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Special Coverage and Barack Obama's Press Conference About Status of Debt Talks

Aired July 15, 2011 - 10:51   ET


SUZANNE MALVEAUX, CNN ANCHOR: Live from Studio 7, I'm Suzanne Malveaux. And President Obama holds a news conference at the top of the hour on the deadlock over raising the debt ceiling. After days of tense talks and political back and forth, the week is ending pretty much the same way it started, with stalled negotiations and a presidential news conference. Only now the situation is even more critical.

WOLF BLITZER, CNN HOST, "THE SITUATION ROOM": The stakes certainly are enormous, Suzanne. I'm Wolf Blitzer here in Washington. And as we await the president's news conference, we'll update you on where things stand right now, what the debt ceiling debate means for the country, the economy, and for your personal finances.

MALVEUAX: Well, no new talks are planned today between the White House and congressional leaders after five meetings in five days. They're trying to come up with a deal that raises the debt ceiling to prevent the U.S. from defaulting on its bills while also trimming the deficit. The Treasury secretary warns of financial disaster if there is no deal by August 2nd. Now, the president says he wants an agreement within 24 to 36 hours.

And here's a quick look at where things stand. President Obama is holding out hope for the so-called grand bargain. Four trillion dollars in savings through spending cuts, reforming Medicare, other entitlements, and potentially raising taxes. But Republicans oppose any tax increases.

Now, Senator Mitch McConnell, he suggested a fallback plan. It would give the president the authority to raise the debt limit to keep the country from defaulting. House majority leader Eric Cantor proposes a short-term hike in the debt ceiling. And President Obama says no to that.

So, just like on Monday, President Obama's going to try to make his case to the public. I want to bring in our chief White House correspondent Jessica Yellin in the briefing room where the president is going to hold his news conference.

And Jessica, I don't think in any of our years that you and I both have been covering the White House that we have ever seen a president hold a press conference twice in one week. I mean, I don't even recall that. What does he hope to accomplish here?

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: It is a lot of talking. The point of this, Suzanne, essentially is to take his case again to the American people and to keep the pressure on Capitol Hill to get something done and to get something done quickly. You can expect the president no doubt to make the case again, as we have heard so many times in recent days, that he wants something done, big but he also wants something done now. That he wants the leaders to, as we've heard, put their differences aside and find a way to get compromise.

You know, we have heard from the White House, from Democrats in general, that they would like this White House process to bear fruit. But there is a diminishing sense of hope in Washington in general that this negotiation that you've mentioned that was five days, almost eight hours, is actually going to be the center of progress, that perhaps the negotiations that are now taking place on the Hill, quiet talks that are happening there, will actually produce a piece of legislation that will ultimately raise the debt ceiling.

So, no doubt the president will get a lot of questions about what's coming -- about the conversation that's are happening on Capitol Hill these days, Suzanne.

MALVEUAX: Thank you, Jessica. I want to go to Wolf Blitzer in Washington. And Wolf, some people are saying this is really a sideshow. The president coming out here, that the real negotiations, the relevant talks, are happening behind the scenes.

BLITZER: Yes, there's a lot of people saying that, that the Senate leadership, the Republican leadership, the Democratic leadership, especially Mitch McConnell, they've got a backup plan that seems to have some traction right now because the main deal doesn't seem to be going very far.

But let's get the very latest from our congressional correspondent Kate Bolduan. She's up on Capitol Hill. Just within the past hour, Kate, the Republican leadership came out and they gave their side of the story.

KATE BOLDUAN, CNN CONGRESSIONAL CORRESOPNDENT: Giving their side of the story. And I'll tell you, some news this morning as they met with their caucus early this morning for quite a long time, Wolf. The Republican leadership came out to really lay down a marker. And they're kind of laying it out as the Republican alternative here in order to get to a path of raising the debt ceiling.

They're pushing now a bill that we've heard about. It's very popular amongst conservatives. A cut-cap balance bill. It would cut spending -- it would cap spending as a percentage of GDP and also require a balanced budget amendment, an amendment to the Constitution requiring that the federal government balance its budget every year. Very -- we've heard it talked about, but now they're saying this is what they're pushing for in terms of these negotiations.

Listen here to John Boehner as he's explaining why they're bringing this up, why they're pitching this now.

(BEGIN VIDEO CLIP) REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: We're in the fourth quarter here. Time and again, Republicans have offered serious proposals to cut spending and address these issues. And I think it's time for the Democrats to get serious as well.

We asked the president to lead. We asked him to put forward a plan. Not a speech. A real plan. And he hasn't. We will.


BOLDUAN: A couple things on this, though, Wolf. This would be a very tough vote in the Democratic-controlled Senate. So no matter. But regardless of how this Republican alternative, how far this would go, I'll tell you that it does allow, as no surprise to you, it does allow Republicans to vote on a bill, an idea that gets to the core of their principles here. Regardless of how this whole thing ends up, it puts the Republicans on the record on a vote they really do want to take.

And John Boehner, the House speaker, he did say when asked he's unwilling to give up on these White House negotiations, but he said this is what Republicans are pushing for at this very moment. Really laying down a marker here, Wolf, for his party.

BLITZER: As you know, Kate, though, the White House doesn't support a balanced budget amendment to the Constitution, and it's doubtful that what would probably pass the House of Representatives next week would necessarily pass the U.S. Senate. But it does give the Republicans of the House an opportunity to make a statement.

Gloria Borger is here, our chief political analyst. We're less than a minute away from the start, we're told, of this news conference, or at least a couple minutes away. Give us a little perspective. The president really feels he's got a case to make, and he wants to make it to the American public, in effect going around the negotiators.

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: He's going to speak directly to the American public. First of all, I think he wants to reassure the markets, reassure the American public that yes, they're making some progress on this, Wolf. And that indeed everybody sitting in that room agrees, you have to do something to raise the debt ceiling.

This morning's developments are really interesting to me because Republicans in the House want to vote on balancing the budget so they can go home and say guess what, we voted on balancing the budget. And the compromise way out of this is so that they don't have to vote to raise the debt ceiling that the debt ceiling gets raised anyway. So, that's having your cake and eating it too. And it will be interesting to see what occurs in the future meetings if they have any over the weekend, whether the president gets anything resembling a larger size deal so they don't have to go to the backup.

BLITZER: Yes, there's probably going to be some meetings over the weekend, I suspect. Suzanne, there had been even some talk of the president inviting the Republican and Democratic leadership to Camp David, although Nancy Pelosi, the Democratic leader in the House, the minority leader, she made it clear yesterday she has no desire to go back and continue these discussions and sort of be jailed in to Camp David, where there's limited opportunities -- here comes the president, Suzanne. So let's listen.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: As you know, yesterday we had another meeting with thecongressional leaders. We're not having one today. So I thought it would be useful to give you guys an update on where we are.

All the congressional leaders have reiterated the desire to make sure that the United States does not default on our obligations and that the full faith and credit of the United States is preserved. That is a good thing.

I think we should not even be this close to a deadline on this issue. This should have been taken care of earlier. But it is encouraging that everybody believes that this is something that has to be addressed.

And for the general public, I've said this before, but I just want to reiterate, this is not some abstract issue. These are obligations that the United States has taken on in the past. The Congress has run up the credit card, and we now have an obligation to pay our bills.

If we do not, it could have a whole set of adverse consequences. We could end up with a situation, for example, where interest rates rise for everybody all throughout the country -- effectively, a tax increase on everybody -- because suddenly, whether you're using your credit card, you're trying to get a loan for a car or a student loan, businesses that are trying to make payroll, all of them could end up being impacted as a consequence of a default.

Now, what is important is that even as we raise the debt ceiling we also solve the problem of underlying debt and deficits.

You know, I'm glad that the congressional leaders don't want to default, but I think the American people expect more than that. They expect that we actually try to solve this problem; we get our fiscal house in order.

And so during the course of these discussions with congressional leaders, what I've tried to emphasize is we have a unique opportunity to do something big. We have a chance to stabilize America's finances for a decade, for 15 years or 20 years, if we're willing to seize the moment. Now, what that would require would be some shared sacrifice and a balanced approach that says, "We're going to make significant cuts in domestic spending." And I have already said I am willing to take down domestic spending to the lowest percentage of our overall economy since Dwight Eisenhower.

It also requires cuts in defense spending. And I've said that in addition to the $400 billion that we've already cut from this defense spending we're willing to look for hundreds of billions more.

It would require us taking on health care spending. And that includes looking at Medicare and finding ways that we can stabilize the system so that it is available not just for this generation but for future generations.

And it would require revenues. It would require -- even as we're asking the person who needs a student loan or the senior citizen or, you know, people -- veterans who are trying to get by on a disability check, even as we're trying to make sure that all those programs are affordable, we're also saying to folks like myself that can afford it that we are able and willing to do a little bit more, that millionaires and billionaires can afford to do a little bit more, that we can close corporate loopholes so that oil companies aren't getting unnecessary tax breaks or that corporate jet owners aren't getting unnecessary tax breaks.

If we take that approach, then I am confident that we can not only impress the financial markets, but more importantly we can actually impress the American people that this town can actually get something done once in a while.

Now, let me acknowledge what everybody understands: It is hard to do a big package. My Republican friends have said that they're not willing to do revenues, and they have repeated that on several occasions.

My hope, though, is that they're listening not just to lobbyists or special interests here in Washington, but they're also listening to the American people. Because it turns out, poll after poll, many done by your organizations, show that it's not just Democrats who think we need to take a balanced approach, it's Republicans as well.

The clear majority of Republican voters think that any deficit reduction package should have a balanced approach and should include some revenues.

That's not just Democrats. That's the majority of Republicans.

You've got a whole slew of Republican officials from previous administrations, you've got a bipartisan commission that has said that we need revenues.

So this is not just a Democratic understanding, this is an understanding that I think the American people hold: that we should not be asking sacrifices from middle-class folks who are working hard every day, from the most vulnerable in our society, we should not be asking them to make sacrifices we're not asking the most fortunate in our society to make some sacrifices, as well.

So I am still pushing for us to achieve a big deal. But what I also said to the group is, "If we can't do the biggest deal possible, then let's still be ambitious, let's still try to at least get a down payment on deficit reduction."

And that we can actually accomplish without huge changes in revenue or significant changes in entitlements, but we could still send a signal that we are serious about this problem.

The fallback position, the third option, and I think the least attractive option, is one in which we raise the debt ceiling but we don't make any progress in deficit and debt.

Because if we take that approach, this issue is going to continue to plague us for months and years to come.

And I think it's important for the American people that everybody in this town set politics aside, that everybody in this town sets our individual interests aside and we try to do some tough stuff.

And I've -- I've already taken some heat from my party for being willing to compromise. My expectation and hope is that everybody in the coming days is going to be willing to compromise.

The last point I'll make, and then I'll take questions.

We are obviously running out of time. And so what I've said to the members of Congress is that, "You need, over the next 24 to 36 hours, to give me some sense of what your plan is to get the debt ceiling raised, through whatever mechanisms they can think about, and show me a plan in terms of what you're doing for deficit and debt reduction."

If -- if they show me a serious plan, I'm ready to move, even it requires some tough decisions on my part.

And I'm hopeful that over the next couple of days we'll see this logjam break -- this logjam broken, because the American people, I think understandably, want to see Washington do its job.

All right?

So with that, let me see whose on the list. We're going to start with Jake Tapper.

QUESTION: Thank you, Mr. President.

You've said that reducing the deficit will require shared sacrifice.

We know -- we have an idea of the taxes that you would like to see raised on corporations and on Americans in the top two tax brackets. But we don't yet know what you specifically are willing to do when it comes to entitlement spending.

In the interest of transparency, leadership and also showing the American people that you have been negotiating in good faith, can you tell us one structural reform that you are willing to make to one of these entitlement programs that would have a major impact on the deficit? Would you be willing to raise the retirement age? Would you be willing to means test Social Security or Medicare?

OBAMA: We've said that we are willing to look at all those approaches. I've laid out some criteria in terms of what would be acceptable.

So, for example, I've said very clearly that we should make sure that current beneficiaries as much as possible are not affected.

But we should look at what can we do in the out-years so that over time some of these programs are more sustainable.

I've said that means testing on Medicare, meaning people like myself, if -- you know, I'm going to be turning 50 in a week, so I'm starting to think a little bit more about Medicare eligibility.


OBAMA: Yeah, I'm going to get my AARP card soon and the discounts.

But the -- you know, you can envision a situation where for somebody in my position, me having to pay a little bit more on premiums or copays or things like that would be appropriate. And again, that could make a difference.

So we've been very clear about where we're willing to go.

What we're not willing to do is to restructure the program in the ways that we've seen coming out of the House over the last several months, where we would voucherize the program and you'd potentially have senior citizens paying $6,000 more.

I view Social Security and Medicare as the most important social safety nets that we have. I think it is important for them to remain as social insurance programs that give people some certainty and reliability in their golden years.

But it turns out that making some modest modifications in those entitlements can save you trillions of dollars.

And it's not necessary to completely revamp the program. What is necessary is to say, you know, "How do we make some modifications?"

Including, by the way, on the provider side. I think that it's important for us to keep in mind that, you know, the drug companies, for example, are still doing very well through the Medicare program. And although we have made drugs more available at a cheaper price to seniors who are in Medicare through the Affordable Care Act, there's more work to potentially be done there.

So if you look at a balanced package even within the entitlement programs, it turns out that you can save trillions of dollars while maintaining the core integrity of the program.

QUESTION: And the retirement age?

OBAMA: You know, I'm not going to get into specifics.

As I said, Jake, everything that you mentioned are things that we have discussed. But what I'm not going to do is to ask for even -- well, let me put it this way.

If you're a senior citizen and a modification potentially costs you a hundred or 200 bucks a year more, or even if it's not affecting current beneficiaries, somebody who's 40 today 20 years from now is going to end up having to pay a little bit more, the least I can do is to say that people who are making $1 million or more have to do something as well.

And that's the kind of trade-off, that's the kind of balanced approach and shared sacrifice that I think most Americans agree needs to happen.

QUESTION: Thank you.


QUESTION: Yes. Thank you, Mr. President.

I just thought I heard you, kind of, open up the door to this middle-of-the-road possibility. I think you said, "Show me a serious -- a serious plan and then I'm prepared to move."

Just a few minutes before you came here, House Republicans said they'd be voting on a $2.4 trillion package; has a balanced budget amendment.

Is that a serious plan, is it dead on arrival, or does it short- circuit what you expect to happen in the next 24 or 36 hours?

OBAMA: I haven't look at it yet, and I think -- my expectation is that you'll probably see the House vote on a couple of things just to make political statements.

But if you're trying to get to $2.4 trillion without any revenue, then you are effectively gutting a whole bunch of domestic spending that is going to be too burdensome and is not going to be something that I would support.

You know, just to be very specific, we've identified over a trillion dollars in discretionary cuts, both in defense and domestic spending. That's hard to do. And that -- that requires essentially that you freeze spending.

And when I say "freeze," that means you're not getting inflation, so that these are programmatic cuts that over the course of 10 years, you'd be looking at potentially a 10 percent cut in domestic spending.

Now, if you then double that number, you're -- you're then at that point really taking a big bite out of programs that are really important to ordinary folks. I mean, you're talking then about students accumulating thousands of dollars more in student loan debt every year. You're talking about, you know, federal workers and veterans and others potentially having to pay more in terms of their health care.

So, you know, I have not seen a credible plan, having gone through the numbers, that would allow you to get to $2.4 trillion without really hurting ordinary folks.

And the notion that we would be doing that and not asking anything from the wealthiest among us or from closing corporate loopholes, that -- that doesn't seem like a serious plan to me.

I mean, the notion that, for example, you know oil company tax breaks, where the oil executives themselves say they probably don't need to them to have an incentive to go out and drill oil and make hundreds of billions of dollars -- you know, if -- if we haven't seen the other side even budge on that, you know, then I think most Democrats would say that's not a serious plan.

One last point on the balanced budget amendment.

I don't know what version they're going to be presenting, but some of the balanced budget amendments that have been floating up there -- this cap, or cut, cap and balance, for example -- when you look at the numbers, what you're looking at is cuts of half a trillion dollars below the Ryan budget in any given year.

I mean, it would require cutting Social Security or Medicare substantially. And you know, I think it's important for everybody to understand that all of us believe that we need to get to a point where eventually we can balance the budget. We don't need a constitutional amendment to do that. What we need to do is to do our jobs and we have to do it the same way a family would do it.

You know, a family if they get over-extended and their credit card is too high, they don't just stop paying their bills. What they do is they say, "How do we start cutting our monthly costs? We keep on making payments, but we start cutting out the things that aren't necessary. And we do it in a way that maintains our credit rating; we do it in a way that's responsible. We don't stop sending our kids to college. We don't stop fixing the boiler or the roof that's leaking. We do things in a sensible, responsible way."

We can do the same thing when it comes to the federal budget.

QUESTION: Within that $2 trillion band, if you end up going for this middle-of-the-road package, which I think you referred to as a second option, would that need to have for your signature some sort of stimulative measures, either a payroll tax extension or the extension of the unemployment insurance?

OBAMA: I think both would be good for the economy.

A payroll tax cut is something that has put a thousand dollars in the pocket of the typical American family over the last six, seven months and has helped offset some of the rising costs in gasoline and food. And I think that American consumers and American businesses would benefit from a continuation of that -- that tax cut next year.

Unemployment insurance. Obviously, unemployment is still too high. And there are a lot of folks out there who are doing everything they can to find a job, but the market is still tight out there. And for us to make sure they are able to stay in their homes potentially or they're able to still support their families I think is very important and contributes to the overall economy.

So I think there are ways that you can essentially take a little over a trillion dollars in serious discretionary cuts, meaningful discretionary cuts, and then start building on top of that some cuts in non-health care mandatory payments, you know, ethanol programs or, you know, how we calculate various subsidies to various industries.

That could potentially be layered on. And we could still do something like a tax cut for -- for ordinary families that would end up benefiting the economy as a whole.

That is not my preferable option, though. I just want to be clear. I think about this like a layer cake. You know, you can do the bare minimum, and then you can make some progressively harder decisions to solve the problem more and more.

And we're in a position now where if -- if we're serious about this and everybody's willing to compromise, we can, as I said before, fix this thing, probably for a decade or more.

And that's something that I think would be good for the overall business climate and would encourage the American people that Washington actually is willing to take care of its business.

QUESTION: Good for the business climate, though, but not required for your signature, is that what I heard?

OBAMA: I'm sorry, I lost you on that one.

QUESTION: So you're saying these cumulative measures would be good for the business climate, good for the economy, but you're not saying that they need to be included for you to sign either $2 trillion or $4 trillion package.

OBAMA: I've got to look at an overall package.

I don't know what the speaker or Mr. McConnell are willing to do at this point.


QUESTION: Mr. President, this process got kind of ugly in the last week. And it appears from the outside that I think even things even got a little futile with these meetings.

Any regrets on your role in how this went?

And do you have any regrets that you never took Bowles- Simpson, which was $4 trillion over 10 years, and spent the last six months selling that, which was a balanced package, to the American people?


First of all, I think this notion that things got ugly is just not true. We've been meeting every single day. And we have had very constructive conversations.

You know, the American people are not interested in the reality TV aspects of who said what and did somebody's feeling get hurt. (LAUGHTER)

They're interested in solving the budget problem and the deficit and the debt.

And so, that may be good for chatter in this town. It's not something that folks out in the country are obsessing about.

I think, with respect to Bowles-Simpson, it was important for us to -- Bowles-Simpson wouldn't have happened had I not set up the structure for it.

As you will recall, this was originally bipartisan legislation that some of the Republican supporters of decided to vote against when I -- when I said I supported it. That seems to be a pattern that I'm still puzzled by.

And so we set it up. They issued a report. And what I said was, "This provides us an important framework to begin discussions." But there were aspects of Bowles-Simpson that I said from very early on, you know, were not the approach I would take.

I'll give you an example, on defense spending, a huge amount of their savings on the discretionary side came out of defense spending. I think we need to cut defense, but as commander in chief I've got to make sure that we're cutting it in a way that recognizes we're still in the middle of a war, we're winding down another war, and we've got a whole bunch of veterans that we've got to care for as they come home.

And so what we've said is, a lot of the components of Bowles- Simpson we are willing to embrace. For example, you know, the domestic spending cuts that they recommend we've basically taken. Others, like on defense, we have taken some but not all the recommendations because it's important for it to be consistent with our defense needs and our security needs.

The bottom line is that this is not an issue of salesmanship to the American people. The American people are sold. The American people are sold -- I -- I just want to repeat this.


QUESTION: -- would have been different? You had Republican support on --


OBAMA: Chuck? Chuck? QUESTION: -- Republican senators signed --

OBAMA: Chuck?

You have 80 percent of the American people who support a balanced approach. Eighty percent of the American people support an approach that includes revenues and includes cuts.

So the notion that somehow the American people aren't sold is not the problem.

The problem is members of Congress are dug in ideologically into various positions because they boxed themselves in with previous statements.

And, you know, so this -- this is not a matter of the American people knowing what the right thing to do is. This is a matter of Congress doing the right thing and reflecting the will of the American people. And if we do that we will have solved this problem.

Lori Montgomery?

QUESTION: Thank you, Mr. President.

I wanted to ask you about the two trains that seem to be rolling down the tracks on the Hill.

Specifically, Leader McConnell has laid out an elaborate plan to raise the debt limit. He said last night that it looks like they're going to pair that with a new committee that would be tasked with coming up with the big solution that you talk about by the end of the year. Your comment on that proposal.

Meanwhile, in the House they're saying, "Well, we could be flexible on some of our demands if we could get a balanced budget amendment," and they note that Vice President Biden voted for a BBA in 1997.

Is there any way that that could be part of a solution? Is there any version of a BBA that you would support?

OBAMA: First of all, for the consumption of the general public, BBA meaning a balanced budget amendment.


I think I already addressed this -- this question earlier. We don't need a constitutional amendment to do our jobs. The Constitution already tells us to do our jobs and to make sure that the government is living within its means and making responsible choices.

And so this notion that we're going to go through a multi- year process instead of seizing the moment now and taking care of our problems is a typical Washington response.

We don't need more studies.

We don't need a balanced budget amendment. We simply need to make these tough choices and be willing to take on our bases.

And everybody knows it. I mean, we could have a discussion right here about what the numbers look like and we know what's necessary.

And here's the good news. It turns out we don't have to do anything radical to solve this problem. Contrary to what some folks say, we're not Greece, you know, we're not Portugal.

It turns out that our problem is we cut taxes without paying for them over the last decade. We ended up instituting new programs like a prescription drug program for seniors that was not paid for. We fought two wars; we didn't pay for them. You know, we had a bad recession that required a recovery act and -- and stimulus spending and helping states. And all that accumulated and there's interest on top of that.

And to unwind that, what's required is that we roll back those tax cuts on the wealthiest individuals, that we clean up our tax code so we're not giving out a bunch of tax breaks to companies that don't need them and they're not creating jobs, we cut programs that we don't need, and we invest in those things that are going to help us grow.

And every commission that's been out there has said the same thing and basically taken the same approach within the margin of error.

So, you know, my general view is that if the American people looked at this they'd say, "Boy, some of these decisions are tough, but they don't require us to gut Medicare or Social Security, they don't require us to stop helping young people go to college, they don't require us to stop, you know, helping families who've got a disabled child, they don't require us to violate our obligations to our veterans, and they don't require, quote/unquote, 'job-killing' tax cuts.' They require us to make some modest adjustments to get our house in order, and we should do it now."

With respect to Senator McConnell's plan, as I said, I think it is a -- it is constructive to say that, "If Washington operates as usual and can't get anything done, let's at least avert Armageddon." That's -- I'm glad that people are serious about the consequences of default, but we have two problems here. One is raising the debt ceiling. This is a problem that was manufactured here in Washington because every single one of the leaders over there have voted for raising the debt ceiling in the past and has typically been a difficult but routine process.

And we do have a genuine underlying problem that our debt and deficits are too big.

So Senator McConnell's approach solves the first problem. It doesn't solve the second problem. I'd like to solve that second problem.

QUESTION: Are you looking at this option as a more likely outcome at this point? Or can -- can you -- can you share with us why you have some hope that the talks that have been going on might actually produce an outcome?

OBAMA: I always have hope. Don't you remember my campaign?


OBAMA: Even after -- even after being here for two and a half years, I continue to have hope.

Do you know why I have hope? It's because of the American people.

You know, when I talk to them and I meet with them, as frustrated as they are about this town, they still reflect good common sense. And all we have to do is align with that common sense on this problem, it can get solved.

And I'm assuming that at some point, members of Congress are going to listen.

I -- I just want to repeat, every Republican -- not -- I won't say "every" -- a number of Republican former elected officials, they're not in office now, would say a balanced approach that includes some revenue is the right thing to do.

The majority of Republican voters say that approach is the right thing to do.

The proposal that I was discussing with Speaker Boehner fell squarely in line with what most Republican voters think we should do.

So the question is, at what point do folks over there start listening to the people who put them in office? Now's a good time.

Sam Young? QUESTION: Good morning, Mr. President.

I'd like to go back to something Chuck asked, his first question, about the tone of this debate. I faintly remember your campaign and I'm guessing that while it hasn't been ugly as you say, it -- it's not what you had in mind when you said you wanted to change the tone in Washington.

When you have Senator McConnell making comments that he views these negotiations through the prism of 2012, how much does that poison the well? And going forward, if -- big if -- you can get a deal on this, can you get anything done with Congress for the next year and a half?

OBAMA: Well, let me -- let me say this.

The -- and I'm not trying to poke at you guys -- I generally don't watch what is said about me on cable. I generally don't read what's said about me -- even in The Hill. And so, you know, part of this job is having a thick skin and understanding a lot of this stuff's not personal.

You know, that's not going to be an impediment to -- you know, whatever Senator McConnell says about me on the floor of the Senate is not going to be an impediment to us getting a deal done.

You know, the question is going to be whether at any given moment we're willing to set politics aside, at least briefly, in order to get something done.

I don't expect politicians not to think about politics. But every so often there are issues that are urgent, that have to be attended to, and require us to do things we don't like to do, that run contrary to our base, that gets some constituency that helped elect us agitated because they're looking at it from a narrow prism. We're supposed to be stepping back and looking at it from the perspective of what's good for the country.

And if we are able to remind ourselves of that, then there's no reason why we shouldn't be able to get things done.

Look, what we've been obsessing over the last couple of weeks about raising the debt ceiling and reducing the debt and deficit -- I tell you what the American people are obsessing about right now is that unemployment is still way too high and too many folks' homes are still underwater, and prices of things that they need, not just that they want, are going up a lot faster than their paychecks are if they've got a job.

And so even after we solve this problem, we've still got a lot of work to do.

(INAUDIBLE) was mentioning we should renew the payroll tax for another year. We should make (sic) unemployment insurance is there for another year. We should --



OBAMA: -- but you were making the point about whether or not, you know, that issue could be wrapped into this deal. My -- my point is that those are a whole 'nother set of issues that we need to be talking about and working on.

I've got an infrastructure bank bill that would start putting construction workers back to work rebuilding our roads and bridges. We should be cooperating on that.

Most of the things that I've proposed to help spur on additional job growth are traditionally bipartisan.

I've got three trade deals sitting ready to go. And the -- these are all trade deals that the Republicans told me were their top priorities. They said this would be one of the best job creators that we could have.

And yet it's still being held up because some folks don't want to provide trade adjustment assistance to people who may be displaced as a consequence of trade.

Surely we can come up with a compromise to solve those problems.

So there will be huge differences between now and November 2012 between the parties. And whoever the Republican nominee is, you know, we're going to have a big, serious debate about what we believe is the right way to -- to guide American forward and to win the future.

And I'm -- I'm confident that I will win that debate because I think that we've got -- we've got the better approach.

But in the meantime, surely we can every once in a while sit down and actually do something that helps American people right here and right now.

QUESTION: It's in the meantime, sir, that I'm curious about. You just said raising the debt ceiling is (INAUDIBLE) fairly routine, but it's brought us to the point of economic Armageddon, as you said.

If you can get past this one, how can you get -- how can you get any agreement with Congress on those big issues you talked about?

OBAMA: You know, I am going to keep on working, and I'm gonna keep on trying. And what I'm going to do is to hope that in part this debate has focused the American people's attention a little bit more and will subject Congress to scrutiny.

And -- and I think increasingly the American people are going to say to themselves, "You know what? If a party or a politician is constantly taking the position 'my way or the highway,' constantly being locked into, you know, ideologically rigid positions, that, you know, we're going to remember at the polls."

You know, it's, kind of, cumulative. The American people aren't paying attention to the details of every aspect of this negotiation, but I think what the American people are paying attention to is who seems to be trying to get something done, and who seems to be just posturing and trying to score political points.

And I think it's going to be in the interests of everybody who wants to continue to serve in this town to make sure that they are on the right side of that impression.

And that's, by the way, what I said in the meeting two days ago. I was very blunt. I said, "The American people do not want to see a bunch of posturing. They don't want to hear a bunch of sound bites. What they want is for us to solve problems. And we all have to remember that; that's why we were sent here."

Last question, Scott Horsley?

QUESTION: Thank you, Mr. President.

I wonder if you've seen any sign at these daily meetings that Republicans are being more aligned with that American majority, or if we are in the same place today that we were on Monday.

OBAMA: It's probably better for you to ask them how they're thinking.

I do think that -- and I've said this before -- Speaker Boehner in good faith was trying to see if it was possible to get a big deal done. He had some problems in his caucus.

My hope is is that after some reflection, after we walked through all the numbers this week and we looked at all the options, that there may be some movement, some possibility, some interest to still get something more than the bare minimum done.

But we're running out of time. That's the main concern that I have at this point.

We have enough time to do a big deal. You know, I've got reams of paper and printouts and spreadsheets on my desk. And so we know how we can create a package that solves the deficits and debt for a significant period of time.

But in order to do that we got to get started now. And that's why I'm expecting some answers from all the congressional leaders sometime in the next couple of days.

And I have to say, you know, this is tough on the Democratic side, too. I mean, some of the things that I've talked about and said I would be willing to see happen, there are some Democrats who think that's absolutely unacceptable.

And so that's where I'd have a selling job, Chuck, is -- is trying to sell some of our party that if you are a progressive you should be concerned about debt and deficit just as much as if you're a conservative.

And the reason is because if the only thing we're talking about over the next year, two years, five years is debt and deficits, then it's very hard to start talking about how do we make investments in community colleges so that our kids are trained, how do we actually rebuild $2 trillion worth of crumbling infrastructure.

You know, if you care about making investments in our kids and making investments in our infrastructure and making investments in basic research, then you should want our fiscal house in order so that every time we propose a new initiative somebody doesn't just throw up their hands and say, "Ah, more big spending, more government."

We -- you know, it would be very helpful for us to be able to say to the American people, "Our fiscal house is in order."

And so now the question is: What should we be doing to win the future and make ourselves more competitive and create more jobs? And what -- what aspects of what government's doing are a waste and we should eliminate?

And that's the kind of debate that I'd like to have.

All right?

Thank you, guys. BLITZER: All right. So, there he is, the president of the United States, walking out of the briefing room in the West Wing of the White House, spending about 40 minutes, an opening statement followed by Q&A.

Suzanne, the president reiterating his goal, it seems increasingly unlikely, would be a massive $4 trillion cut in spending. But it's accompanied by an increase in tax revenue, something the Republicans oppose. His second objective: something more modest, maybe $2 trillion, $2.5 trillion, but that also includes increased tax revenue. The Republicans resisting on that.

Based on what he's saying, unless there's some major surprise, Suzanne, it looks like that fallback position, that third option, something he's reluctant to endorse but clearly is ready to endorse if necessary to avoid a default, the Mitch McConnell proposal, is something they're going to have to do -- at least in the short term -- to avoid the nation's credit worthiness going down the tubes right now.

So, it's not a pretty picture out there, but we'll see what happens over the next couple of days.

MALVEAUX: I thought it was interesting, Wolf, because the president, it seems like what he's trying to do is appear as the reasonable party in all of this, the grownup in the room, if you will.

And the president reached out. He seemed to be telling the American people, look, he says, it requires modest adjustments to get our fiscal house in order here. That this is not going to be difficult.

He even tried to paint those talks. He said they're not ugly but I was very blunt in my language.

I think you're trying see him strike some sort of middle ground here to appeal to the American public and at least put some pressure on Republicans and Democrats as well to make the kind of sacrifices that are necessary.

I want to go to our Alison Kosik who's at the New York Stock Exchange -- because, Alison, I know a lot of people are thinking about what the president said. We know there are various proposals, there are a lot of big numbers that are out there, but a lot of people want to know, retirees -- am I going to get my Social Security benefits come August 3rd? Student loans, are they in trouble? Car notes -- is that going to be a problem?

We heard the president say interest rates, if they go up -- it's going to pose major problems for a lot of people.

Is that the scenario that is going to play out here that you see as being really a legitimate concern for people to have?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, according to what the president said just this week, Suzanne, he said you know, what come August 3rd, I don't know if you're going to get your Social Security check.

You know, what's going to wind up happening is the government's going to have to prioritize its obligations, and that means all of those payments. But there is a chance that some of those payments won't go out.

But, you know, at this point when you look at how the markets are reacting, I've been watching the numbers as the president's been speaking. We're still just kind of sitting at the flat line. We're in positive territory here. Not seeing much of a reaction.

I don't know -- maybe it's a case of like an ostrich's head in the sand at this point. Investors are not really realizing what's going on. But they are not rattled by this at all right now, about this debt ceiling stalemate -- Suzanne.

MALVEAUX: And what about these credit agencies, Moody's and Standard & Poor's? What does that mean? I mean, is it already -- has the damage already been done if they are threatening to lower the credit rating of the United States?

KOSIK: You know, all three have come out saying various statements. But the difference between the one we got from Standard & Poor's is that they're taking it a step forward. They're putting the U.S. on notice that there's a one in two chance that they will go ahead and downgrade the U.S.'s stellar credit rating, which is AAA status, which is the best that there is, if Washington doesn't get its act together.

I think what S&P is really looking for is they're really looking for an agreement on deficit reduction. They're really looking for the long-term solution. And they are threatening that even just the possibility of the government not being able to meet its obligations could result in a lowered credit rating and then we can see where the chips fall after that -- Suzanne.

MALVEAUX: Our incredible debt -- essentially China holding on to this. What is the role of China in the impact around the world for this potential crisis? I want you to, first of all, listen to Fareed Zakaria, what he told John King yesterday, and then we'll come back to that.


FAREED ZAKARIA, HOST, "FAREED ZAKARIA GPS": I think the Chinese government is actually being very responsible. If we held a trillion dollars' worth of yuan, China's currency, and they would have been playing this insane game of political partisanship, we would be complaining. The Chinese have been very quiet so far.

And, by the way, one of the reasons they're quiet is no one wants to raise the panic because no one wants to drive those interest rates up. This is the crucial thing to understand. Once we drive those interest rates up, they will not come down easily.

The global financial system rests on one sort of bedrock, and that is that U.S. treasury bills are the safest, most liquid, cheapest form of debt in the world.


MALVEAUX: So, Alison, I guess the question is at what point do the Chinese give up and think, you know what, we're tired of this, this is no longer a good investment? Are they at that point?

KOSIK: You know, we're already seeing -- you know, we know that China, we have a trade deficit with China, first of all, because they're the biggest buyer of our debt. They have full faith in the dollar and in our debt. But the problem is, is that if one shoe should drop, then it's questionable whether or not they're going to keep buying that debt.

We're even seeing them kind of diversify. I'm talking about China diversifying and buying more euros these days instead of the dollar because of what's going on with the debt ceiling.

MALVEAUX: All right, Alison.

I want to go back to our own Wolf Blitzer -- because, Wolf, we heard the president saying that, you know, McConnell's plan here, in a way, it was just trying to get something done, recognizing that very little can get done with this government in this kind of atmosphere, but they want to avoid financial Armageddon, a crisis.

BLITZER: Yes. I mean, you heard him also say rather dramatically the United States is not Greece, the United States is not Portugal, it will be done one way or another. People don't have to worry. The international community does not have to worry. The U.S. will pay its debts one way or another.

It looks increasingly likely that Mitch McConnell proposal is the way it's going to get done.

But we'll be surprised if some other of these more ambitious proposals manages to get through given the very, very strong differences.

Let's bring in our own chief White House correspondent Jessica Yellin.

I was also intrigued, Jessica. The president made it clear -- he was asked about cuts in Medicare, changes in Medicare. We did hear him saying specifically he is indeed open to what's called means- testing for more wealthy, for wealthier Medicare recipients. They would pay more than middle-class or poor Medicare recipients.

I know that's going to cause some controversy out there. But the president saying he's willing to resist, he's willing to go up against his own Democratic Party base on some of these issues like Medicare, Social Security, entitlement spending.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: Absolutely, Wolf. He has said not only will he means-test -- so, in other words, make the wealthier take on a little bit more of the burden of their own payment.

But they've also made it clear that among the things they'd put on the table as part of this, quote, "big deal" is raising the eligibility age for Medicare, something that is also a wildfire within their Democratic base. And making providers pay -- reducing payments potentially to providers. Changing the payment structure for drug companies, you heard him saying.

All these things are those hot-button issues that would have made political difficulty for him and his party in the election season. And that's one of the reasons you hear so much frustration from the White House and from Democrats when they say they think they put it all out there. They think they tried hard to cut a deal, and they don't feel like they've gotten equal acceptance from Republicans in making equal overtures in trying to cut a deal.

Of course, you hear a very different story from Republicans. But those are big offers in the minds of Democrats.

And I'll tell you, Wolf, I am hearing, and as we've been reporting, there is a real sense here that the McConnell plan -- I began hearing this, you know, as early as yesterday morning, that the McConnell plan has taken over a lot of these talks as the increasingly likely plan, a version of the McConnell-Reid plan as the likely option seemingly going forward to get these debt ceiling talks raised.

The one other component we did hear the president say is maybe there will be some pared down version of raising the debt ceiling without deficit reduction but he clearly did not like that -- Wolf.

BLITZER: Yes. And what's also obvious now is that Mitch McConnell, the Republican leader, is working more closely with Harry Reid, the Democratic majority leader in the Senate. So, it looks like that's where the action is right now.

Very quickly, Jessica, is the president staying in town this weekend, going to Camp David, someplace else? Is he going to be around if there's some new proposal that they decide Saturday or Sunday, they all need to get together?

YELLIN: No, no. He's available. He's here. He can meet with them. And there's nothing announced, nothing scheduled.

But I wouldn't be surprised if they do add some kind of meeting to the schedule over the weekend. I expect to be working, Wolf.

BLITZER: I expect you'll be working. And maybe all of us will be working. But that's life in the fast lane.

All right, Suzanne, I don't know if you're going to be working. But you're ready to go to work if necessary, right?

MALVEAUX: Absolutely. We're all going to be working, Wolf. I have a feeling we're all going to be working this weekend on this story. This isn't going away.

I want to bring in our congressional correspondent Kate Bolduan -- because, Kate, you know, we've heard about a lot of plans here and the people behind them, the Republicans, Boehner, McConnell, Cantor -- give us a sense behind the scenes, who's running the show here? Who's in charge? Who's driving the debate when it comes to the Republican side?

KATE BOLDUAN, CNN CONGRESSIONAL CORRESPONDENT: Well, right now all this week, despite speculation that there's tension between House Republican leaders, I'll tell you that they have been very -- they've made very much a point to come out, to tamp down that kind of speculation, and present a unified front that they are all on the same page, repeatedly saying that very same phrase, "we're all on the same page."

And they did that same thing this morning in come out and presenting after a big meeting with their entire caucus in the House, coming out and presenting what they say is their plan, their plan for now -- I guess we should say -- this idea of cut, cap and balance. It's a bill that's very popular among House conservatives and some conservatives in general.

But I'll tell you, as you just heard in that press conference, the president seemed to pour cold water on that pretty quickly, saying that's not something that he thinks is a good idea and in no uncertain terms that he does not support.

And especially this idea of a balanced budget amendment, that's something that is being pushed here, has been talked about amongst conservatives but is really being pushed starting this morning, getting the backing of house Republican leadership, Suzanne. They're saying that a balanced budget amendment would be contingent on the fact that they would agree to raise the debt ceiling, and the president said very flatly, we don't need an amendment to the Constitution to do our jobs.

MALVEAUX: And real quickly here, Kat, is -- are there anyone in the Republican leadership that's saying that tax increases are OK, that that is on the table, or that is still just no go?

BOLDUAN: Very much they're holding a hard line. They're saying tax hikes are not good for the economy, not good to put in place in the middle of a jobs crisis and they are not supporting that at all.


BOLDUAN: But again, they have -- I was told by a Boehner aide just this morning, the House speaker has cleared his schedule, so we'll see how things progress over the weekend.

MALVEAUX: OK. Thank you, Kate.


BLITZER: You know, it's -- I want to get Gloria Borger's perspective, our chief political analyst.

It was interesting. Once again the president -- without mentioning President Bush by name --


BLITZER: -- he made it clear who he believes is responsible for this current economic disaster in the United States.

He said there were tax cuts throughout the '90s -- excuse me, in the Bush administration, two rounds of tax cuts that weren't paid for. There were drug benefits for the elderly that weren't paid for. Two wars, Iraq and Afghanistan, not paid for. And a very bad recession that somebody was responsible for helping to create --


BORGER: For driving the country into the ditch.

BLITZER: He didn't mention President Bush. But interesting, he's blaming the Bush administration.

But if you listen to the Republicans, they are saying 2 1/2 years of the Obama administration and the enormous growth in spending, that's to blame.

BORGER: Well, it's interesting to me because I heard the same thing you heard. And it's very clear they won't use George W. Bush's name anymore, because the American public has said, you know, the statute of limitations is up on that. You can't blame your predecessor anymore for the economy now, that you own the economy. So, he did go through that litany.

What was also interesting to me, Wolf, is that he was clearly making the case that "I am on the side of the American public and the Republicans are on the wrong side of public opinion on this."

Our recent polls -- the president said 80 percent -- polls that we've looked showed about 67 percent of the American public wants to get a deal that has both revenue and spending cuts.

But when you look at the internals of those polls, they also show the Republican Party itself is with the Republican leaders in saying no taxes. You know, it's kind of a split in the Republican Party for sure, but the overwhelming number comes from when you add in independent voters and when you add in Democratic voters.

So, the president is really talking to his party and the Republicans are talking to theirs.

BLITZER: And what they're really going after are those independent voters --

BORGER: Absolutely.

BLITZER: -- the Democrats and the Republicans the president needs --

BORGER: And independents want a deal.

BLITZER: If he wants to be re-elected next year, he's going to need those independents voters.

BORGER: You bet.

BLITZER: Suzanne, one thing we're going to have to do is a fact check on some point on one of the most sensitive issues that the president raised in the news conference today when he flatly said, and this is a very sensitive issue, Suzanne, I think you'll agree with me, that he said "I don't watch those cable news shows."

So, we're going to have to see if that's true, if he watches your show or my show, or any of the cable news shows. If that's true that he doesn't watch any of these cable news shows, that's a huge story.

MALVEAUX: Yes, I don't believe him.

BLITZER: We're going to do a fact-check and see if we can --

MALVEAUX: I don't believe him. I think he's watching.

BLITZER: I think he watches some of those --

MALVEAUX: I totally think he's watching.

BLITZER: I think he's watching some of those cable news shows.

MALVEAUX: He's watching our shows, Wolf, no doubt. OK. Thanks.

We're going to check our stories making news right after this, including new details on al Qaeda's plans to target the president.