was significant progress that there is an interest on all sides on those issues. In terms of the markets, I think what the markets want to see is progress. The markets understand that we're not -- we didn't get here overnight and we're not going to get out overnight. What they want to see is that we have the capacity to work together. If they see us chipping away at this problem in a serious way, even if we haven't solved 100% of it all in one fell swoop, then that will provide more confidence that Washington can work. And more than anything, that's not just what the markets want, that's what the American people. They just want some confirmation that this place can work. And I think it can.”
12:00 p.m. -- Obama takes a question about the tax hikes proposed in his budget for energy and on people with higher incomes, and if he worries about the impact on jobs.
Obama: "Well, actually, if you look at that budget, there's a whole bunch of stuff in there for job creation. I think some folks noted, for example, our infrastructure proposals which would create millions of jobs around the country. Our investments in research and development and clean energy had the potential for creating job growth in, you know, industries of the future. You know, my belief that the high end tax cuts for -- or the Bush tax cuts for the high end of the population, folks like me, my belief is that that doesn't in any way impede job growth. And most economists agree.
"You know, we had this debate in December. We compromised in order to achieve an overall package that reduced taxes for all Americans. So I believe -- I continue to believe that was a smart compromise. But when it comes to, over the long-term, maintaining tax breaks for millionaires and billionaires, that will mean additional deficits of $1 trillion. If you're serious about deficit reduction, you don't do that.
"And as I said, I think most economists-- even ones that tend to lean to the right or are more conservative-- would agree that that's not, that's not the best way for us to approach deficit reduction and debt reduction. So I do think it's important, as we think about corporate tax reform, as we think about individual tax reform, to try to keep taxes as simple as possible and as low as possible. But we also have to acknowledge that, in the same way that families have to pay for what they buy, well, government has to pay for what it buys. And if we believe that it's important for us to have a strong military, that doesn't come for free. We've got to pay for it. If we think that we have to take care of our veterans when they come home and not just salute on Memorial Day, but we actually have to work with folks who have post traumatic stress disorder or traumatic brain injury, well, that requires services that are very labor intensive and expensive. If we think it's important that our senior citizens continue to enjoy health care in their golden years, that costs money. If we think that after a flood we help out our neighbors and our fellow citizens so that they can recover, we've got to pay for it.
"So.... My hope is that what's different this time is we have an adult conversation where everybody says, ‘Here's what's important, and here's how we're going to pay for it.’ Now, there are going to be some significant disagreements about what people think is important. And then, that's how democracy should work. And you know, at the margins, I think that I'll end up having to compromise on some things. Hopefully others will have that same spirit," he said.
Q: As part of that adult conversation, what if they say deeper spending cuts before you consider tax hikes?
Obama: "Well, I think it just depends on what exactly you’re talking about. I think there should be a full open debate with the American people: are we willing to cut millions of young people off when it comes to student loans… to help kids and families on their college education? Are we only serious about education in the abstract but when it’s the concrete are we willing to put the money into it? If we’re cutting infant formula to poor kids, is that who we are as a people?
"We’re going to have to have those debates. Particularly if it turns out that making those cuts doesn’t really make a big dent in the long term debt and deficits, then I think the American people may conclude, let’s have a more balanced approach. But that’s what we’re going to talk about over the next couple months. I know everybody would like to see it get resolved today. It probably will not be. That’s a fair prediction," he said.
11:52 a.m.-- CNN’s Ed Henry takes the discussion back to Egypt, asking about the president’s message to protestors, especially because he was criticized for being too cautious during the protests. “Do you want them to taste freedom, or do you want them to taste freedom only if it will also bring stability to our interests in the region?” he asks.
A: “Well, first of all, without revisiting all the events over the last three weeks, I think history will end up recording that at every juncture in the situation in Egypt that we were on the right side of history. What we didn't do was pretend that we could dictate the outcome in Egypt because we can't. So we were very mindful that it was important for this to remain an Egyptian event, that the United States did not become the issue. But that we sent out a very clear message that we believed in an orderly transition, a meaningful transition, and a transition that needed to happen not later but sooner. And we were consistent on that message throughout. So particularly if you look at my statements, I started talking about reform two weeks or two and a half weeks before Mubarak ultimately stepped down. And at each juncture, I think we calibrated it just about right. And I would suggest that, you know, part of the test is that what we ended up seeing was a peaceful transition, relatively little violence, and relatively little if any anti-American sentiment. Or anti-Israel sentiment or anti-western sentiment. And I think that testifies to the fact that in a complicated situation, we got it about right.
“My message I think to demonstrators going forward is your aspirations for greater opportunity for the ability to speak your mind, for a free press; those are absolutely aspirations we support. As was true in Egypt, you know, ultimately what happens in each of these countries will be determined by the citizens of those countries. And even as we uphold these universal values, we do want to make sure that transitions do not degenerate into chaos and violence. It's not just good for us; it's good for those countries. You know, the history of successful transitions to democracy has generally been ones in which peaceful protests led to dialogue, led to discussion, led to reform, and ultimately led to democracy. And that's true in countries like Eastern Europe. That was also true in countries like Indonesia, a majority Muslim country that went through some of these similar transitions but didn't end up doing it in such a chaotic fashion that it ended up dividing the societies fundamentally.”
Henry follows up: “Has it improved the chances of something like Mideast peace, or has it made it more complicated in your mind?”
A: “I think it offers an opportunity as well as a challenge. I think the opportunity is that when you have the kinds of young people who were in Tahrir square feeling that they have hope and they have opportunity, then they're less likely to channel all their frustrations into anti-Israeli sentiment or anti-western sentiment because they see the prospect of building their own country. That's a positive. You know, the challenge is that democracy is messy. So if you're trying to negotiate with the democracy, you don't just have one person to negotiate with, you have to negotiate with a wider range of views. But I like the odds of actually getting a better outcome in the former circumstance than in the latter.”
11:51 a.m.-- Part two of President Obama's answer, about American diplomat Ray Davis:
“If our diplomats are in another country, they are not subject to that country's local prosecution. We respect it with respect to diplomats when they are here. We [call on Pakistan] to recognize Davis as a diplomat, to abide by the same convention. The reason why this is an important principle is that if it starts being fair game on our ambassadors around the world, including in dangerous places, where we might have differences with those governments, and our ambassadors or our various embassy personnel are having to deliver a tough messages to countries where we disagree with them on X,Y,Z, and they start being vulnerable to prosecution locally-- that is untenable. That means they cannot do their job. That’s why we respect these conventions and every country should as well.
“So we’re going to be continuing to work with the Pakistani government to get this person released, and, obviously, for those of you that are not familiar with the background on this, a couple of Pakistanis were killed in a incident between Mr. Davis within Pakistan. So obviously we're concerned about the loss of life. We are not callous about that -- but there is a broader principle that we think needs to be upheld.”
11:47 a.m.-- ABC’s question: House Republicans want to start cutting this year’s budget. Are you willing to work with them in the next few weeks so as to avoid a government shutdown? There has been talk about a down payment they would like to make for this year's budget. Also, could you talk a little bit about the attempts to get American diplomat Ray Davis freed from Pakistan? Could you walk us through that process?
Obama: My goal is to work with the Republicans both on the continuing resolution, and for those of you that are watching that do not know, the CR is a continuing resolution -- a way to keep government going when you don’t budget settled…. This is carry over business from last year, funding vital government functions this year. I want to work with everybody to get that resolved…I think it is important that we do not try to make symbolic cuts this year that could endanger the recovery. So that’s point number one.
What I will be looking for is some common sense that the recovery is still fragile. We passed this tax cut package precisely to make sure people have more money in their pockets, that their paychecks were larger. We provided these tax credits and incentives for businesses, but if the steps that we take then prompt thousands of layoffs in state or local government, or core vital functions are not performed properly, that could also have a dampening impact on our recovery as well. So my measure is going to be are we doing things in a sensible way, and meeting core functions, not endangering our recovery? In some cases, like defense, for example, Secretary Gates has already testified if we are operating under the current continuing resolution is putting significant strains on ability to make sure our troops have what they need to perform their missions in Afghanistan. Further slashes would impair our ability to meet our mission. We’ve got to be careful. Again, let’s use a scalpel, let’s not use a machete, and if we do that there should be no reason at all for a government shutdown. And I think people should be careful about being too loose in terms of talking about a government shutdown because this is not an abstraction – people don’t get their Social Security checks, they don’t get their veterans payments, basic functions shut down. And that also would have an adverse effect on our economic recovery, it would be destabilizing, at a time when I think everybody is hopeful that we can start growing this economy quicker… I’m looking forward to having a conversation, but… the key here is for people to be practical not to score political points. That’s true for all of us. I think if we take that approach we can navigate the situation in the short term and deal with the problem long term."
11:43 a.m.-- The president is asked about some of the more unpopular cuts in his budget, such as cuts to community service block grants, Pell Grants, and the Low Income HomeEnergy Assistance Program. In a lighter moment, he’s also asked if he’s been making calls on behalf of his former chief of staff, Rahm Emanuel, who is running for mayor in Chicago.
A: “I don't need to make calls for Rahm Emanuel. He seems to be doing fine on his own. He's been very busy shoveling snow out there. I've been very impressed with that. I never saw him shoveling around here.
“Let me use Pell Grants as an example of how we're approaching these difficult budget choices in a way that is sustainable but preserves our core commitment to expanding opportunity. When I came into office, I said, I want to, once again, have America have the highest graduation rates, college graduation rates of any country in the world, that we have been slipping, and so I significantly increased the Pell Grant program by tens of billions of dollars. And so millions of young people are going to have opportunities through the Pell Grant program that they didn't before, and the size of the Pell Grant itself went up. What we also did, partly because we were in a recessionary situation, and so more people were having to go back to school as opposed to work, we also did, for example, say, you can get pell grants for summer school.
“Now, we're in a budget crunch. The takeup rate on the Pell Grant program has skyrocketed. The costs have gone up significantly. If we continue on this pace, sooner or later, what's going to happen is we are going to have to chop off eligibility. We're going to have to say, that's it, we can't do this anymore, it's too expensive. So, instead what we did was say how do we trim, take a scalpel to the Pell Grant program, make sure we keep the increase for each Pell Grant, make sure that the young people who are being served by the Pell Grant program are still being served, but, for example, on the summer school thing, let's eliminate that. That will save us some money, but the core functions of the program are sustained. That's how we're approaching all of these cuts.
“On the LIHEAP program, the home heating assistance program, we doubled the home heating assistance program when I first came into office in part because there was a huge energy spike, and so folks, if we just kept it at the same level, folks would have been in real trouble. Energy prices have now gone down but the cost of the program has stayed the same. So what we've said is let's go back to a more sustainable level. If it turns out that, once again, you see a huge energy spike, then we can revisit it, but let's not just assume because it's at a $5 billion level that each year we're going to sustain it at a $5 billion level regardless of what's happening on the energy front. Now, that doesn't mean that, you know, these aren't still tough cuts. Because they're always more people who could use some help across the country than we have resources. And so it's still a tough decision, and I understand people's frustrations with some of these decisions. Having said that, my goal is to make sure that we're looking after the vulnerable, we're looking after the disabled, we're looking after our seniors, we're making sure that our education system is serving our kids so that they can compete in the 21st century, we're investing in the future. And doing that in a way that's sustainable and that we're paying for. As opposed to having these huge imbalances where there's some things that aren't working that we're paying a lot of money for, there are some things that are underfunded. We're trying to make adjustments so that we've got a sustainable budget that works for us over the long term.
“And by the way, there are just some things that aren't working at all. We've eliminated a couple hundred programs in this budget. On the education front, we're consolidating from 33 programs to 11 programs. There is waste and inefficiency there that, you know, is long overdue. And we identify a number of these programs that just don't work. Let's take that money out of the programs that don't work and put that money in programs that do.
“Look, I definitely feel folks' pain. You know, I -- somebody's doing a book about the ten letters that I get every day. And they came by to talk to me yesterday. And they said, you know, what's the overwhelming impression that you get when you read these ten letters a day. And what I them is I'm so inspired by the strength and resilience of the American people, but sometimes I'm also just frustrated by the number of people out there who are struggling and you want to help every single one individually. And I -- you know, you almost feel like you want to be a case worker and just start picking up the phone and advocating for each of these people who are working hard, trying to do right by their families. Oftentimes through no fault of their own. They've had a tough time particularly over these last couple of years. So, yeah, it -- it's frustrating. But my job is to make sure that we're focused over the long term. Where is it that we need to go. And the most important thing I can do as president is make sure that we're living within our means, getting a budget that is sustainable, investing in the future and growing the economy. If I do that, then that's probably the most help I can give to the most number of people.”
11:37 a.m.-- Julianna Goldman of Bloomberg asks the president why he thinks that he will be able to get a budget that relies on tax increases to multinational corporations and increases in the oil and gas industries through a divided Congress if he couldn’t get those proposals through a Democratic Congress when he called for them in the past.
A: “Well, I continue to believe I'm right. So we're going to try again. I think what's different is everybody says now that they're really serious about the deficit. Well, if you're really serious about the deficit, not just spending, but you're serious about the deficit overall, then part of what you have to look at is unjustifiable spending through the tax code. Through tax breaks that do not make us more competitive, do not create jobs here in the United States of America. And they -- two examples you cite, most economists would look at and say these aren't contributing to our long-term economic growth. And if they're not, why are we letting some folks pay lower taxes than other folks who are creating jobs here in the United States? And are investing. Why are we not investing in the energy sources of the future, just the ones in the past? Particularly the energy sources of the past are highly profitable right now and don't need a tax break.
“So I think what may is changed is if we are going to get serious about deficit reduction and debt reduction, then we've got to look at all the sources of deficit and debt. We can't be, you know, just trying to pick and choose and getting 100% of our weight. The same is true, by the way, for Democrats. I mean, there's some provisions in this budget that are hard for me to take. You've got cities around the country and states around the country that are having a tremendously difficult time trying to balance their own budgets because of falling revenue. They've got greater demands because of folks who have lost their jobs. The housing market is still in a tough way in a lot of these places. And yet, part of what this budget says is we're going to reduce community development block grants by 10%. That's not something I'd like to do, but -- and if it had come up a year or two years ago, I would have said no. Under these new circumstances I'm saying yes to that. So my expectation is that everybody is going to have to make those same sorts of compromises.
“Now with respect to corporate tax reform, the whole concept of corporate tax reform is to simplify, eliminate loopholes, treat everybody fairly. That is entirely consistent with saying, for example, that we shouldn't provide special treatment to the oil industry when they've been making huge profits and can afford to further invest in their companies without special tax breaks that are different from what somebody else gets.
“Well what is absolutely true is that it's going to be difficult to achieve serious corporate tax reform if the formula is lower our tax rates and let us keep all our special loopholes. If that's the formula, then we're not going to get it done. I wouldn't sign such a bill, and I don't think the American people would sign such a bill. If you're a small business person out on Main Street and you're paying your taxes and you find out that you've got some big company with billions of dollars in far-flung businesses all across the world and they're paying a fraction of what you're paying in taxes, you know, you'd be pretty irritated. And rightfully so. And so the whole idea of corporate reform is -- corporate tax reform is, yes, let's lower everybody's rate so American businesses are competitive with businesses all around the world. But in order to pay for it, to make sure that it doesn't add to our deficit, let's also make sure that these special interest loopholes that allow lobbyists who have been working hard to get into the tax code, let's get rid of those, as well.”
11:36 a.m.-- NBC’s question: Everything you have talked about, tax reform, and … entitlement reform, you had a majority consensus to do all of this. It has now been shelved. I guess my question is, what was the point of the fiscal commission, if you have this moment where you had Tom Coburn.. Dick Durbin... sign on to this deal… Why not grab it?
Obama’s answer: “The notion that it’s been shelved I think is incorrect. It still provides a framework for a conversation. Part of the challenge is here is that in this town let’s face it, you guys are pretty impatient. If something doesn’t happen today, the assumption is that it isn’t going to happen. I’ve had this conversation for the last two years about every issue… whether it was on health care, Don't Ask, Don't Tell. On Egypt -- we have had this monumental change your last three weeks. Why did it take three weeks?
“I think there’s a tendency for us to assume that if it didn’t happen today it’s not going to happen. Well, the fiscal commission put out a framework. I agree with much of the framework, I disagree with some of the framework. It is true that it got 11 votes. That was a positive sign. When it is also true is that the chairman of the House Republican budgeteers did not sign off. He’s got … concerns. I will need to have a conversation with him, and with those Democrats that did not vote for it. There are some issues in there, that as a matter of principle I do not agree with, where I think they did not go far enough or they went too far. So, this is going to be a process in which each side in both chambers of Congress go back and forth and start trying to whittle their differences down until we arrive said something that has an actual chance at passage. And that is my goal. My goal is to actually solve the problem. It is not to get a good headline on the first day. My goal is that a year from now, or two years from now, people look back and say we started making progress on this issue.
“This was the same criticism people had right after the midterm election. If you had polled the press room and the conventional wisdom in Washington after the midterm, the assumption was that there was no way we were going to end up getting a tax deal… it was impossible. And we got it done. This was not a matter of you go first or I go first, this is a matter of everybody having a serious conversation about where we want to go and… getting in that boat at the same time so it doesn’t tip over. And I think that can happen.”
11:26 a.m.-- The president takes a question from Chip Reid of CBS, who asks, “You said that this budget is not going to add to the credit card as of about the middle of the decade, and as Robert Gibbs might say, I'm not a budget expert and I'm not an economist, but if you could just explain to me how you can say that when if you look on page 171, which I'm sure you've read, it is the central page in this, the 1 trillion down to $768 billion, and they go down again all the way to $607 billion in 2015. Then they start to creep up again. And by 2021, it's at at $774 billion. The total over those ten years, 2 trillion on top of the $14 trillion we already have. How can you say that we're living within our means?”
A: “Well, here -- let me be clear on what I'm saying because I'm not suggesting that we don't have to do more. We still have all this accumulated debt as a consequence of the recession and as a consequence of a series of decisions that were made over the last decade. We've piled up, we've racked up a whole bunch of debt. And there's a lot of interest on that debt. So in the same way that if you've got a credit card and you've got a big balance, you may not be adding to principle. You've still got all that interest that you've got to pay. We've got a big problem in terms of accumulated interest that we're paying, and that's why we're going to have to whittle down further the debt…that's already been accumulated. So that's problem number one.
"Problem number two, we talked about, which is rising health care costs. And programs like Medicaid and Medicare are going to start zooming up again as a consequence of the population getting older and health care costs going up more rapidly than incomes and wages and revenues are going up. So you've got those two big problems. What we've done is try to take this in stages. What we say in our budget is let's get control of our discretionary budget to make sure that whatever it is that we're spending on an annual basis we're also taking in a similar amount. Right, that's step number one. Step number two is going to be, how do we make sure that we're taking on these long-term drivers and how do we start whittling down the debt? That's going to require entitlement reform, and it's going to require tax reform. And in order to accomplish those two things, we're going to have to have a spirit of cooperation between Democrats and Republicans. And I think that's possible. I think that's what the American people are looking for. But what I think is important to do is not discount the tough choices that are required just to stabilize the situation. It doesn't solve it, but it stabilizes it, and if we can get that done, that starts introducing this concept of us being able to in a serious way cooperate to meet this fiscal challenge, and that will lay the predicate for us being able to solve some of these big problems over the course of the next couple of years, as well.
"So again, I just want to repeat, the first step in this budget is to make sure that we're stabilizing the current situation. Second step is going to be, make sure we're taking on long-term drivers. We've got to get control of the short term deficit, as well, and, you know, people are going to be looking for a signal to that. The choices we've made are pretty tough choices which is why I think you've been seeing grumblings from the other party and my own party about decisions we've made."
11:24 a.m.-- Obama was asked about his concerns about instability in the Middle East, especially in Saudi Arabia, and if he foresees any effect on oil prices. He was also asked to comment on Iran.
Obama said: "On Iran, we were clear then, and we are clear then and we are clear now, that the people should be able to express their grievances and seek a more responsive government. What has been different is the Iranian government's response, which is to shoot people, beat people, and arrest people.
"My hope and expectation is that we are going to continue to see the people of Iran have the courage to express their yearning for greater freedoms and a more representative government. Understanding that America cannot ultimately dictate what happens inside of Iran, any more than it could inside of Egypt. Ultimately these are sovereign countries and they’re going to have to make their own decisions.
"We are going to have to lend moral support to those who are seeking a better life for themselves. Obviously, we are concerned about stability throughout the region. Each country is different. The message that we have sent, even before the demonstrations in Egypt has been to friend and foe alike that the world is changing, that you have a young, vibrant generation within the Middle East that is looking for greater opportunity, and that if you are governing these countries, you need to get out ahead of change. You cannot be behind the curve. So, I think that the thing that will actually achieve stability in that region is if young people, if ordinary folks, end up feeling that there are pathways for them to feed their families, get a decent job, a better education, and aspire to a better life.
"The more steps that these governments are taking to provide these avenues for mobility and opportunity, the more stable these countries are. You can’t maintain power through coercion. At some level in any society there has to be consent. And that’s particularly true in this new era where people can communicate not just through some centralized government or state run TV but they can get on a smart phone or a twitter account and mobilize hundreds of thousands of people. My believe is that as a consequence of … Tunisia and Egypt.. governments in that region are starting to understand this. And my hope is that they can operate in a way that is responsive to this hunger for change but also do this in a way that doesn’t lead to violence," he said.
11:18 a.m.-- The second portion of Obama's answer, about how he will deal with promoting freedom in the region in places where instability could endanger U.S. interests:
"Now with respect to the situation in the Middle East, obviously there's still a lot of work to be done in Egypt itself. What we've seen so far is positive. The military council that will is in charge has reaffirmed its treaties with countries like Israel and international treaties. It has met with the opposition, and the opposition has felt that it is serious about moving toward fair and free elections. Egypt’s going to require help in building democratic institutions and also in strengthening the economy that's taken a hit as a consequence of what happened. But so far at least, we're seeing the right signals coming out of Egypt. There are ramifications throughout the region, and I think my administration's approach is the approach that jives with how most Americans think about the region, which is that each country is different. Each country has its own traditions. America can't dictate how they run their societies.
"But there are certain universal principles that we adhere to. One of them is that we don't believe in violence and coercion as a way of maintaining control. So we think it's very important that in all the protests that we're seeing throughout the region that governments respond to peaceful protesters peacefully. The second principle that we believe in strongly is in the right to express your opinions and the freedom of speech and freedom of assembly that allows people to share their grievances with the government and to express them in ways that hopefully will over time meet their needs. And so, you know, we have sent a strong message to our allies in the region saying let's look at Egypt’s example, as opposed to Iran’s example. You know, I find it ironic that you've got the Iranian regime pretending to celebrate what happened in Egypt hen in fact they have acted in direct contrast to what happened in Egypt by gunning down and beating people who were trying to express themselves peacefully in Iran. And I also think that an important lesson, and I mentioned this last week, that can draw from this is real change in these societies is not going to happen because of terrorism. It's not going to happen because you go around killing innocents. It's going to happen because people come together and apply moral force to a situation. That's what garners international support. That's what garners internal support. That's how you bring about lasting change."
11:11 a.m.-- Obama takes the first question from the Associated Press:
Q: “You have been talking about the need for tough choices in your budget, but your plan does not address the long-term depression costs of Medicare, Medicaid, and Social Security. Where is your leadership on that issue, when will we see your plan?"
A: “What my budget does is put forward some tough choices, significant spending cuts, so that by the middle of this decade, our annual spending will manage our annual revenues. We will not add more to the national debt. To use an analogy that families are familiar with, we will not run up the credit card anymore. That is important, and that is hard to do, but it is necessary, and I think the American people understand that. At the same time, we will make key investments in places like education and science and technology, research and development, that the American people understand is required to win the future. We have taken a scalpel to the discretionary budget, rather than a machete,” Obama said.
“I said in the State of the Union, and I will repeat, that side of the ledger only accounts for about 12 percent of our budget. So, we have a lot of other stuff to do, including dealing with entitlements. If you talk about Social Security, Medicare, and Medicaid. The truth is Social Security's is not a huge contributor that the other two entitlements are. I am confident we can get Social Security done in the same way Ronald Reagan and Tip O'Neill were able to get it done by parties coming together. I think we can avoid slashing benefits, and we can make it safer and stronger for this generation, and the next generation. Medicare and Medicaid are huge problems because health-care costs are rising, even as the population is getting older what I have said is I am prepared to work with Democrats and Republicans to start dealing with that in a serious way.
"We have made a down payment on that with health care reform last year. That is part of what health-care reform was about. Projected budgets will be about 250 billion dollars lower, and $1 trillion less than they would be for the coming decade. We will still need to do more. If you look at the history of how these deals get done, typically, it is not because there is an Obama plan out there, it is because Democrats and Republicans are both committed to tackling this issue yet a serious way. What we have done is the specific on how to stabilize the budget, be sure we are not adding additional debt by 2015, and then, let us together, Democrats and Republicans, tackle long-term problems in a way that I think will inshore our fiscal health, and insure that we are making investments in the future.
"We will be in discussions over the next several months. This will be a negotiation process. The key thing that I think the American people want to see is that all sides are serious about it, and all sides are willing to give a little bit,... We did that in December on the tax-cut issue. Both sides had to give...
"The thing I want to emphasize is that no one is more mindful than me that entitlements are going to be a key part of this issue, as is tax reform. I want to simplify rates, and at the same time make sure that we have the same amount of money coming in as go in and out. Those are big, tough negotiations, and I expect there will be a lot of ups and downs in the months to come before we get that solution. Just as people were skeptical about being able to deal with the tax cuts, and we end up getting it done, I am confident we can get this done," he said.
11:05 a.m.-- Obama's opening remarks on the budget:
"Good morning, everyone. Please have a seat. I figured that I'd give Jay one more taste of freedom before we lock him in a room with all of you. So I'm here to do a little downfield blocking for him.
"Before I take a few questions, let me say a few words about the budget that we put out yesterday. Just like every family in America, the federal government has to do two things at once. It has to live within its means while still investing in the future. If you're a family trying to cut back, you might skip going out to dinner. You might put off a vacation, but you wouldn't want to sacrifice saving for your kids' college education or making key repairs in your house. So you cut back on what you can afford to focus on what you can't do without. That's what we've done with this year's budget.
"When I took office, I pledged to cut the deficit in half by the end of my first term. Our budget meets that pledge. And puts us on a path to pay for what we spend by the middle of the decade. As a start, it freezes domestic discretionary spending over the next five years which would cut the deficit by more than $400 billion over the next decade and bring annual domestic spending to its lowest share of the economy since Dwight Eisenhower.
"Now some of the savings will come through less waste and more efficiency. To take just one example, we'll give -- we'll save billions of dollars by getting rid of 14,000 office buildings, lots, and government-owned properties that we no longer need. And to make sure special interests are not larding up legislation with special projects, I've pledged to veto any bills that contain earmarks. Still, even as we cut waste and inefficiency, this budget freeze will also require us to make some tough choices. It will mean freezing the salaries of hard-working federal employees for the next two years. It will mean cutting things I care about deeply like community action programs for low-income communities. And we have some conservation programs that are going to be scaled back. These are all programs that I wouldn't be cut figure we were in a better fiscal situation, but we are not.
"We also know that cutting annual domestic spending alone won't be enough to meet our long-term fiscal challenges. That's what the bipartisan fiscal commission concluded. That's what I've concluded. And that's why I'm eager to tackle excessive spending wherever we find it. In domestic spending but also in defense spending, health care spending, and spending that is embedded in the tax code. Some of this spending we've begun to tackle in this budget like the $78 billion that secretary gates identified in defense cuts. But to get where we need to go, we're going to have to do more. We'll have to bring down health care costs further, including in programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficits. I believe we should strengthen Social Security for future generations, and I think we can do that without slashing benefits or putting current retirees at risk. And I'm willing to work with everybody on Capitol Hill to simplify the individual tax code for all Americans.
"All of these steps are going to be difficult. And that's why all of them will require Democrats, Independents, and Republicans to work together. I recognize that there are going to be plenty of arguments in the months to come. And everybody's going to have to give a little bit. But when it comes to difficult choices about our budget and our priorities, we have found common ground before. Ronald Reagan and tip O’Neill came together to save social security. Bill Clinton and the Republican congress eventually found a way to settle their differences and balance the budget. And many Democrats and Republicans in Congress today came together in December to pass a tax cut that has made Americans’ paychecks a little bigger this year and will spur on additional economic growth this year. So I believe we can find this common ground, but we're going to have to work, and we owe the American people a government that lives within its means while still investing in our future in areas like education, innovation, and infrastructure that will help us attract new jobs and businesses to our shores. That's the principle that should drive this debate in the coming months. I believe that's how America will win the future in the coming years. So with that, let me take a few questions."
10:55 a.m.-- We'll be bringing you live coverage of the President's press conference today, where we expect him to make a statement about his 2012 budget proposal - which was released yesterday - and then take questions from the press. Expect the continuing unrest in the Middle East to be a topic of many reporters' questions. You can catch up on all the recent movement in one place in National Journal's map of protests in the region.