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CNN LIVE EVENT/SPECIAL
President Obama Speaks to Fairfax Residents About Tax Cuts and Economic Policies
Aired September 13, 2010 - 13:55 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So, thank you to the entire family for opening up. And thanks to all of you for taking the time to be here because I want to -- I was telling John and Nicole that a lot of times when you're in Washington, you're busy. You've got a lot of stuff to do. And you're in a bubble when you're president. And sometimes you just don't have the opportunity to have the kinds of interactions that I used to have even when I was a senator.
And so these kinds of formats are terrific for me, and my hope is despite all these people who are here with cameras and microphones and all that stuff, that people won't be shy because the whole point of this is for me to hear directly from you and answer your questions. Hear about your concerns, hear about your hopes, and hopefully, that will translate itself into some of the things that we're doing at the White House.
I obviously want to make some introductions that -- I think all of you know that you've got some members of Congress who are working very hard here in northern Virginia, and I want to acknowledge them. First of all, Congressman Jim Moran has been doing great work for a very long time.
OBAMA: Congressman Jerry Conway has been doing terrific work here locally and now on Capitol Hill.
OBAMA: We've got Sharon Malvova, who is the chairman of the Fairfax County Board of Commissioners, and we've also got a couple of small business owners because one of the things want to talk about is how we can grow the economy and get people back to work. And so, who better to hear from than a couple of small business owners?
Don't worry. I'm not going to call on you, but I'm just glad you're here. And first of all, we've got Cheryl Hurt, who's the owner of the As We Grow Learning center. Hey, Cheryl. Thank you for being here.
OBAMA: And Larry Poltofov (ph) - did I say that right, Larry? Who is the CEO of (INAUDIBLE). And so, we're so glad you guys could join us.
Now, I'm only going to say a few things at the top. And I want to talk a little bit about why I decided to run for president in the first place back in 2007, 2008. Having served as a state senator, having then served as a United States senator, I had had a chance to see how economic policies were having an effect on working-class families and middle-class families for a long time. And my wife and I, we came out of hard-working families who didn't have a lot.
But because the economy was growing, because there was an emphasis on what was good for the middle class, we were able to get a great education. We were able to get scholarships. Michelle's dad worked as a blue-collar worker but just on that one salary, he was able to provide for his family and make sure that they always had enough and the kids had opportunities.
And what it seems like was for about a decade there, middle-class families were losing more and more ground. And some of that had to do with changes in the global economy and greater competition from around the world. But a lot of it had to do with the policies that had been put in place, which really boiled down to cutting taxes, especially for millionaires and billionaires. Cutting regulations that made consumers and workers more vulnerable, failing to make investments that were so critical in growing our middle class over the long term.
And so when I ran for president, my goal was to make sure that we get a set of economic policies in place that would lay the foundation for long-term growth in the 21st century so that the 21st century would be an American century just like the 20th century had been. And that's what we've tried to do over the last 19 months in the midst of the worst financial crisis that we've seen since the Great Depression.
The first thing we had to do was just stop the bleeding. Stabilize the financial system and make sure we didn't trip into a great depression and we have done that. So, when I was sworn in on that very cold day in January -- some of you may remember -- we lost 750,000 jobs in that month alone. Now, we've seen eight consecutive months of private sector job growth because of the policies we put in place.
We were on the verge of financial meltdown. Anybody who was involved in business at that time remembers banks were not lending at all.
(JOINED IN PROGRESS) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Now, we were on the verge of financial meltdown. Anybody who was involved in business at that time remembers banks were not lending at all. You couldn't even get an auto loan or a consumer loan. And now the financial systems have stabilized, although they're not completely where we need them to be. The economy was shrinking at a pace of -- an astounding pace of about six percent annually, and now the economy has been growing.
So we stopped the bleeding, stabilized the economy. But the fact of the matter is, is that the pace of improvement has not been where it needs to be. And the hole that we had dug ourselves in was enormous.
I mean, we lost four million jobs in the last six months of 2008, when I was still running. We lost four million jobs. And all told, we lost eight million jobs. And so even though we've grown jobs this year, we haven't been able to make up for those eight million jobs that have been lost, and that's an enormous challenge.
Now, the second part of the challenge, though, is to make sure that even as we're digging ourselves out of this hole, we start making some better decisions so that long term, we don't find ourselves in the circumstance again and we start creating the kind of economy that's working for middle class families. So a couple of things that we did on that front.
We cut taxes for middle class families because we understand that people's incomes and wages have not gone up, have not kept pace with increases in health care, increases in college, and so forth. The second thing that we felt was very important was to start creating some rules of the road again. So, in financial services, for example, we passed a financial regulatory bill to make sure that we're not going to have taxpayer bailouts, make sure that banks have to operate a little bit more responsibly and take less risks with the money that they're investing.
And we also made sure that consumers are treated more fairly, because part of what happened in this financial crisis was people were getting mortgages that they didn't understand. Suddenly, the bottom fell out of the housing market and banks found themselves in a crisis situation.
So what we've said is, let's make sure that consumers know exactly the kinds of mortgages they're getting. Let's make sure that they can't be steered into these balloon-type payments where there's no chance that over the long term they're going to be able to make their payments. Let's make sure that credit card companies have to notify you if they're going to increase your interest rates. And let's make sure that they can't increase your interest rates on your existing balances, only on future balances, so that they're not tricking you into suddenly paying exorbitant fees and putting you into a hole over the long term.
Gerry likes that one. So we set up a bunch of rules both in the financial services area, in the housing sector, and in health care. And I know that a lot of people here heard a lot about the health care bill.
The most important things that that was about was making sure that insurance companies treated you fairly. So, if you've got health insurance, companies are not going to be able to drop you from coverage when you get sick, which is part of what had been happening. They couldn't deny you insurance because of a pre-existing condition, or if your child had a pre-existing condition, which obviously makes families enormously vulnerable. So, a set of rules of the road for how companies interact with consumers, how they interact with workers.
And then the final thing that we've tried to do to lay this foundation for long-term economic growth is to put our investments in those things that are really going to make us more competitive over the long term. So we have made the largest investment in research and development, in basic research and science, in our history, because that's going to determine whether we can compete with China and India and Germany over the long term. Are we inventing stuff here that we can then export overseas?
We're making investments in our infrastructure because we can't have a second class infrastructure and expect to have a first class economy. Just an interesting statistic over the last decade. China spends about nine percent of its gross domestic product on infrastructure. Europe spends about five percent. We've been spending two percent, and that's part of the reason why we no longer have the best airports, we no longer have the best rail systems, we don't have the best broadband service. South Korea has better broadband service and wireless service than we do.
And over time, that adds up. It makes us less competitive. So what we've said is we've got to make investments in infrastructure.
A third area, education. A generation ago, we had the highest proportion of college graduates of any country in the world. We now rank 11th or 12th in the proportion of college graduates.
Well, we can't win in an information society, in a global technologically-wired economy, unless we're winning that battle to make sure our kids can compete. So what we've said is we're going to put more money into higher education and through K through 12. But here's the catch: the money is only going to go to those communities that are serious about reforming their education system so they work well, because education is not just a matter of putting more money into it. You also have to make sure that we've got the best teachers, that we've got accountability, that the way we're designing our schools help our kids actually succeed over the long term, especially in areas of math and science, where we're lagging even further behind than we were a generation ago.
So those are the things that we've been trying to do over the last 19 months. Now, as I said before, the economy is growing, but it's not growing as fast as we would like. So over the last week, I've put forward a few more things that I think really can make a difference. Number one, instead of giving tax breaks to companies that are investing overseas, which our tax code does right now, what I've said is let's close those tax loopholes and let's provide tax breaks to companies that are investing in research and development here in the United States. That's a smart thing to do. We want to incentivize businesses who actually are making profits right now to say we should go ahead and take a chance, and let's invest in that next new thing.
Second is -- what I've proposed is that we allow companies to write off essentially their new investments early if they make those investments here in 2011. So, essentially accelerating the depreciation that they can take on their taxes to encourage them to front-load making investments now.
The third thing that we've proposed -- and this is actually pending right now in the United States Senate because Gerry and Jim have already voted on it -- is a small business package that would eliminate capital gains taxes for small businesses, would help small businesses obtain loans. It is a commonsense bill that traditionally would have garnered a lot of bipartisan support, but we're in the political silly season right now, so it's been blocked up by the Senate Republicans for the last months and a half, two months.
Small businesses are still having trouble getting loans. And what we want to do, even though we've already given them eight different tax breaks, is we want to say, we're going to give you just a little bit more incentive, because if we can get small businesses growing and investing and opening their doors and hiring new workers, that's probably going to be the area where we can make the most progress over the next year in terms of accelerating employment and reducing the unemployment rate.
So these are all steps that we're taking right now to try to move the economy forward.
Now, I have never been more confident about the future of our economy if we stay on track and we deal with some of these long-standing problems that we hadn't dealt with for decades. If we make investments and improve our education system; if we make investments in research and development; if we make investments in things like clean energy so that we've got an energy policy that's not just tied to importing oil from the Middle East, but instead start figuring out, how can we develop our homegrown industries; if we have a tax system that is fair and helps the middle class, and that also attends to our long-term deficit problems; if we regulate, but not with a heavy hand, just regulate enough to make sure that we don't have a collapse of the financial system and consumers aren't taken advantage of, and health insurance companies are responsive to ordinary families; if we do those things, there's no reason why we can't succeed.
And I've traveled all around the world and I've looked at all the economic data. If you had a choice of which country you'd want to be, you'd still want to be the United States of America. We still have a huge competitive edge, and we've got the best workers in the world. And we've got the most dynamic economy in the world, we've got the best universities, the best entrepreneurs in the world. But we've got to tackle these long-standing problems that have been getting in the way of progress, and we've got to do it now. We can't wait another 20 years or another 30 years because other countries are catching up. That's what we've been trying to do over the last two years.
Now, some of these things I've got to admit are hard. They cause great consternation.
When we tried to get some commonsense rules in the financial sector, for example, that means billions of dollars that were going to profits to some of the banks are not going to be going there because you're getting a better deal on your credit card, and they're not happy about it. So that ends up creating a lot of drama on Capitol Hill, and it means that we've had some very contentious debates.
But I just want to close by saying this: ultimately, when I get out of Washington and I start talking to families like yours, what I'm struck by is not how divided the country is, but I'm actually struck by how basically people have common values, common concerns and common hopes. They want to be able to find a job that pays a decent wage, give their family and their children in particular a bright future, be able to retire with some dignity and respect, not get bankrupt when they get sick.
And that cuts across region, it cuts across racial lines, across -- it cuts across religious or ethnic lines. People -- there's a core set of American values that I think people across the country respond to.
And what I want to do is make sure that the government is on the side of those values of responsibility and hard work and thinking about future generations, and not just thinking about the next election. And I think we've made progress, but we've got more progress to make.
So with that, I thank you all for being here. And what I want to do is I just want to answer questions.
And I know folks in the sun are hot, so I'm going to stand in the sun so you make sure you know that I feel your pain as -- absolutely. I wouldn't mind having that hat, though. That's helpful. I should have thought ahead.
All right. Anybody want to -- John, go ahead. Here, hold on a second. I'll give you a mike. Oh, we've got one.
UNIDENTIFIED MALE: Mr. President, thank you very much for coming. We really appreciate it. It's a great opportunity.
I'm an engineer, and you talked a lot about R&D and infrastructure and every -- I love every dollar spent on that by definition. I'm also a paraplegic and we -- I have a great interest in stem-cell research and how it gets furthered.
And so how do we get this issue to be a scientific issue instead of a political issue? OBAMA: Well, John, as you know, I have been a huge supporter of stem- cell research for a very long time. When I came into office, we said that what's going to govern our decision-making here is sound science.
There are legitimate ethical issues involved in all this -- the biotech industry. And those are going to continue as time goes on. I mean, there's some very tricky questions, and we've got to make sure that our values and our ethical standards are incorporated in everything we do, but we've also got to make sure that we're making decisions not based on ideology, but based on what the science says.
Now, the executive order that I signed would say that we are not going to create embryos to destroy for scientific research. We're not going to do that.
On the other hand, when you have got a whole bunch of embryos that were created because families were trying to -- couples were trying to start a family, and through in vitro fertilization they're frozen in some canister somewhere and are going to be discarded anyway, then it makes sense for us to take those that are going to be destroyed and use them to advance our scientific knowledge to see if at some point we can start making huge progress on a whole set of issues. Obviously, spinal cord injuries are an example, but Parkinson's disease, Alzheimer's disease, diabetes, juvenile diabetes -- there's not a single family here who has not in some way been touched by a disease that could end up benefiting from the research that's done on stem cells.
Now, recently, a district court judge said that not only -- well, essentially said that our executive order, he felt, went too far beyond what the guidelines that Congress had provided before I came into office, although the way he had written the order, it made it seem like even Bush's orders were out of line and that you'd have to stop stem-cell research altogether. We are appealing that. We're challenging it. And what we're going to keep on doing on a whole range of these decisions is to make sure that I'm talking to scientists and ethicists and others, and try to build a commonsense consensus that allows us to make progress over the long term.
Yes, go ahead.
UNIDENTIFIED MALE: Mr. President, it's a privilege for me to be here.
You talk about small business loans. My company is a high-tech company, and we are growing and we are providing high-tech jobs for Americans.
How can we ensure that banking and lending institutions are going to actually lend money to small businesses? There have been a number of steps done in that way, but so far I've been denied a loan twice and only got the -- for the third time, after I asked for SBA-backed loan.
OBAMA: Right. Tell me more about your business, by the way. I've actually read about it, but tell -- people here I think would be interested, because you're working on clean energy issues.
UNIDENTIFIED MALE: This is correct, yes. I have two lines of business, clean energy part, where we are actually trying to get companies to become green and change their practices so that they follow sustainability of practice in regular ways.
UNIDENTIFIED MALE: And the second part of my business is high tech. We're doing IT consulting and IT services for the federal government and Fortune 500 companies.
OBAMA: How many employees do you have right now?
UNIDENTIFIED MALE: About 94.
UNIDENTIFIED MALE: Yes.
OBAMA: Well, look, part of the answer is what you already spoke about, which is SBA, the Small Business Administration.
We have doubled the number of small business loans that we've been giving through the SBA. We've waived a lot of fees on those loans because we knew that small businesses were getting harder hit than just about anybody during the financial crisis. They were the ones where the banks were pulling back the most.
So we tried to fill that void as the banks were getting well, making sure that small businesses could keep their doors open. But even by doubling the number of SBA loans, there's still not enough capital to meet all the demand for small businesses across the country.
That's why this bill that we're looking to pass this week out of the Senate and that Gerry and Jim already voted for is so important, because what it would do is it would take funding authorization to provide to community banks who are most likely to give loans to small businesses. But it would say to those banks, you know what? We're going to hold you accountable for actually lending the money. So -- because what we don't want to do is just help the banks boost their balance sheets but they're never getting the money out of the door.
Over the long term, we think that there are going to be enormous opportunities for banks to make money with businesses like yours, because yours are the ones that grow. But they're still feeling gun shy because of what happened on Wall Street.
And in fairness to a lot of the community banks, they weren't the ones who were making big bets on derivatives, but they were punished, nonetheless. They've been hit really hard in the housing market. They've been hit on their portfolios. They've been trying to strengthen their portfolios. But when we provide these loan guarantees through the SBA or we provide cheaper money to them that they can then lend out, and as long as we're monitoring them to make sure that they actually lend those moneys to small businesses, they are the ones that are most likely to get that money out the door.
This bill is very important. It has been held up now for a couple of months unnecessarily.
There was an article in "USA Today" just about three weeks ago that said small businesses were actually holding of on hiring because they weren't sure whether some of these tax cuts that they were going to get, as well as some of these lending facilities, would actually be set up. And you hear some of my friends on the Republican side complaining that, well, we'd get more business investment if we had more certainty.
Well, here's an example where we could give some certainty right away. Pass this bill. I will sign it into law the day after it's passed or the day it is passed. And then right away, I think a lot of small businesses around the country will feel more comfortable about hiring and making investments.
UNIDENTIFIED MALE: Well, this is -- what's happening right now is that, you know, I have contracts and I am ready to hire 20 more people.
UNIDENTIFIED MALE: But nobody is going to give me additional loan right now. I mean, I had an off-the-record conversation with the vice president of one bank, and they said it's simply we've made a decision not to loan to small businesses. It's simply more profitable to us to invest this money elsewhere.
OBAMA: Well, that's why it's so important to make sure that if they are getting help from us in terms of having more money to lend, that they actually lend it out and they lend it to small businesses. And we've got to make a direct link between the help that they're getting and them actually lending the money. That's going to be critical.
All right. Who's next?
Yes, over here.
Hey, Wendy (ph). How are you?
UNIDENTIFIED FEMALE: I am so honored and delighted to be here. Thank you.
OBAMA: You must be John's younger sister.
UNIDENTIFIED FEMALE: Yes, definitely. Definitely. No, he's my kid brother. And I actually am the stringer in from Boston with that hockey team you're meeting with this afternoon.
OBAMA: There you go. Yes. I've been looking forward to congratulating them.
UNIDENTIFIED FEMALE: Yes. I would tell you just a little story, which is when I was in high school here at Woodson High School, I got involved in historic preservation. And I worked on an archaeology dig. I researched the history of an old house. I helped move the one-room Legato schoolhouse from out in the country in to town hall to restore it as a piece of our county's history.
And that launched my lifelong career in historic preservation. And so I guess -- and I know you are interested in history and have studied particularly, I think I've read, President Lincoln and the way he created a cabinet and so on. And so I know you value our nation's history.
And I guess my question for you is, what are your thoughts about what we're doing in your administration to invest in preserving our nation's history and our historic places? And one little job- generating idea I'd give you is that all the studies show that renovating existing buildings, restoring historic buildings is more labor-intensive than materials-intensive. It creates more jobs. They're local jobs for local people.
So I hope that might be part of your jobs strategy.
OBAMA: I am a huge booster of historic preservation. If I wasn't, Michelle would get on me, because she used to, in Chicago, used to be on the historic -- on the Landmarks Commission there. And we live in a landmark district in Chicago. So this is something that we care deeply about.
I guess I'd broaden the point to say that not only should we be thinking about historic preservation, but we should also be thinking about our national parks, our national forests. You know, there's this treasure that we inherited from the previous generation dating back to Teddy Roosevelt, and that requires us to continually renew that commitment to our historic structures and our natural resource base so that when Trevor (ph) -- and I'll -- and Olivia (ph) and those guys have their kids -- when you guys have your grandkids -- that that stuff is there for them too.
So we have actually tried to ramp up our commitment to these issues where we can put a little bit more money into it. But a lot of it's not just more money. It's also more planning. And the Recovery Act gave a range of grants to state and local governments in some cases around preservation issues.
Now, one other point I want to make, though, and you were mentioning how renovation oftentimes will actually generate more jobs than new construction. A related idea is what we can do to make our existing buildings and housing stock more energy efficient, because it turns out that we could probably cut about a third of our total energy use just on efficiency.
We wouldn't need new technologies. We wouldn't need to invent some fancy new fusion energy or anything.
If we just took our existing building stock and homes and insulated them, had new windows, schools, hospitals, a lot of big institutions, we could squeeze huge efficiencies out of that. There's a lot of waste to be had. And that would benefit everybody.
It would mean that over time, we were helping to save the planet by reducing our carbon footprint. People would be paying less on their electricity bills and their heating bills and their air conditioning bills. So it helps consumers.
The problem -- the reason we haven't done more of this is because it requires some capital on the front end. I mean, a lot of school districts, for example, would love to retrofit their schools, but they're having problems just keeping teachers on payroll right now. So they always put off those investments.
And one of the things that we tried to do through the Recovery Act, and something that I know that Gerry and Jim have been interested in, is something called Home Star that we've been working on, is to essentially provide families, as well as small businesses, as well as institutions like schools or hospitals, grants up front where we say, all right, we're going to give you $10,000 to retrofit your building or your house, and then you're going to pay us back through your savings on utilities over a five-year period, for example. So that over time, it doesn't cost taxpayers a lot of money, but we're essentially giving some money up front that's going to then be recouped.
And I think there are a lot of ideas that we can pursue on that front that could really make a difference and put a lot of people back to work, whether they're the folks selling the insulation at Home Depot, or the small contractor that for a long time was remodeling kitchens or putting in home additions. Maybe that business has dried up. This would be a new area for them to get put to work.
And about one out of four construction -- one out of four jobs that have been lost during this recession are related to the construction industry in some fashion. You know, those folks have been hit harder than just about anybody else. This would be an important boost for them.
(END OF CNN COVERAGE)