Return to Transcripts main page


President Obama Press Conference on Tax Cut Agreement; President Obama Defends Tax Cut Deal; Can Tax Deal Get Through Congress?

Aired December 7, 2010 - 14:15   ET



WOLF BLITZER, HOST, "THE SITUATION ROOM": I'm Wolf Blitzer in Washington.

We're getting ready for the president of the United States. He's about to walk into the briefing room in the West Wing of the White House. You see the reporters. They are there. They're getting ready for live coverage.

We'll have of course live coverage here on CNN, together with "The Best Political Team on Television." Ali Velshi is standing by, as is John King, Gloria Borger, Roland Martin, Ed Rollins, David Gergen. We've got Ed Henry in the briefing room, and Dana Bash up on Capitol Hill.

Ed Henry, if you're set up, I want to go to you first. Set the scene for us.

This came as a surprise even though the president yesterday, when he announced the agreement -- the compromise, he said he wanted to engage the media. He's now about to engage the media.

Unfortunately, Ed is not yet ready, but we'll get to Ed shortly.

John King, you and I, we've been in that briefing room. They announce the president is coming in. Within an hour, everybody gets ready, the camera crews, the reporters, the producers. They are getting ready momentarily. He'll walk in.

He wants to have this discussion with the American people through the media.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: He needs to have this discussion with the American people. And more importantly, at the moment with the left of the Democratic Party.

The original plan, Wolf, was to send the vice president up to Capitol Hill for him to do much of the salesmanship. But the White House realizes now it has a revolt on its hands.

The AFL-CIO, the labor union, says this deal is unconscionable., a big, powerful movement on the left, says it's like watching a car wreck in slow motion, says it's a millionaire tax bailout. More and more Democrats, as Dana and our producers on Capitol Hill and Brianna have been working their sources, are saying, wait a minute, I don't like this deal. So he needs to sell it to the American people in terms of the votes and the imagery here in Washington. He needs to sell it to his own party.

BLITZER: And we just got a sort of wishy-washy statement from the Speaker of the House, Nancy Pelosi. She didn't reject it, but she certainly didn't endorse it.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: No, she didn't endorse it. And she might not endorse it. We don't know.

But I spoke with a senior White House adviser this morning who said, "Look, we have to live in the real world now." So this is the first day of their new lives.

And they said, look, the Republicans said they would block anything that did not include the extension of the tax cuts for the wealthy. What are our liberal friends going to say to their constituency, oh, by the way, we can't give you your middle class tax cuts because we want to make a political point on extending the tax cuts for the wealthy?

This senior White House adviser said to me, "Look, we relish" -- and that's the quote -- "relish the thought of relitigating this in 2012." My question is, don't they lose a little credibility on this issue by cutting this deal?

ROLAND MARTIN, CNN CONTRIBUTOR: And Wolf, I spent time today talking to people in the White House, Congress, Democrats, people in policy groups. And one of the reasons they're so angry is Gloria's point.

When they say, well, the Republican say it, we're not going to vote on it. They say, but you never forced them.

You never put them in the position to say I'm going to support a tax cut for those who are wealthy and say I'm going to deny it for those who are middle class. And so they're saying, wait a minute, how did you actually try to drive that point home?

BORGER: Well, the White House response to that would be you could have voted on this before the election, folks, but you were the ones who punted on Capitol Hill and decided not to.

BLITZER: All right. Let's go to the White House. Ed Henry is inside that briefing room.

And I'm sure you're getting ready to ask the president of the United States a question as well. But set the scene for us. How did this come about, this decision within the past hour or so, for the president to have this full-scale news conference?

ED HENRY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, it was very unexpected since the president had spoken last night on the tax cut deal. And we were expecting Robert Gibbs to have a briefing here just a short time. Instead, we got guidance saying the president himself is going to come out.

He had a very light schedule. He had an opportunity, obviously, to fill that void.

He realizes that he has a couple of audiences he has to deal with. Not just talking to the American people all around the country and trying to sell this tax cut package, but he's got to talk inside the family, to some of his fellow Democrats who are very skeptical.

He's got Vice President Biden up there in the Senate Democratic Caucus right now. A senior Democrat told me earlier this morning, look, "This is going to be a pretty lively caucus beforehand," that there are a lot of people who are frustrated with this president, think he's caving in, think he's no longer standing on what was once a bedrock principle, which is to roll back those Bush tax cuts for the rich.

And so you can bet Vice President Biden is getting an earful right now. And this is a chance for the president to use the megaphone himself and again, not just speak to the American people, but directly to some of those wavering Democrats and make his case -- Wolf.

BLITZER: All right. Stand by, Ed, because we're going to be coming back to you.

Dana Bash is our senior congressional correspondent. She's on Capitol Hill right now.

The Republican leadership in the Senate, we just heard, Dana, they basically endorse this deal. They're pretty happy with it. Democrats, not so much.

Is it fair to say this is not yet a done deal? The votes aren't necessarily sown up?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: It is fair to say that. There's no question about it.

I spoke to so many Democrats. And interesting here, we have been really focused on House Democrats, that that would be the place where we would have the most revolts, if you will, from the House Democrats.

But we are hearing it so much today from Democratic senators. And even more interesting, I think, to me is that it's not just from liberals. It's from many moderate Democrats, those who, historically, have been for compromise.

One of those is Mary Landrieu of Louisiana. She was -- angry, I think, is an understatement to talk about the way she felt about this deal.

Listen to part of what she told me in the hallway just a little while ago.

(BEGIN VIDEO CLIP) SEN. MARY LANDRIEU (D), LOUISIANA: If I end up voting for this package, it will not be silently. It will be being sort of dragged to that position, having firmly established that I disagree strongly with some provisions, and can't imagine this president leading the country in that direction.


BASH: Now, why did she say that? She and other moderates are upset because of the cost of this package, because it will cost billions and billions of dollars, tens of billions, and it won't be paid for. So it is going to add to the deficit, and about the fact, the fundamental fact, that this deal extends the tax cuts for wealthy Americans, which she and others believe is fundamentally unfair.

So it really does go across the spectrum among the Democrats here. The Senate will vote first. So that is where I think the focus is, to make sure that they have the votes. This meeting that Ed was talking about that's going on right now with the vice president, as we speak, with Democrats is going to be absolutely crucial.

BLITZER: All right. Dana, we're going to have you stand by as well.

I want to bring in David Gergen and Ed Rollins.

David, first to you.

Is this fight that the president is having with the liberal base of his own party in the long run basically good for the president?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: I don't think so, Wolf. It reminds me a little bit of the fight that George Bush Sr. had with his Republican base when he had the "No new taxes," "Read my lips."

And in effect, ,that's the kind of pledge that President Obama gave during the campaign. He didn't use "Read my lips," but he certainly said we're not going to extend these taxes for the upper income folks. And that was a firm pledge.

So he has got a rebellion going, a revolt, as John King puts it. But I think that, you know, in talking about it, the tax cuts for the rich are only a small part of this. What is really surprising about this package is it's a $900 billion package that's not paid for over two years. That's as big as the stimulus package we had in the first two years, and look where we got with that.

BLITZER: Yes. I want to bring Ali Velshi in.

Ed Rollins, stand by for one moment.

On that point, this is a very expensive proposition, this deal that's been put together.

VELSHI: This depends heavily, Wolf, on the idea that at some point in the next year or two years, economic growth kicks in. That is the one magic bullet.

If economic growth goes beyond where we're expecting it to be, 2.5, 2.75 percent in 2011, to 3.5 percent, then we are off to the races. That's the one way you can reduce taxes or keep taxes low, and reduce the deficit, thereby reducing the debt over time. But this remains the big problem.

We have to be able to understand that that's going to happen. And that means, does this deal prompt those businesses that are sitting on $2 trillion and not investing it might say there's some certainty here, they like these policies, they like this Congress and the deal-making that it makes with the president, and they invest? Or do they still sit on the sidelines?

If we can start to see people employed, more employed people and more businesses paying taxes mean that we can attack this deficit and this debt. This is the uncertainty of this whole thing.

Is it, as David said, a black hole where we put $800 billion in and we don't know what we're getting? Or is it, as Republicans say, something that will stimulate the economy better than last year's stimulus did? That is yet to be seen.

BLITZER: All right. Ali, stand by, because we're only a few seconds away. The president of the United States getting ready to walk into the briefing room.

The reporters will all sit down as the president walks in. We believe he will open up with a short statement. He had a much longer statement yesterday when he announced the agreement. And then he'll start taking reporters' questions.

It could last for a half an hour, 45 minutes, an hour. It's unknown right now. But we do know the president wants to have a serious engagement.

Here he is.


Before I answer a few questions, I just want to say a few words about the agreement we've reached on tax cuts.

Now, my number one priority is to do what's right for the American people for jobs and for economic growth. I'm focused on making sure that tens of millions of hard-working Americans are not seeing their paychecks shrink on January 1st just because the folks here in Washington are busy trying to score political points.

And because of this agreement, middle class Americans won't see their taxes go up on January 1st, which is what I promised, a promise I made during the campaign, a promise I made as president. Because of this agreement, two million Americans who lost their jobs and are looking for work will be able to pay their rent and put food on their table. And in exchange for a temporary extension of the high-income tax breaks -- not a permanent, but temporary extension -- a policy that I opposed, but that Republicans are unwilling to budge on, this agreement preserves additional tax cuts for the middle class that I fought for and that Republicans opposed two years ago.

I'll cite three of them.

Number one, if you are a parent trying to raise your child or pay college tuition, you will continue to see tax breaks next year.

Second, if you're a small business looking to invest and grow, you'll have a tax cut next year.

Third, as a result of this agreement, we will cut payroll taxes in 2011, which will add about $1,000 to the take-home pay of a typical family.

So this isn't an abstract debate. This is real money for real people that will make a real difference in the lives of the folks who sent us here. It will make a real difference in the pace of job creation and economic growth. In other words, it's a good deal for the American people.

Now, I know there are some who would have preferred a protracted political fight, even if it had meant higher taxes for all Americans, even if it had meant an end to unemployment insurance for those who are desperately looking for work. And I understand the desire for a fight. I'm sympathetic to that. I'm as opposed to the high-end tax cuts today as I've been for years.

In the long run, we simply can't afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle class tax cuts that I've championed and that they've opposed.

So we're going to keep on having this debate. We're going to keep on having this battle. But in the meantime, I'm not here to play games with the American people or the health of our economy.

My job is to do whatever I can to get this economy moving. My job is to do whatever I can to spur job creation. My job is to look out for middle class families who are struggling right now to get by and Americans who are out of work through no fault of their own.

A long political fight that carried over into next year might have been good politics, but it would be a bad deal for the economy and it would be a bad deal for the American people. And my responsibility as president is to do what's right for the American people. And that's the responsibility I intend to uphold as long as I am in this office.

So with that, let me take a couple of questions.

Ben Feller.

BEN FELLER, THE ASSOCIATED PRESS: Thank you, Mr. President. You've been telling the American people all along that you oppose extending the tax cuts for the wealthier Americans. You said that again today. But what you never said was that you opposed the tax cuts, but you'd be willing to go ahead and extend them for a couple of years if the politics of the moment demand it.

So what I'm wondering is, when you take a stand like you had, why should the American people believe that you're going to stick with it? Why should the American people believe that you're not going to flip- flop?

OBAMA: Hold on a second, Ben.

This isn't politics of the moment. This has to do with what can we get done right now?

So the issue -- here's the choice. It's very stark. We can't get my preferred option through the Senate right now. As a consequence, if we don't get my option through the Senate right now and we do nothing, then on January 1st of this -- of 2011, the average family is going to see their taxes go up about $3,000. Number two, at the end of this month, 2 million people will lose their unemployment +insurance.

Now, I have an option, which is to say, "You know what? I'm going to keep fighting a political fight which I can't win in the Senate." And, by the way, there are going to be more Republican senators next year, sworn in, than there are currently. So the likelihood that the dynamic's going to improve for us getting my preferred option through the Senate will -- will be diminished.

I've got an option of just holding fast to my position and, as a consequence, 2 million people may not be able to pay their bills and tens of millions of people who are struggling right now are suddenly going to see their paychecks smaller.

Or, alternatively, what I can do is I can say that I am going to stick to stick to my position that those folks get relief, that people get help for unemployment insurance; and I will continue to fight before the American people to make the point that the Republican position is wrong.

Now, if there was not collateral damage, if this was just a matter of my politics or being able to persuade the American people to my side, then I would just stick to my guns because the fact of the matter is the American people already agree with me. There are polls showing right now that the American people for the most part think it's a bad idea to provide tax cuts to the wealthy.

But the issue is not me persuading the American people; they're already there. The issue is how do I persuade the Republicans in the Senate who are currently blocking that position. I have not been able to budge them, and I don't think there's any suggestion anybody in this room thinks realistically that we can budge them right now. And in the meantime, there are a whole bunch of people being hurt and the economy would be damaged. And my first job is to make sure that the economy is growing, that we're creating jobs out there, and that people who are struggling are getting some relief.

And if I have to choose between having a protracted political battle on the one hand but those folks being hurt, or helping those folks and continuing to fight this political battle over the next two years, I will choose the latter.

QUESTION: Let me follow up quickly, sir.

You're describing the situation you're in right now. What about the last two years when it comes to your preferred option? Was there a failure either on the part of the Democratic leadership on the Hill or here that you -- that you couldn't preclude these wealthier cuts from going forward?

OBAMA: Well, let me say that on the Republican side, this is their Holy Grail, these tax cuts for the wealthy. This is -- seems to be their central economic doctrine. And so unless we had 60 votes in the Senate at any given time, it would be very hard for us to move this forward.

I have said that I would have liked to have seen a vote before the election. I thought this was a strong position for us to take into the election, to crystallize the positions of the two parties. Because I think the Democrats have better ideas. I think our proposal to make sure that the middle class is held harmless, but that we don't make these Bush tax cuts permanent for wealthy individuals because it was going to cost the country at a time when we've got these looming deficits -- that that was the better position to take, and the American people were persuaded by that.

But the fact of the matter is, I haven't persuaded the Republican party. I haven't persuaded Mitch McConnell and I haven't persuaded John Boehner. And if I can't persuade them, then I've got to look at what is the best thing to do given that reality for the American people and for jobs.

Juliana (ph)?

QUESTION: Thank you, Mr. President.

Back in July your budget office's mid-session review forecast that unemployment would be 7.7 percent in the second - in the fourth quarter of 2012. Will this package deal lower that projected rate?

And also, is it going to do more to boost growth and create jobs than your Recovery Act?

OBAMA: This is not as significant a boost to the economy as the Recovery Act was, but we're in a situation then. I mean, when the Recovery Act passed, we were looking at a potential Great Depression, and we might have seen unemployment go up to 15 percent, 20 percent; we don't know.

In combination with the work we did in stabilizing the financial system, the work that the Federal Reserve did, that's behind us now. We don't have the danger of a double-dip recession.

What we have is a situation in which the economy, although growing, although company profits are up, although we are seeing some job growth in the private sector, the economy is not growing fast enough to drive down the unemployment rate given the 8 million jobs that were lost before I came into office and just as I was coming into office.

So what this package does is provide an additional boost that is substantially more significant than I think most economic forecasters had expected. And in fact, you've already seen some just over the last 24 hours suggest that we may see faster growth and more job growth as a consequence of this package.

I think the payroll tax holiday will have an impact. Unemployment insurance probably has the biggest impact in terms of making sure that the recovery that we have continues and perhaps at a faster pace.

So overall, every economist I've talked to suggests that this will help economic growth and this will help job growth over the next several months. And that is the main criteria by which I made this decision.

Look, this is something that I think everybody has to remember. And I would speak especially to my fellow Democrats who I think rightly are passionate about middle-class families, working families, low-income families who are having the toughest time in this economy.

OBAMA: The single most important jobs program we can put in place is a growing economy. The single most important anti-poverty program we can put in place is making sure folks have jobs and the economy is growing.

We can do a whole bunch of other stuff, but if the economy is not growing, if the private sector is not hiring faster than it's currently hiring, then we are going to continue to have problems, no matter how many programs we put into place.

And that's why, when I look at what our options were, for us to have another three, four, five months of uncertainty, not only would that have a direct impact on the people who see their paychecks get smaller, not only would that have a direct impact on people who are unemployed and literally depend on unemployment insurance to pay the bills or keep their home or keep their car, but, in terms of macroeconomics, the overall health of the economy, that would have been a damaging thing.

QUESTION: Just to follow up, the unemployment rate was just north of 8 percent when your last Recovery Act was put into place.

OBAMA: Yes. Yes.

QUESTION: It's now 9.8 percent. Are you prepared to say today that the unemployment rate is going to do down as a result of this package?

OBAMA: My expectation is that the unemployment rate is going to be going down because the economy is growing. It's -- and even though it's growing more slowly than I'd like, it's still growing.

Now, how fast is it going to go down? How quickly the economy is going to grow. When are private sector businesses going to start making the investments in plant and equipment and actually start hiring people again? You know, there are a lot of economists out there who have been struggling with that question.

So -- so I'm not going to make a prediction.

What I can say, with confidence, is that this package will help strengthen the economy, will help strengthen the recovery. That I'm confident about.

Chuck Todd?

CHUCK TODD, CHIEF WHITE HOUSE CORRESPONDENT, NBC NEWS: Mr. President, what do you say to Democrats who say you're rewarding Republican obstruction here?

You, yourself, used in your opening statement, "They were unwilling to budge on this."

A lot of progressive Democrats are saying they're unwilling to budge --

OBAMA: Right.

TODD: -- and you're asking them to get off the fence and budge. Why should they be rewarding Republican obstructionism?

OBAMA: Well, let me -- let me -- let me use a couple of analogies.

I've said before that I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts. I think it's tempting not to negotiate with hostage takers, unless the hostage gets harmed. Then, people will question the wisdom of that strategy.

In this case, the hostage was the American people. And I was not willing to see them get harmed.

Again, this is not an abstract political fight. This is not isolated here in Washington.

There are people right now who, when their unemployment insurance runs out, will not be able to pay the bills.

There are -- there are folks right now who are just barely making it on the paycheck that they've got. And when that paycheck gets smaller on January 1st, they're going to have to scramble to figure out, "How am I going to pay all my bills? How am I going to keep on making the payments for my child's college tuition? What am I going to do exactly?"

Now, I could have enjoyed the battle with the Republicans over the next month or two because, as I said, the American people are on our side. This is not a situation in which I have failed to persuade the American people of the rightness of our position.

I know the polls. The polls are on our side on this. We weren't operating from a position of political weakness with respect to public opinion.

The problem is that Republicans feel that this is the single most important thing that they have to fight for as a party. And in light of that, it was going to be a protracted battle, and they would have a stronger position next year than they do currently.

So, you know, I guess another way of thinking about it is that, if -- certainly, if we had made a determination that the deal was a permanent tax break for high-income individuals in exchange for these short-term things that people need right now, that would have been unacceptable.

And the reason is, is because, you know, you would be looking at $700 billion that would be added to the deficit with very little on the short term that would help to offset that.

The deal that we've struck here makes the high-end tax cuts temporary. And that gives us the time to have this political battle without having the same casualties for the American people that are -- that are my number one concern.

QUESTION: But if I may follow, aren't you telegraphing, though, a negotiating strategy of how the Republicans can beat you in negotiations all the way through the next year, because they can just stick to their guns, stay united, be unwilling to budge, to use your words, and force you to capitulate?

OBAMA: I don't think so.

And the reason is because this is a very unique circumstance. This is a situation in which tens of millions of people would be directly damaged and immediately damaged, and at a time when the economy is just about to recover.

Now, keep in mind, I've just gone through two years, Chuck, where the rap on me was I was too stubborn and wasn't willing to budge on a whole bunch of issues, including, by the way, health care where everybody here was writing about how, "Despite public opinion and despite this and despite that, somehow the guy's going to bulldoze his way through this thing."


OBAMA: Now --


OBAMA: Well, but that's my point. My point is I don't make judgments based on what the conventional wisdom is at any given time. I make my judgments based on what I think is right for the country and for the American people right now.

And, you know, I will be happy to see the Republicans test whether or not I'm itching for a fight on a whole range of issues. I suspect they will find I am. And I think the American people will be on my side on a whole bunch of these fights.

But right now, I want to make sure that the American people aren't hurt because we're having a political fight. And I think that this agreement accomplishes that.

And, as I said, there are a whole bunch of things that they are giving up. I mean, the truth of the matter is, from the Republican perspective, the Earned Income Tax Credit, the college tuition tax credit, the child tax credit -- all those things that are so important for so many families across the country -- those are the things they really opposed.

And so, temporarily they were willing to go along with that, presumably because they think they can beat me on that over the course of the next two years. And I'm happy to have that battle. I'm happy to have that conversation. I just want to make sure that the American people aren't harmed while we're having that broader argument.

QUESTION: Thank you, Mr. President.

Last week, the members of your administration were boasting about your willingness to walk away from the Korea negotiations led to a better deal. Can you explain how this (inaudible) different (ph)?

OBAMA: You know, the difference is that if I didn't get the Korea deal done on January 1st, the taxes on middle-class America wouldn't go up. Now, that's pretty straightforward. You know, if we didn't get the Korea deal done by January 1st, 2 million people weren't suddenly looking at having no way to support their families.

And that's why -- you know, this goes to Chuck's question as well about what's going to be different in the future.

I mean, you've got a situation here that was urgent for millions of people. But, you know, as I recall, with the Korea free trade agreement, that was deemed by conventional wisdom as an example of us not getting something done.

I remember a story above the fold on that.

Then, when we got it done with a better deal, that is -- has the endorsement of -- not only of the U.S. auto companies, but also of labor, the story was, sort of, below the fold.

So I -- I would just --


-- I would just point that out.

I think -- I -- I think -- I think -- I am happy to be tested over the next several months about our ability to negotiate with Republicans.

QUESTION: And having bought that time now, do you hope to use this two-year window to push for a broader overhaul of the tax code --

OBAMA: Yes. And the answer is yes.

I mean, part -- part of what I want to do is to essentially get the American people in a safe place so that we can then get the economy in a stable place. And then we're going to have to have a broad-based discussion across the country about our priorities. And I started doing that yesterday down in North Carolina.

Here's going to be the long-term issue. We've had two years of emergency. Emergency economic action on the banking industry, the auto industry, on unemployment insurance, on a whole range of issues -- on state budgets.

The situation is now stabilized, although for those folks who are out of work it's still an emergency. So we've still got to focus short term on job growth.

But we've got to have a larger debate about how is this -- how is this country going to win the economic competition of the 21st century. How are we going to make sure we've got the best trained workers in the world?

There was just a study that came out today showing how we've slipped even further when it comes to math education and science education. So what are we doing to revamp our schools to make sure our kids can compete?

What are we have doing in terms of research and development to make sure that innovation is still taking place here in the United States of America? What are we doing about infrastructure so that we have the best airports and the best roads and the best bridges?

And how are we going to pay for all that at a time when we've got both short-term deficit problems, medium-term deficit problems and long-term deficit problems?

That's going to be a big debate and it's going to involve us sorting out what government functions are adding to our competitiveness and increasing opportunity and making sure that we're growing the economy, and which aspects of the government aren't helping.

And then we've got to figure out, how do we pay for that?

And that's going to mean, you know, looking at the tax code and saying, you know, "What's fair? What's efficient?" And I don't think anybody thinks the tax code right now is fair or efficient. But we've got to make sure that we don't just paper over those problems by borrowing from China or Saudi Arabia.

And so that's going to be a major conversation.

And in that context, I don't see how the Republicans win that argument. I don't know how they are going to be able to argue that extending permanently these high-end tax cuts is going to be good for our economy, when, to offset them, we'd end up having to cut vital services for our kids, for our veterans, for our seniors.

But I'm happy to listen to their arguments. And, you know, I think the American people will benefit from that debate. And that's going to be starting next year.

QUESTION: Mr. President, thank you.

How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now going in.

Was there ever any attempt by the White House to include the -- raising the debt limit as part of this package?

OBAMA: When you say it would seem they'll have a significant amount of leverage over the White House, what do you mean?

QUESTION: Just in the sense that -- that, you know, they'll say essentially, "We're not going to raise the -- we're not going to agree to it unless the White House is -- is able to or willing to agree to significant spending cuts across the board." They'll probably go deeper and further than what you're willing to do.

OBAMA: Well --

QUESTION: What -- I mean, what leverage would you have --


OBAMA: Look, here's my expectation. And I'll take John Boehner at his word, that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse; that that would not be a good thing to happen.

And so I think that there will be significant discussions about the debt limit vote. That's something that nobody ever likes to vote on.

But once John Boehner is sworn in as speaker, then he's going to have responsibilities to govern. You can't just stand on the sidelines and be a bomb-thrower.

And so my expectation is, is that we will have tough negotiations around the budget, but that ultimately we can arrive at a position that is keeping the government open, keeping Social Security checks going out, keeping veterans' services being provided, but at the same time is prudent when it comes to the taxpayer dollars.

OBAMA: Last question.

QUESTION: Some on the left have questioned -- have looked at this deal and questioned what your core values are, what, specifically, you will go to the mat on.

I wonder if you can reassure them with some specific things in saying, "All right, this is where I don't budget."

And one -- and along those lines, what's going to be different in 2012, when all of these tax cuts again are up for expiration?

OBAMA: Well, what's going to be different in 2012, we just discussed, which is we will have had two years to discuss the budget; not in the abstract, but in concrete terms.

And over the last two years, the Republicans have had the benefit of watching us take all these emergency actions, having us have -- preside over a $1.3 trillion deficit that we inherited, and just pointing fingers and saying, "That's their problem."

Well, over the next two years, they're going to have to show me what it is that they think they can do.

And I think it becomes pretty clear, after you go through the budget line by line, that if, in fact, they want to pay for $700 billion worth of tax breaks to wealthy individuals, that that's a lot of money and that the cuts -- corresponding cuts that would have to be made are very painful.

So, either they rethink their position or I don't think they're going to do very well in 2012.

So that's -- that's on the first point.

With respect to the bottom line in terms of what my core principles are --

QUESTION: What are your lines in the sand?

OBAMA: Yeah. Well, look, I've got a whole bunch of lines in the sand.


Not -- not -- not making the tax cuts for the wealthy permanent. That was a line in the sand.

Making sure that the things that most impact middle-class families and low-income families, that those were preserved. That was a line in the sand.

I would not have agreed to a deal -- which, by the way, some in Congress were talking about -- of just a two-year extension on the Bush tax cuts and one year of unemployment insurance, but meanwhile all the other provisions of Earned Income Tax Credit or, you know, other important breaks for middle-class families, like the college tax credit, that those had gone away, just because they had Obama's name attached to them instead of Bush's name attached to them.

You know, so this notion that somehow, you know, we are willing to compromise too much, reminds me of the debate that we had during health care. This is the public option debate all over again.

So I pass a signature piece of legislation, where we finally get health care for all Americans, something that Democrats have been fighting for for a hundred years, but because there was a provision in there that they didn't get, that would have affected maybe a couple of million people, even though we got health insurance for 30 million people and the potential for lower premiums for 100 million people, that somehow that was a sign of weakness and compromise.

Now, if that's the standard by which we are measuring success or core principles, then let's face it: We will never get anything done.

People will have the satisfaction of having a purist position and no victories for the American people. And we will be able to feel good about ourselves and sanctimonious about how pure our intentions are and how tough we are, and in the meantime the American people are still seeing themselves not able to get health insurance because of preexisting condition, or not being able to pay their bills because their unemployment insurance ran out.

That can't be the measure of -- of how we think about our public service. That can't be the measure of what it means to be a Democrat.

This is a big, diverse country. Not everybody agrees with us. I know that shocks people. You know, the New York Times editorial page does not permeate across all of America. Neither does The Wall Street Journal editorial page.

Most Americans, they're just trying to figure out how to -- how to go about their lives and -- and how can we make sure that our elected officials are looking out for us.

And that means because it's a big, diverse country and people have a lot of complicated positions, it means that in order to get stuff done, we're going to compromise.

This is why FDR when he started Social Security it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people. When Medicare was started, it was a small program. It grew. Under -- under the criteria that you just set out, each of those were betrayals of some abstract ideal.

This country was founded on compromise. I couldn't go through the front door at this country's founding. And, you know, if we were really thinking about ideal positions, we wouldn't have a union.

So my job is to make sure that we have a North Star out there: What is helping the American people live out their lives? You know, what is giving them more opportunity? What is growing the economy? What is making us more competitive?

And at any given juncture, there are going to be times where my preferred option, what I'm absolutely positive is right, I can't get done. And so then my question is, does it make sense for me to tack a little bit this way or tack a little bit that way? Because I'm keeping my eye on the long term and the long fight; not my day-to- day news cycle but where am I going over the long term?

And I don't think there's a single Democrat out there who, if they looked at where we started when I came into office and look at where we are now, would say that somehow we have not moved in the direction that I promised.

Take a tally. Look at what I promised during the campaign. There's not a single thing that I've said that I would do that I have not either done or tried to do. And if I haven't gotten it done yet, I'm still trying to do it.

And -- and so the -- to my Democratic friends, what I'd suggest is let's make sure that we understand this is a long game. This is not a short game.

And to my Republican friends, I would suggest, I think this is a good agreement. Because I know that they're swallowing some things that they don't like as well. And I'm looking forward to seeing them on the field of competition over the next two years.

Thanks very much, everybody.

QUESTION: What about "Don't Ask" in the lame duck?

QUESTION: Is the deal set in stone, sir?

QUESTION: Julian Assange?


WOLF BLITZER, HOST, "THE SITUATION ROOM": All right. So, the president of the United States spending a little bit more than half an hour answering reporters' questions, following an opening statement. Making it clear that he believes he has no choice but to fight for the middle class, to make sure the middle class, 98 percent of taxpayers continue to receive the lower tax rates as opposed to letting those tax rates going up, even though he has to accept what he hates, continuing those lower tax rates for wealthier Americans, those making more than $250,000 a year. He's trying to be pragmatic.

Let's go around and ask members of "The Best Political Team on Television" how the president did. How did he do, John?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Fascinating. Fascinating moment in politics. The Democratic president essentially saying to the left of his own party, "Listen, I know what I'm doing, quiet down."

This is the public option all over again. Essentially revisiting the health care fight. He knows all the criticism is coming from the left. They think he's too weak, he gives the Republicans too much, he capitulated here. The president saying, no, I believe this will stimulate the economy. It's not perfect but I think it will stimulate the economy, which would help him in 2012 and help all the other Democrats in 2012 if he's right. And essentially defiantly answering critics on the left by saying, I think I'm right. Too bad.

BLITZER: All right. I want to -- Gloria, stand by for a moment. I want to play this little clip of what the president said, and then I David Gergen to assess. Go ahead.


OBAMA: I make my judgments based on what I think is right for the country and for the American people right now.

And, you know, I will be happy to see the Republicans test whether or not I'm itching for a fight on a whole range of issues. I suspect they will find I am.

And I think the American people will be on my side on a whole bunch of these fights.


BLITZER: David Gergen, how did he do?

DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Well, Wolf, it's a very strange, very unusual thing for a president to be in this position.

From my point of view, he was fundamentally right on the merits. He had to have a compromise. He had to extend all of these tax cuts in order not to put a damper on the economy.

But, even as he made the compromise, and essentially what a president often has to do, he lost the argument. He -- the -- the -- negotiations had become so bollixed up and the argument were so bollixed up that he comes out looking like he got rolled and that he -- and that he's weak, and he's got this rebellion going on.

And so, from his political point of view, it is very much like the health care fight. He got the bill, but he lost the argument. And I think that's a hard way to practice politics. I think it -- I think it leaves him in a weakened position going forward with a party that is -- is clearly on the edges of rebellion.

BLITZER: Let me bring Gloria Borger in.

What did you think, Gloria?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, I think this president is making a bet that the American public is more interested in him as being the grownup triangulating, if you will, a little bit of Bill Clinton here, and being able to say to the American public, I am on your side. I did this for you. I cannot be sanctimonious. I am not going to play these political games.

He was clearly very angry at the left flank of his own party. But I think their -- their argument here inside the White House is, OK, this is a president who's going to be independent and he's going to try and get things done and not play games.

And he's going to take on Republicans, as he said over and over again. He's going to be weakened by his -- by his left flank. But you know what? Bill Clinton got reelected by doing exactly what we saw today.



BLITZER: And -- and -- hold on a second, Roland, because I want to play this clip first. The president at one point suggested that the Republicans were holding the middle class hostage. He said the Republicans were like hostage -- hostage-takers. I want to play this little clip.


OBAMA: I have said before that I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts. I think it's tempting not to negotiate with hostage-takers, unless the hostage gets harmed.


BLITZER: All right, Roland is here. Ed -- Ed Rollins is here.

Let me get to Ed first.

How do you feel when the president suggests the GOP are like hostage-takers?

ED ROLLINS, CNN SENIOR POLITICAL CONTRIBUTOR: I thought the statement was outrageous. First of all, we have never been for raising taxes on anybody, middle class, upper class, or what have you. This was a comprehensive tax plan a long time ago. And all the rhetoric about the shortfall, the shortfall is because there's too much spending.

Not raising people's taxes doesn't cost anybody anything. The spending in all of this, which we went along with, is the additional unemployment, which is not being paid for, the 2 percent reduction in payroll taxes, which I happen to support, which I think helps stimulate the economy. But, still, that puts a shortfall.

So, I think, at the end of the day, you know, if he wants the fight, he's going to get the fight. But I think -- I think the bottom line here is he can't misrepresent Republicans. Republicans have never been about raising taxes. They were the ones that broke this bill up.

This bill was either all or nothing, and we basically said, we're not going to raise taxes.

MARTIN: OK, you talk about getting facts straight.

The Congressional Budget Office made perfectly clear that if it were not for those Bush cuts from 2001 to 2005, we would have had a -- we would have a surplus and not a deficit. So, again, you can talk about how it has no impact, but that's the reality.


ROLLINS: The spending went on. It's not a reality. It's not a reality. The money has not -- the money has been spent.

MARTIN: Ed, we had two -- we had three levels of spending coming out of 9/11, the wars in Iraq and Afghanistan, as well as those tax cuts.

ROLLINS: And that cost money. That cost money.

MARTIN: And the largest contributor to the deficit were those tax cuts.

But, Wolf, let me go to this point the president made. He talked about -- he said -- quote -- a "purist" position and no victories for the American people, when he was addressing the left.

Yet, earlier in the very same news conference, he talked about Republicans, their position on this being the Holy Grail.

Well, guess what? They got exactly what they wanted. And so it seems to me, on the Republican side, they maintained a purist position, and they caused the president to have to back down. And so...


ROLLINS: Thirty days ago, there was a... MARTIN: One second, Ed. One second, Ed.

ROLLINS: Thirty days ago, the election, and this case was made to the public.

MARTIN: Ed, Ed...

ROLLINS: We won 63 seats. We won six seats. If the Democrats would have won the Congress, this whole thing wouldn't have been -- would have been a moot question.

MARTIN: Ed, and, also -- also, 30 days ago, you and Republicans were talking -- you and other conservatives were talking about the deficit being most important. And here we...

ROLLINS: It's still important.

MARTIN: Wait. And here we have -- here we have a compromise that is going to add $900 billion to the deficit, and I don't hear the Tea Party...

BLITZER: All right.

MARTIN: ... I don't hear anybody saying a word about that when it comes to the deficit. So, it's like that somehow has blown away, and it's no big deal.

BORGER: But that's where -- but that's where the president can -- can -- can put the Republicans on the spot, because, in the State of the Union address, he can come out and say, you know what? Phase two. We have spent all this money. We have essentially done a second stimulus package.

Now we have got to talk about deficit reduction and reforming the tax code...

BLITZER: All right.

BORGER: ... and maybe both.

BLITZER: I want to bring Ali Velshi in.


BLITZER: The president kept saying repeatedly, Ali, that his -- his major goal is making sure the economy recovers. The way to do that is to get people to start spending money.

If you -- if you presumably give people more money, reduce the taxes, they will spend it. That could stimulate the economy. There could be economic growth, which would bring -- bring in greater revenue into the Treasury.

I assume you agree...


VELSHI: Well, there are two ways. This is a 180-degree turn from where we were a year ago, right?

Back then, there was one philosophy, that you stimulate the economy, especially when consumers are not engaged in the economy and businesses aren't spending. The government steps in with that he stimulus bill, which was roughly the same size. You -- you -- you -- let that money trickle down into people's hands, and they have more money, and it stimulates demand.

I have to tell you, for all of the people who said that didn't work, Wolf, it did work. It did create jobs. And for month after month now, for the last few months, we have seen increased demand and we have seen jobs being created.

But somehow the Republicans decided that didn't work, so we're going to try this other business of -- of -- of not cutting people's taxes. I just want to remind everybody, tax rates that -- that the Republicans were arguing for are staying the same. What you are going to see is some other cuts that the president did support.

Now, the president has cover here, because, if this doesn't work, he can go in and say now we have deepened the hole and it didn't achieve what we wanted.

I'm a little suspicious that this may not work as well as Republicans have wanted it to. There is a reason that businesses are staying on the sidelines and not investing their money. And I'm not sure this is going to get this done.

But the bottom line is, the president has gone along with it.

Ed Henry, the -- the -- at the White House, he was in that room. The president stayed far away, in fact, from the financial decisions -- the financial discussion in this. He did not defend at all his decision to go ahead with the Republicans, except for the political decision to get this done without further fallout.

He made it very clear he's never going to be able to be held to this decision by saying he agreed with the -- extending the tax cuts to the highest income earners in the United States.


And it was fascinating to sit him and watch him say that, look, I have got the American people on my side. He said, I have seen the polls, as we have been talking about in recent days, that show a clear majority of Americans are behind the notion, at least, if not behind him, behind the notion, that the tax cuts for the rich should expire, the tax cuts for the middle class should move forward.

And he insisted at one point, this is not a failure of my leadership, of my -- it's not a failure of me to fail to communicate that to the American people. They get that. Well, obviously, there were Democrats on Capitol Hill watching that, wondering, well, then why in the world are we caving in to those Republicans that you just mentioned, if in fact the American people are behind this point of view?

I also thought it was interesting that he sort of had kind of a slow start and then was building and building. And that last answer was the most fascinating of all. I mean, he -- he just got fired up. You could feel it in the room, where he was almost, you know, having this open conversation about the war within his own party, about -- essentially saying, look, there are some people in my party, if you go all the way back to the health care debate, who will not be satisfied unless we get 100 percent.

And he's trying to make the case that 50 percent, 60 percent is going to be good enough. And, clearly, there are people in his party who still don't buy it.

VELSHI: Yes, he was quite focused on that. In fact, at -- at some point, it steered away from being a -- a press conference, and -- and was veering into speech territory.

He -- he also made some comments about collateral damage. Listen in.


OBAMA: I will continue to fight before the American people to make the point that the Republican position is wrong.

Now, if there was not collateral damage, if this was just a matter of my politics or being able to persuade the American people to my side, then I would just stick to my guns.


VELSHI: Dana Bash, congressional correspondent at Capitol Hill on this, Dana, this press conference was so squarely aimed, not at Republicans, not at the opposition, at Democrats who are saying the president made a deal with the devil.

Do you think they got that message?

DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: No, I don't think they got that message.

And, in large part, at least when it comes to Senate Democrats, they were actually in a meeting as he began to speak with his vice president, with Joe Biden.

And I can tell you that the Senate majority leader, Harry Reid, came out and talked to reporters while President Obama was speaking, and he announced to reporters that there probably will have to be some changes made to this deal.

He actually said -- this is the Democratic leader in the Senate -- "I am not a big fan of what has been announced."

And it was very clear in talking to many, many Democratic senators going into the meeting, not just liberals, but also moderate Democrats -- very interesting there, moderate Democrats -- who say that they have problems with this on a -- on a whole host of issues.

But the fact that Harry Reid is saying that they're not going to go forward until they talk to the White House, talk to Republicans about making some changes shows that -- that this is -- it's not just sound and fury, if you will, that there are some real issues here that -- when it comes to getting the votes.

VELSHI: Dana, you -- you -- you've -- you have put a light on something that goes back to TARP, goes back to the stimulus bill, and goes back to everything that's ever been discussed, the president discussing it like it's a fait accompli with that deal.

This is still something that has to go through Congress, and Harry Reid saying that it may well involve changes -- Wolf.

BLITZER: Ali, thank you.

And, John King, that -- that would be quite a bombshell, if in fact -- this was supposed to be a take-it-or-leave-it kind of deal. They have negotiated it very carefully with the Republican leadership. You either accept it or you reject it.

If Harry Reid is now saying, we're going to start tinkering with this and opening parts of it, this whole thing could still collapse.

KING: It absolutely could collapse, because, look, if it's a minor tweak, they will have a conversation. It happens all the time.

If you're talking about a fundamental policy shift here, the Republicans agreed to this. The one thing the Republicans gave up is not paying for the unemployment insurance. They wanted to offset that somewhere else. And all the Republicans I have talked to -- and I think everybody else would echo the point -- say, this is the deal, this is the deal, this is the deal.

Now, if it's a little tinker, maybe they get away with that, but anything big won't happen. So, what would happen then? If this collapses, then the president is forced by people in his own party into another negotiation, into this fight.

But the -- the tensions right now -- there's a short term. The immediate short-term focus here is the tensions within the Democratic Party, and how does this president manage them? The president was trying to make the point politically he's looking more at the longer view...

BORGER: Right.

KING: ... that if this -- if the economy starts to recover, everyone will forget this day, and he will benefit politically. But, in the short term, we have a fascinating drama between a Democratic president -- Ed had it just right -- that's when the energy -- you could feel it. He's in a fight with his own party.


BLITZER: Yes, right at the very end.


BLITZER: Hold on. Hold on a second.

John Avlon is in New York. And he -- he wants to weigh in as well.

What did you think of -- of the president, especially the -- the final summation, the -- the final arguments he made in the final two or three or four minutes of his -- of his statement?

JOHN AVLON, AUTHOR, "WINGNUTS: HOW THE LUNATIC FRINGE IS HIJACKING AMERICA": And that last question was fascinating. That deserves -- on an Obama highlight reel.

It really showed a president who was strong and defiant and making the case that he had a responsibility beyond partisan politics. That seemed to be the theme throughout this press conference, that he is the last responsible adult in Washington, and when everyone else is engaging in positional bargaining, he's trying to look out for the American people, and he's not going to let them get caught as collateral damage as the clocks ticks to January 1.

It was a strong president. It was a decisive and defiant president, and that last question, really, he made the case for the -- the good of incremental change, not making the perfect the enemy of the good. That was a -- quite a statement.

BLITZER: All right, John, hold -- hold on.


BLITZER: Roland, I know you want to weigh in. So, go ahead.

MARTIN: John, what does it say, though, when the president says at a news conference that the American people were with me, poll after poll after poll, yet he was unable to rally the American people to move the Republicans in Congress?

So, I -- I -- I get your whole point about leadership...


MARTIN: ... in a news conference. But, also, if you're saying, they're with me, and you can't rally them to get them to move, well, then, how are they really with you?

AVLON: He's making the point that this is not simply about polls. This is about the best deal you can get done in the time allotted. And -- and -- and he made the point -- and I think this -- this is one of the things Democrats will use against him -- that the American people is on his and on the Democrats' side on this, not necessarily the Republicans' absolute tax increase for everybody.

And maybe a compromise that could have worked, for example, is that Chuck Schumer compromise for, you know, keeping taxes for everyone under a million. But, at the moment, that's academic.

He's making the point this is not about polls; this is about practical realities. And that's his...


AVLON: ... president.


BLITZER: All right.


MARTIN: You have got to move people to act. And I think that's where...


BLITZER: Roland, Roland, Roland, you can move as many people in the public opinion...


BLITZER: ... but if you don't have the votes in the United States Senate to beat a filibuster, it doesn't make any difference, if there's 60 or 70 or 80 percent of the American public.

BORGER: But, Wolf...


BORGER: But, Wolf...


MARTIN: But that's why you move them to call and to write and to e-mail and to put pressure...

BLITZER: But you don't have the time right now.


BLITZER: It's about to expire.

BORGER: Right.

(CROSSTALK) MARTIN: But, if you never did it, how would you know?

BORGER: But for the president to say...


BORGER: ... he's not playing politics, come on.

BLITZER: All right. Let me -- let me bring Ed...

BORGER: This was a political deal, Wolf.

BLITZER: ... Ed Rollins...

BORGER: This is about politics.

BLITZER: The impression everyone is getting, Ed, is that the president blinked, the Republicans didn't blink. Is that a fair impression?

ROLLINS: No, it's not. I think we sat down, and we dealt, as we're going to have to do for the next two years. We're in the room. It's no longer a question of us not being in the room. We are part of the governing process.

We gave up on something. He obviously gave up on something. The only way we're going to govern in the next two years and to try and tackle this economy and get it moving forward is both sides are going to have to make compromises.

I can promise you there's a lot of conservatives out there aren't perfectly happy with this deal either, and as -- just as a lot of liberals. And I think with the president, obviously, he's the negotiator in the middle. He is one who basically has the veto pen, and he can stop anything he wants. He can't get it done.

Polls are not how we run American politics.

BLITZER: Gloria.

BORGER: No, I -- I totally agree with you.

But I think, with -- when the president stands up there and says, I'm the grownup, I'm on your side, I can't play politics, my point is that this is a political document...



BORGER: ... and that each side had to give. The president made it very clear that he's very happy to re-litigate these tax cuts for the wealthy in 2012, when he is running for reelection.

(CROSSTALK) BLITZER: On this issue of tax cuts -- increasing taxes for the wealthy, when the president said, I didn't have the votes in the Senate, and, as a result, I had to accept the compromise to protect the middle class, is that a fair statement?

Would there -- would there have been a Scott Brown of Massachusetts or Olympia Snowe of Maine, some moderate Republicans, who would have joined him?

KING: Not in the short term, because they had agreed to be with the leader.

What the Democrats wanted is for the president to play this out, for the president refuse this deal, take it to the end of the year. And some Democrats -- not all -- some Democrats say, if taxes go up, Mr. President, you blame the Republicans. We will be with you. They will blame you. And let's have a fight and then eventually cut a deal and retroactively fix it.

Some Democrats wanted him to take it into next year.

BORGER: Right.

KING: You heard the president say he was not going to take that risk and made this deal. That's why they're mad.

They wanted -- the liberal especially -- they just lost an election, but they want -- the reaction to that election is, they think fight the Republicans more. They other thing they fear, Wolf, is they think this is a snowball at the top of a hill, and the president is cutting a deal with the Republicans now. What's next?

As we rolls down the hill, what's next? Is he going to put Social Security and Medicare on the table to try to reduce the budget down the road?

So, it's not just this deal. They believe, on the left, many people, that this deal is the beginning of something they don't like.


MARTIN: ... question really comes in.


KING: Right.

BORGER: Well, and the president -- the president is saying, I'm a realist here. I'm pragmatic. There was an election. We lost. We lost those seats. I had to cut this deal.

And then he's going to present the big picture...


BLITZER: And -- and last Saturday, that vote in the Senate, there were a whole bunch of -- at least half-a-dozen Democrats...

BORGER: Six, six Democrats.

BLITZER: ... who went against the president's position.

BORGER: And that made them do this.

BLITZER: All right, we're not going to leave this story. This is a huge story. We're going to continue our coverage here on CNN.

I will be back 5:00 p.m. Eastern in "THE SITUATION ROOM" -- lots more coming up. We will speak with the president's top economic adviser, Austan Goolsbee, among others.

Our coverage will continue in the CNN NEWSROOM right after this.



OBAMA: We're going to keep on having this debate. We're going to keep on having this battle. But in the meantime, I'm not here to play games with the American people or the health of our economy.

My job is to do whatever I can to get this economy moving.