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President to Speak on Budget; Obama Talks Budget, Sequester.

Aired March 1, 2013 - 11:30   ET


ASHLEIGH BANFIELD, CNN ANCHOR: They all left yesterday for a long weekend.

And the criticism about the meeting today was that this was optics given the fact that these two positions are so, how shall where he say, intransigent, for lack of a better word, there is likely -- not likely to be any meeting of the minds today are or even next week. But the House speaker said he will be pushing for a continuing resolution next week.

Gloria Borger joins me live from Washington, D.C.

I said this is an unexpected news conference. That's not entirely unexpected because the White House has to say something about this dire day.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right. I think what we're seeing right now is the blame game playing out. Obviously both sides realize in their heart of hearts that there is a real possibility here that the public could blame all of them for this, right? Because the public wants them to get their work done and wants to see -- they want to see government cut, but they don't like this kind of meat-ax approach to cutting government. They believe there is a better way to do it.

The president's more popular than the Republicans in Congress right now. They have kind of a 29 percent favor ability rating. I think the president is somewhere at 49 percent. But what the president will come out and say is that he proposed a balanced way of doing business with loophole closings as well as revenues and the Republicans decided they didn't want to do it.

But if you step back for a minute, I think what we have to recognize here is that something that was unthinkable, unthinkable, in 2011 suddenly seems pretty palatable to both sides. Liberals look at this and they say these Pentagon cuts are something we could never have gotten. And conservative Republicans are saying, well, we don't want to cut spending this way, but at least it's a down payment on cutting spending.

BANFIELD: Is there anything -- let me bring in our colleague, as well, Wolf Blitzer, Gloria.

But is there anything to the demeanor of John Boehner? I only say this because he was cursing on camera. He has walked away from microphones after stating his piece and not taking questions. Everybody seems pretty down right angry about all of this. And as Gloria said, blaming the other guy or gal.

Wolf, remind me, how far apart are the positions of these two bodies?

WOLF BLITZER, HOST, THE SITUATION ROOM: Pretty far apart. One side, the president and the Democrats say they want tax increases, additional tax revenue by eliminating loopholes, exemptions, other tax-related issues. The other side said we're not doing that now as part of this deal. Maybe as part of comprehensive tax reform coupled with entitlement reform, Social Security and Medicare reform, a grand bargain, if you will, but we're not doing that now. They raised taxes to avoid going over the fiscal cliff in December, January 1st, as all of our viewers remember. Boehner as recently as the last few minutes said flatly the discussion about revenue, when they use the word revenue, they mean increased taxes, is in my view is over. So the White House is saying it has to be what they call a balanced approach. And I'm sure that see what we'll hear from the president. It has to be a balanced approach. Spending cuts coupled with eliminating some of these loopholes for millionaires, coupled with removing some of the deductions, the subsidies for big farmers, if you will, stuff like that, stuff that both sides basically could agree on to a certain agree. But the Republicans say it has to be part of comprehensive tax reform and it has to be coupled with reducing tax rates. Tax rates on the wealthiest, those making more than $400,000 a year just went up as of January 1st. So it's obviously the key issue right now between these two sides.

Let me ask Jessica Yellin, our chief White House correspondent.

That's it. In a nutshell, that's it, the battle over tax revenue, right, Jessica?

JESSICA YELLIN: I'm sorry, Wolf, can you stay again?

BLITZER: I said in a nutshell, the whole dispute between John Boehner and the Republicans on one side and the president and Democrats on the other side is whether increased tax revenue should be part of any deal right now and Republicans say no, Democrats say yes.

JESSICA YELLIN, CNN CHIEF WHITE HOUSE CORRESPONDENT: That's right. And the two sides battling, as we have heard so many times recently, over whether tax revenues should be part of an overall deal or not.

What I expect the president will say when he comes out here is that he would like to see that as part of what he call as balanced deal and he will no doubt make criticism of the Republicans alleging that they have been unwilling to be unreasonable and cooperate on that front and that we are creating an unnecessary wound, unnecessary deadline and self-inflicted wound because of Republican intransigence.

But I would also expect him to try to paint a picture of what is going to happen over the coming weeks once these cuts go into effect. As we've been explaining, initially, it was sort of painted by the White House as this dramatic crisis that will hit instantly, and now that it looks like it really is going to hit, and it is, they're clarifying that this is more a slowdown rather than a shutdown. Many people will not actually feel or see the cuts in their own lives unless they have personal engagement with the government on a daily basis.

So it might take some time for people to really experience the impacts themselves. I imagine he will explain a little bit about how this works and why it matters for the broader economy, because business, they argue, could start pulling back in response to this government to change -- Wolf?

BLITZER: Jessica, we're waiting for the so-called two minute warning when the White House will let us know that the president is only two minutes away from walking into the briefing room there. As soon as we get that, obviously we'll want to hear what the president has to say. We'll be anxious to see in he just makes a statement and leaves or answers reporters' questions. Because I know a lot of the reporters have a lot of questions.

And, Gloria, when Boehner just said as he left the White House and made a brief statement -- he didn't answer any questions either -- but he did say the House would take up legislation next week to pass what's called a continuing resolution to keep the government going beyond the March 27th deadline. He thinks the House will pass it and he hopes the Senate will pass it, as well. That seems significant potentially because it removes a possible government shutdown from the agenda. I wonder how you read that.

BORGER: Yes, I feel the same way about that, Wolf. In the recesses of my mind, there is some possibility that this issue we're dealing with now could get resolved in the context of that question of the funding of the government.

Look, you know, Congress acts in crisis situations. When you look at this situation we're in right now, what's the default position? The default position is that you cut some government spending, OK? When you looked at the debt ceiling crisis, the default position was, oh, my god, the full faith and credit of the United States is on the line so they did something about it. Fiscal crisis, January 1, they did something about the fiscal cliff because everybody's taxes were going to go up. The crisis on that continuing resolution at the end of March is that the government would shut down, Republicans have had bad experiences with that in the past politically when the government shut down, when Newt Gingrich was speaker of the House. They don't want to go through that again. Nobody wants the government to shut down.

This particular crisis we're in right now, Republicans and some Democrats are making a bet that it's not the end of the world. They'll find a way to deal with this in the short term, and in the long term try to fix the next fiscal crisis coming up. And I have a sense that there's something that can be done on that looming crisis at the end of the month so they can put it all together and come up with some kind of a deal. But maybe I'm just being kind of optimistic here -- Wolf?

BLITZER: Optimism is good. Let's hope you're not being overly optimistic.

(CROSSTALK) BLITZER: If they could get at least the so-called temporary continuing resolution passed, keep the government open, they don't have to worry about a government shutdown. They will have to worry about raising the nation's debt ceiling once again. That will be another crisis that presumably will come up.

BORGER: Yes --

BLITZER: Unless there's spending going forward.

Ali, very quickly, because we're within a minute of the president. This, C.R., this continuing resolution, if they get that off the table, that's good.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: That's huge. That's a really big deal. Markets, which as you've seen, are not reacting to this sequester all that much. That's the thing people are worried about. That's also the thing that's politically very dangerous because, unlike Saturday morning when nothing would really change for most people, March 28th, things will really change for people if there is anything resembling a government shutdown. So that would be a big win for everybody. Remember, though, there hasn't been a real budget process if in this country since 2009.


BLITZER: Hold on a second.


BLITZER: The president is walking in right now.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: As you know, I just met with leaders of both parties to discuss a way forward in light of the severe budget cuts that start to take effect today. I told them these cuts will hurt our economy, they'll cost us jobs, and to set it right, both sides need to be willing to compromise.

Now, the good news is the American people are strong and resilient. They've fought hard to recover from the worst economic crisis since the Great Depression and we will get through this, as well. Even with these cuts in place, folks all across the country will work hard to make sure that we keep the recovery going.

But Washington sure isn't making it easy. At a time when our businesses have finally begun to get some traction, hiring new workers, bringing jobs back to America, we shouldn't be making a series of dumb arbitrary cuts to things that businesses depend on and workers depend on, like education and research and infrastructure and defense. It's unnecessary at a time when too many Americans are still looking for work, and it's inexcusable.

Now, what's important to understand is that not everyone will feel the pain of these cuts right away. The pain, though, will be real. Beginning this week, many middle class families will have their lives disrupted in significant ways. Businesses that work with the military, like the Virginia ship builder that I visited on Tuesday, may have to lay folks off. Communities near military bases will take a serious blow. Hundreds of thousands of Americans who serve their country, Border Patrol agents, FBI agents, civilians who work at the Pentagon, all will suffer significant pay cuts and furloughs. All of this will cause a ripple effect throughout our economy. Layoffs and pay cuts means that people have less money in their pockets. And that means that they have less money to spend at local businesses. That means lower profits. That means fewer hires. The longer these cuts remain in place, the greater the damage to our economy. A slow grind that will intensify with each passing day. So economists are estimating that as a consequence of the sequester, that we could see growth cut by over one-half of 1 percent. It will cost about 750,000 jobs at a time when we should be growing jobs more quickly. So every time that we get a piece of economic news over the next month, next two months, next six months, as long as the sequester is in place, we'll know that that economic news could have been better if Congress had not failed to act.

And let's be clear. None of this is necessary. It's happening because a choice that Republicans in Congress have made. They have allowed these cuts to happen because they refuse to budge on closing a single wasteful loophole to help reduce the deficit. As recently as yesterday, they decided to protect special interests tax breaks for the well-off and well-connected and they think that that's apparently more important than protecting our military or middle class families from the pain of these cuts.

I do believe that we can and must replace the cuts with balanced approach that asks something from everybody. Smart spending cuts, entitlement reform, tax reform that makes the tax code more fair for families and businesses without raising tax rates. Also that we can responsibly lower the deficit without laying off workers or forcing parents to scramble for child care or slicing financial aide for college students. I don't think that's too much to ask. I don't think that is partisan. It's the kind of approach that I've proposed for two years. It's what I ran on last year. The majority of the American people agree with me in this approach, including a majority of Republicans. We just need Republicans in Congress to catch up with their own party and their country on this. And if they did so, we could make a lot of progress.

I do know that there are Republicans in Congress who privately at least say that they would rather close tax loopholes than let these cuts go through. I know that there are Democrats who would rather do smart entitlement reform than let the cuts go through. There is a caucus of common sense up on Capitol Hill. It's a silent group right now. And we want to make sure that their voices start getting heard. In the coming days and coming weeks, I'll keep on reaching out to them both individually and as groups of Senators or members of the House and say to them let's fix this. Not just for a month or two, but for years to come, because the greatest nation on earth does not conduct its business in month to month increments or by careening from crisis to crisis. And America has a lot more work to do. In the meantime, we can't let political gridlock around the budget stand in the way of other areas where we can make progress. I was pleased to see that the House passed the Violence against Women Act yesterday. That is a big win for not just women, but for families and for the American people. It's a law that will save lives and help more Americans live free from fear. It's something that we've been pushing on for a long time. I was glad to see that done. And it's an example of how we can still get some important bipartisan legislation through this Congress even though there are still these fiscal arguments taking place. And I think there other areas where we can make progress even with the sequester unresolved.

I will continue to push for these initiatives. I'll keep pushing for high quality preschool for every family that wants it. I'll keep pushing on to make sure that we raise the minimum wage so that it's one that families can live on. I'll keep on pushing for immigration reform and reform our voting system and improvements on our transportation sector. And I'll keep pushing for sensible gun reforms, because I still think they deserve a vote. This is the agenda that the American people voted for. These are America's priorities. They are too important to go unaddressed. And I'll keep push to go make sure that push to go make sure they go through.

I'll take questions.

Let's start with Julie.

UNIDENTIFIED REPORTER: How much responsibility do you feel you bear for the cuts taking effect and is the only way to offset them at this point for Republicans to bend on revenue or do you see any alternatives?

OBAMA: Well, look, we've already cut $2.5 trillion in our deficit. Everybody says we need to cut $4 trillion, which means we have to come up where another trillion and a half. The vast majority of the economists agree that the problem when it comes to deficits is not discretionary spending, it's not that we're spending too much money on education, it's not that we're spending too much money on job training or that we're spending too much money rebuilding our roads and our bridges. We're not. The problem that we have is a long-term problem in terms of our health care costs. And programs like Medicare. And what I've said very specifically, very detailed, is that I'm prepared to take on the problem where it exists on entitlements and do some things that my own party really doesn't like if it's part of a broader package of sensible deficit reduction. So the deal that I've put forward over the last two years, the deal that I put forward as recently as December, is still on the table. I am prepared to do hard things and to push my Democratic friends to do hard things. But what I can't do is ask middle class families, ask seniors, ask students, to bear the entire burden of deficit reduction when we know there are a lot of tax loopholes that are benefiting the well connected and wealthy. The American people don't think it's fair and don't think it's right.

So I recognize that Speaker Boehner has challenges in his caucus. I recognize that it's very hard for Republican leaders to be perceived as making concessions to me. You know, sometimes I reflect is there something else I could to do make these guys - I'm not talking about the leaders now, but maybe some of the House Republican caucus members, not to make these guys -- not to paint horns on my head. And I genuinely believe that there is an opportunity for us to cooperate.

But what doesn't make sense and the only they think that we've seen from Republicans so far in terms of proposals is to replace this set of arbitrary cuts with even worse arbitrary cuts. That won't help the economy, it won't help growth and it won't create jobs. And as a number of economists has noted, ironically, it doesn't even reduce our deficit in the smartest way possible or the fastest way possible.

So in terms of going forward, my hope is that after some reflection, as members of Congress start hearing from constituents who are being negatively impacted, as we start seeing the impact that the sequester is having, that they step back and say, all right, is there a way for us to move forward on a package of entitlement reforms, tax reform, not raising tax rates, identifying programs that don't work, coming up with a plan that's comprehensive and that makes sense. And it may take a couple of weeks. It may take a couple of months. But I'll keep on pushing on it. And my view is that ultimately common sense prevails.

But Republicans have made a choice that maintaining an iron-clad rule that we will not accept an extra time's worth of revenue makes it difficult for us to get any larger comprehensive deal. And that's the choice they're making. They're saying it is more important to preserve the tax loopholes than it is to prevent these arbitrary cuts. And what's interesting is Speaker Boehner just a couple months ago identified these tax loopholes and tax breaks and said we should close them and raise revenue. So it's not as if it's not possible to do. They themselves have suggested that it's possible to do. And if they believe that, in fact, these tax loopholes and these tax breaks for the well-off and well-connected aren't contributing to growth, aren't good for our economy, aren't particularly fair and can raise revenue, why don't we get started. Why don't we do that? It may be that because of the politics within the Republican Party, they can't do it right now. I understand that. My hope is that they can do it later.

And I just want to repeat, Julie, because I think it's very important to understand, it's not as if Democrats aren't being asked for do anything either to compromise. There are members of my party who violently disagree with the notion that we should do anything on Medicare. And I'm willing to say to them I disagree with you because I want to preserve Medicare for the long haul. And we'll have some tough politics within my party to get this done. This is not a situation where I'm only asking for concessions from Republicans and asking nothing from Democrats. I'm saying everybody will have to do something.

And the one key to this whole thing is trying to make sure we keep in mind who we're here for. We are not here for ourselves. We're not here for our parties. We're not here to advance our electoral prospects. We're here for American families who have been gotten battered pretty good over the last four years, are just starting to see the economy improve, businesses are just starting for us to see some confidence coming back being. And, you know, this is not a win for everybody. This is a loss for the American people. And about we step back and remind ourselves what it is we're supposed to be doing here, hopefully common sense will allow in the end.

UNIDENTIFIED REPORTER: It sounds like you're saying this is a Republican problem and not one that you bear any responsibility for.

OBAMA: Give me an example of what I might do.


OBAMA: No, what I'm trying to do is clarify the question. I put forward a plan that calls for spending cut, serious entitlement reforms, goes right at the problem that is at the heart of our long- term deficit problem. I've offered negotiations around that kind of balanced approach. And so far we've gotten rebuffed because what Speaker Boehner and the Republicans have said is we cannot do any revenue. We can't do a dime's worth of revenue. So what more do you think I should do? OK. I just wanted to clarify.


Because if people have a suggestion, I'm happy to -- this is a room full of smart folks.

All right. Zach?

UNIDENTIFIED REPORTER: Mr. President, the next focal point seems to be the continuing resolution that is funding the government at the end of the month, that expires at the end of the month. Would you sign a C.R. that continues the sequester but continues to fund the government. And on a related point, have you truly reached the limits of your persuasive power, is there any leverage that you have to convince Republicans, to convince folks that this isn't the way to go?

OBAMA: Well, I'd like to think I still have some persuasive power left. Let me check.


No, look, the issue is not my persuasive power. The American people agree with my approach. They agree that we should have a balanced approach to deficit reduction. The question is, can the American people help persuade their members of Congress to do the right thing. And I have a lot of confidence that, over time, if the American people express their displeasure about how something is working that eventually Congress responds. Sometimes there is a little gap between what the American people think and what Congress thinks. But eventually Congress catches up.

With respect to the budget and keeping government open, for our viewing audience to make sure that we're not talking in Washington gobbledygook, what's called the continuing resolution, which is essentially just an extension of last year's budget into this year's budget, to make sure basic government functions continue? I think that it's the right thing to do to make sure that we don't have a government shutdown. And that's preventable. We have a Budget Control Act, right? We agreed to a certain amount of money that was going to be spent each year. And certain funding levels for our military, our education system and so forth. If we stick to that deal, then I will be supportive of us sticking to that deal. It's a deal that I made.

The sequester are additional cuts on top of that and by law until Congress takes the sequester away, we'd have to abide by those additional cuts. But there is no reason that we should have another crisis by shutting the government down in addition to these arbitrary spending cuts.

UNIDENTIFIED REPORTER: Even at the lower levels of the sequester even in you don't prefer to do it?

OBAMA: Zach, I never want to make myself 100 percent clear with you guys.


But I think it's fair to say that I made a deal for a certain budget, certain numbers. There is no reason why that deal needs to be reopened. It was a deal that Speaker Boehner made as well and all the leadership made. And if the bill that arrives on my desk is reflective of the commitments that we previously made, then obviously I would sign it because I want to make sure that we keep on doing what we need to do for the American people.


UNIDENTIFIED REPORTER: To your question what could you do, first of all, cooperate you just have them down here and refuse to let them leave the room until you have a deal?


OBAMA: You know, the -- Jessica, I am not a dictator. I'm the president. So ultimately, if Mitch McConnell or John Boehner say, we need to go to catch a plane, I can't have Secret Service block the doorway, right?


OBAMA: I understand. And I know this has been some of the conventional wisdom floating around Washington, that somehow, even though most people agree that I'm being reasonable, that most people agree I'm presenting a fair deal, the fact that they don't take it means that I should somehow, you know, do a Jedi mind meld with these folks and convince them to do what's right. Well, they're elected. We have a constitutional system of government. The speaker of the House and leader of the Senate and all those folks have responsibilities. What I can do is I can make the best possible case for why we need to do the right thing. I can speak to the American people about the consequences of the decisions that Congress is making or the lack of decision making by Congress. But ultimately, it's a choice they make. And this idea that somehow there is a secret formula or secret sauce to get Speaker Boehner or Mitch McConnell to say, you know what, Mr. President, you're right, we should close some tax loopholes for the well-connected in exchange for serious entitlement reform and spending cuts for programs we don't need, you know, I think if there was a secret way to do that, would I would have tried it, I would have done it. What I can do is make the best possible argument.