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Issue Position |
President Obama signed the sweeping health-care reform law, which tries to slow the growth in Medicare spending by reducing payments to providers and placing stricter controls on which types of care will be covered -- an effort to reduce inefficiencies in care.
The reform law also set a schedule for closing the so-called “doughnut hole” in prescription drug coverage for seniors by providing new discounts on medications. The legislation gradually increases those discounts to close the hole over time.
Obama has expressed strong opposition toward Republican proposals to reduce Medicare costs by raising the eligibility age and offering an optional voucher system to help pay for private insurance or personal Medicare expenses. He has characterized the plan as a GOP attempt to privatize the entitlement program.
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Obama on MedicareObama's Statements (283)
First is how do we make sure that Social Security is sustainable over the long term. Social Security is one of our entitlement programs that for now is stable, but will not be if we don't make some changes. Now, here's the good news. Compared to Medicare, Social Security is actually in reasonably good shape, and with some relatively small adjustments, you can have that solvent for a long time. So Social Security is going to be there. I know a lot of people are concerned about it. Social Security we can fix.
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You asked about Social Security. Let me talk about Medicare. Medicare will be broke in eight years if we do nothing. Right now we give -- we give about $17 billion in subsidies to insurance companies through the Medicare system -- your tax dollars. But when we tried to eliminate them, suddenly there were ads on TV -- "Oh, Obama is trying to cut Medicare." I get all these seniors writing letters: "Why are you trying to cut my Medicare benefits?" I'm not trying to cut your Medicare benefits. I'm trying to stop paying these insurance companies all this money so I can give you a more stable program.
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So, as temperatures cool, I want everyone to take another look at the plan we've proposed. There's a reason why many doctors, nurses, and health care experts who know our system best consider this approach a vast improvement over the status quo. But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know. Let me know. Let me know. I'm eager to see it.
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Starting in 2011, we are prepared to freeze government spending for three years. Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected. But all other discretionary government programs will. Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don't. And if I have to enforce this discipline by veto, I will.
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Now, even after paying for what we spent on my watch, we'll still face the massive deficit we had when I took office. More importantly, the cost of Medicare, Medicaid, and Social Security will continue to skyrocket. That's why I've called for a bipartisan fiscal commission, modeled on a proposal by Republican Judd Gregg and Democrat Kent Conrad. This can't be one of those Washington gimmicks that lets us pretend we solved a problem. The commission will have to provide a specific set of solutions by a certain deadline.
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Nobody pays more than small businesses and individuals who are self-employed in the insurance market, because they've got no leverage. We want to change that by allowing them to be able to set up a pool. We want to make sure that people who don't have coverage can find an affordable choice in a competitive marketplace. We want a system in which seniors don't have these huge gaps in their Medicare prescription drug coverage -- and where Medicare itself is on a sounder financial footing. Those are the things that we're fighting for.
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Look, let me take the example of health care. Part of the reason why it's so easy to scare people about health care, even if they don't like it the way it is now, is because you've got doctors, you've got nurses, you've got hospitals, you've got insurance systems, you've got Medicaid, you've got Medicare, you've got the VA system -- all these systems constitute several trillion dollars, one-sixth of our economy. Even if you come up with a great plan that lowers premiums and creates greater competition and ensures freedom for you to choose your doctor and is bringing down the deficit -- all the things that I've claimed -- and prevents insurance companies from abusing customers -- even if we do all that, there's going to be somebody out there in a $2 trillion system who's unhappy with something. Right?
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So they'll complain, well, you know, I'm a medical device manufacturer and if you reform the system that might force me to change how I sell my products; or there's going to be a doctor who says, well, you know what, right now I get charged this way and if you change how Medicare reimburses, then I might have to change my billing system and that's going to cost me a few thousand dollars and I don't like that.
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So I am absolutely committed to working with you on these issues, but it can't just be political assertions that aren't substantiated when it comes to the actual details of policy. Because otherwise, we're going to be selling the American people a bill of goods. I mean, the easiest thing for me to do on the health care debate would have been to tell people that what you're going to get is guaranteed health insurance, lower your costs, all the insurance reforms; we're going to lower the costs of Medicare and Medicaid and it won't cost anybody anything. That's great politics, it's just not true.
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The major driver of our long-term liabilities, everybody here knows, is Medicare and Medicaid and our health care spending. Nothing comes close. Social Security we could probably fix the same way Tip O'Neill and Ronald Reagan sat down together and they could figure something out. That is manageable. Medicare and Medicaid -- massive problem down the road. That's where -- that's going to be what our children have to worry about.
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Fifty-five and -- well, no, I understand. I mean, there's a grandfathering in, but just for future beneficiaries, right? That's why I said I didn't want to -- I want to make sure that I'm not being unfair to your proposal, but I just want to point out that I've read it. And the basic idea would be that at some point we hold Medicare cost per recipient constant as a way of making sure that that doesn't go way out of whack, and I'm sure there are some details that --
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CONGRESSMAN RYAN: We drew it as a blend of inflation and health inflation, the point of our plan is -- because Medicare, as you know, is a $38 trillion unfunded liability -- it has to be reform for younger generations because it won't exist because it's going bankrupt. And the premise of our idea is, look, why not give people the same kind of health care plan we here have in Congress? That's the kind of reform we're proposing for Medicare.
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Now, I just want to point out -- and this brings me to the second problem -- when we made a very modest proposal as part of our package, our health care reform package, to eliminate the subsidies going to insurance companies for Medicare Advantage, we were attacked across the board, by many on your aisle, for slashing Medicare. You remember? We're going to start cutting benefits for seniors. That was the story that was perpetrated out there -- scared the dickens out of a lot of seniors.
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No, no, but here's my point. If the main question is going to be what do we do about Medicare costs, any proposal that Paul makes will be painted, factually, from the perspective of those who disagree with it, as cutting benefits over the long term. Paul, I don't think you disagree with that, that there is a political vulnerability to doing anything that tinkers with Medicare. And that's probably the biggest savings that are obtained through Paul's plan.
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And so the question is, at what point can we have a serious conversation about Medicare and its long-term liability, or a serious question about -- a serious conversation about Social Security, or a serious conversation about budget and debt in which we're not simply trying to position ourselves politically. That's what I'm committed to doing. We won't agree all the time in getting it done, but I'm committed to doing it.
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And, finally, the third reason that we had to take this on is because the deficit and the debt that you hear everybody getting in a tizzy about -- properly so -- the vast majority of our long-term debt is driven by Medicare and Medicaid. It's driven by our rising health care costs. Nothing comes close. You could eliminate every earmark, you could eliminate foreign aid, you could eliminate all that stuff -- it would amount to about 5 percent of the budget. Most of it is health care costs.
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And as the population gets older, they use more health care; that drives it up even faster. And pretty soon, pretty soon the entire federal budget is going to be gobbled up by these rising health care costs. And you're already seeing it at the state level here in Nevada, right? What's happening with Medicaid? The governor is starting to talk about having to cut all kinds of aspects of Medicaid because of the cost.
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Number two, we've got a whole series of cost controls. So what we're saying is, for example, that every insurer, they've got to spend the vast majority of your premiums on actual care, as opposed to profits and overhead. We're saying that we've got to get out some of the waste and abuse, including subsidies to insurance companies in the Medicare system that run in the tens of billions of dollars every year. That's not a good use of your taxpayer dollars. And we're working to improve wellness and prevention, as I said before, so that people aren't going to the emergency room for care.
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Well, how about that? Let me -- let me -- before you ask your actual question, let me just make this point. We're not actually eliminating Medicare Advantage. What Medicare Advantage is, is basically the previous administration had this idea, instead of traditional Medicare, let's contract out to insurance companies to manage the Medicare program. And the insurance companies can then kind of package and pool providers of dental care or eye wear or what have you, and it's a one-stop shop for seniors.
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Now, in theory that sounds like a pretty good idea, except as you might imagine if the insurance companies are involved that means they've got to make a profit. And what happened was they didn't bid out competitively this Medicare Advantage program. So these insurance companies were just getting a sweet deal.
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Yes. Here’s the situation with Social Security. It is actually true that Social Security is not in crisis the way our health care system is in crisis. I mean, when you think about the big entitlement programs, you've got Social Security, Medicare, Medicaid. These are the big programs that take up a huge portion of the federal budget. Social Security is in the best shape of any of these, because basically the cost of Social Security will just go up with ordinary inflation, whereas health care costs are going up much faster than inflation.
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But the fixes that are required for Social Security are not huge, the way they are with Medicare. Medicare, that is a real problem. If we don't get a handle on it, it will bankrupt us. With Social Security, we could make adjustments to the payroll tax. For example -- I'll just give you one example -- right now, your Social Security -- your payroll tax is capped at $109,000. So what that means is, is that -- how many people -- I don't mean to pry into your business, but how many people here make less than $109,000 every year? All right, this is a pretty rich audience -- a lot of people kept their hands down. I'm impressed.
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But he understands that we can't afford that. We can't afford to walk away from a clean energy future. We can't afford to walk away from making sure that our education system is producing the kinds of scientists and engineers and entrepreneurs that are going to build our economy in the future. We can't afford to walk away from a health care system that is broken for everybody -- for small businesses and large businesses; for families who are seeing their premiums go up 25 percent, 30 percent, 35 percent; for the millions who don't have health insurance at all; and for future generations who are going to have to carry the bill if we don't get control of health care costs like Medicare and Medicaid. He understands we cannot walk away from it and we will not walk away from it. If I've got Michael Bennet's help, we are going to get health care reform passed in this country.
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And finally, government has also provided a social safety net to guarantee a basic level of security for all our citizens. Now, this last role has been obviously a source of great controversy over the last several decades. But I think most Americans and most business leaders would agree that programs like Social Security and Medicare and Medicaid and unemployment insurance haven't just saved millions from poverty, they've helped secure broad-based consensus that is so critical to a functioning market economy.
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And tomorrow, I look forward to a good exchange of ideas at the Blair House with some of the legislative leaders. And I hope everyone comes with a shared desire to solve this challenge, not just score political points. And I hope the roundtable supports our efforts to finally pass reform that works for the American people and for American businesses.
Now, one of benefits of health care reform is that by bringing down the cost of Medicare and Medicaid, it would significantly reduce our deficit. And I know this is an issue of great concern to many of you. My OMB Director, Peter Orszag, will be here soon to give you the scary numbers. I promise you this is on my mind each and every day.
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And I don't need to tell people here about the effects on the federal budget. We've got some people who've been working a very long time on figuring out how can we control the huge expansion of entitlements. Almost all of the long-term deficit and debt that we face relates to the exploding costs of Medicare and Medicaid. Almost all of it. That is the single biggest driver of our federal deficit. And if we don't get control over that we can't get control over our federal budget.
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You know, I was looking through some of the past statements that people have made, and I think this concern is bipartisan. John McCain has talked about how rising health care costs are devastating to middle-class families. Chuck, you've been working on this a long time. You've discussed the unsustainable growth in Medicare and Medicaid in our budget. Mike Enzi, who's worked on this and partnered with Ted Kennedy on a range of health care issues as a chairman of the committee, you said that small businesses in your home state are finding it nearly impossible to afford health care coverage for their employees. And you said that the current system is in critical condition. And Mitch, you've said that the need for reform is not in question, and obviously there are comparable studies on the Democratic side as well.
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I've looked very carefully at John Boehner's plan that he put forward. I've looked at Tom Coburn and Senator Burr's plan that's been put out there. Paul Ryan has discussed some of the issues surrounding Medicare. I've looked at those very carefully. Mike Enzi, in the past you've put forward legislation around small businesses that are very important.
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Now, you've presented ideas. There's an 11-page memo on the -- I think it's important for people to understand there's not a presidential bill. There are good suggestions and ideas on the Web. We've made our ideas. But it's said -- it's a lot like the Senate bill. It has more taxes, more subsidies, more spending. So what that means is, that when it's written it will be 2,700 pages, more or less, which means it will probably have a lot of surprises in it. It means it will cut Medicare by about half a trillion dollars, and spend most of that on new programs, not on Medicare and making it stronger, even though it's going broke in 2015. It means there will be about a half trillion dollars of new taxes in it. It means that for millions of Americans premiums will go up because those -- when people pay those new taxes, premiums will go up -- they will also go up because of the government mandates.
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It means that from a governor's point of view, there are going to be what our Democratic governor calls "the mother of all unfunded mandates." Nothing used to make me madder as a governor than when Washington politicians would get together and pass a big bill, take credit for it, and then send me the bill to pay. And that's exactly what this does with the expansion of Medicare.
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I can't mention health care in Michigan without acknowledging Chairman Dingell. His institutional memory of how difficult it was to pass Medicare, how he has worked over the decades to improve it, how committed he is to preserving it, and how important a part of preserving Medicare is to this passing this health care bill. Later he will inspire us with that, but he, , as you know, as a young Congressman gaveled Medicare into law in the House of Representatives.
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So it is -- it's a very important initiative that we have to take. And I want to say, because Medicare was mentioned, unless we pass this legislation we cannot keep our promises on Medicare. We simply must make the cuts in waste, fraud, and abuse in Medicare so that the benefits and the premiums are untouched. We owe it to our seniors. We owe it to our country.
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And the doughnut hole. What is the doughnut hole? Well, a senior citizen will tell you what the doughnut hole is. Under the Medicare law that is in existence, you can be sick and you can get your medication paid for for a while. After you spend $2,000 approximately in medication, you are finished until you spend $3,500 more out of your own pocket. And what happens during that hole that we've called the doughnut hole? Seniors in America are splitting pills in half, not getting the prescriptions filled, taking them every other day. Again, Lamar, you're entitled to your opinion but not your own facts.
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No one has said -- I read what the President has online -- no one has talked about reconciliation but that's what you folks have talked about ever since that came out, as if it's something that has never been done before. Now, we as leaders here, the Speaker and I, have not talked about doing reconciliation as the only way out of all this. Of course it's not the only way out. But remember, since 1981 reconciliation has been used 21 times. Most of it has been used by Republicans, for major things, like much of the Contract for America, Medicare reform, the tax cuts for rich people in America. So reconciliation isn't something that's never been done before.
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One of the things that -- as provisions of this legislation that was particularly offensive was the carveout for 800,000 Florida seniors exempt from cuts in Medicare Advantage program. There’s 330,000 seniors under Medicare Advantage in my home state of Arizona. They’re deeply concerned about that. They’re deeply concerned about the carveouts for Vermont, Massachusetts, Hawaii, Michigan, Connecticut -- $100 million for a hospital in Connecticut. Why should that happen? They don't understand it.
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Their over $2-million-a-year lobbyist was here at the White House and was reported to say in the media “a deal is a deal.” And part of that deal was that there would not be competition amongst pharmaceutical companies for Medicare patients. The other, among others, was that the administration would oppose drug reimportation from Canada, a proposal that you supported in the United States Senate. And the Christmas --
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Also since the Clinton health care plan we've seen some pretty awful things. We saw hospitals abandoned to the streets; critically ill, elderly, mentally ill persons, and there was no great hew and cry out there. And now I understand there is actually a proposal -- which God knows I hope never sees the light of day -- that shuts down Medicare and turn that into a voucher system, where obviously we would not pay the cost of health care as these poor people have to go to the public market and try to find some.
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SENATOR ENZI: Thank you, , colleagues. When we're talking about insurance reform we haven’t really talked about -- but Representative Slaughter kind of opened the door on it, and that’s Medicare. Seniors out there are really nervous. Seniors are the ones objecting the most to the program, and it’s because they see half a trillion dollars coming out of their program.
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SENATOR ROCKEFELLER: I'm going to wrap it up. The insurance rate review is important. And if Kathleen Sebelius is to be called an unelected person and she’s head of the group that does all of Medicaid and Medicare and Health and Human Services, and she’s been an insurance commissioner, she’s been a governor, she knows the whole thing -- I don't call her down because she’s not elected, but was appointed by you. And it was a brilliant choice.
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So, again, I think it's clear that the American people have rejected the bills that have gone through so far because they see increases in premiums for families, they see that it raises taxes significantly on families, and raids Medicare to create a new entitlement. This doesn't really bring down the cost; this is really not the answer.
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First of all, everybody agrees we have the finest docs and the finest hospitals and the finest nurses in the world, and we don't have quite enough of them but we have the finest. Everybody also agrees, I got from this morning but I think we had before, that Senator Coburn is right that we waste a heck of a lot of money and that somewhere around a third of all the dollars we spend on Medicare is -- goes for nothing useful.
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The third thing it seems -- I assume we can all agree on is that over the last decade costs have doubled for health care in America -- costs have doubled for government-provided health care, but everybody's health care. And that that meant that right now everybody knows that that wrecks budgets, it wrecks state budget, it wrecks family budgets, it wrecks federal budgets. Every 35 cents of every dollar spent on health care is spent by the federal government or the state governments for Medicare and Medicaid -- 35 cents on the dollar. That doesn't count veterans and other things, just those two. And so -- and what's happened is -- on the dollar, on every health care dollar.
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And so we're facing, all of us around this table, Democrat and Republicans, are facing the fact that there's $919 billion now we're spending on Medicare and the federal portion of Medicaid, and that if things -- I don't see any firewall is going to keep costs from doubling again, we're going to be talking about in the year 2019 we're going to be spending $1.7 trillion if we don't do something to bend that curve.
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Again, we can argue on the margins, but the fact is it's not just CBO that said this -- you had the Business Roundtable/Hewitt study that shows that the Senate plan slows growth by 15 to 20 percent and that business costs per employee by the year 2019 would be $3,000 less per employee. Again, it may be wrong -- it may be wrong-exact amount, it may be $3,800, it may be $2,200 -- but it cuts costs. And so it seems to me that there is -- and I might add, that in the process here, it wasn't part of the -- specifically part of a long-term debt debate, but, you know, as has been pointed out here, we're not cutting Medicare benefits in this; we're trying to eliminate the third of the problem that's a waste.
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And as Senator Enzi, who I have an inordinate amount of respect for, points out, he said it'd be nice if we put some of these savings back into Medicare. Well, the fact is we do. We closed the prescription drug doughnut hole. We provide for preventative care for seniors because they don't have now without a co-pay. And we also -- it's everyone -- I think most every major study agrees that it's going to extend the life of Medicare trust fund, and it changes -- these changes, the actuarial group pointed out, would save about $200 on a premium per Medicare recipient out there, the people who are paying.
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So look -- and the source of how we do this is getting rid of waste, making sure that we don't overpay insurance companies for Medicare Advantage. I want to remind everybody about Medicare Advantage, because some of us around here -- probably all of us around this table were here when it got put in. What was the rationale for Medicare Advantage? The rationale for Medicare Advantage a decade ago was that private insurers could provide insurance -- better insurance -- cheaper than the government can do it. They can do it better.
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And , we can argue, which we will, about whether or not the way you and I want to go after dealing with the long-term debt, whether commissions make sense, whether or not we're ever going to deal with -- this is a big entitlement, this is a big entitlement. It's a big entitlement. Medicare -- it exists. We've got to figure out how to keep it from bankrupting the country without denying seniors what they're entitled to in a nation like ours: decent health care that provides for their needs.
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REPRESENTATIVE RYAN: Look, we agree on the problem here, and the problem is health inflation is driving us off of a fiscal cliff. , you said health care reform is budget reform. You're right. We agree with that. Medicare right now has a $38 trillion unfunded liability. That's $38 trillion in empty promises to my parents' generation, our generation, our kids' generation. Medicaid is growing at 21 percent this year. It's suffocating state's budgets. It's adding trillions in obligations that we have no means to pay for it.
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Now, what do I mean when I say that? Well, first off, the bill has 10 years of tax increases, about half a trillion dollars, with 10 years of Medicare cuts, about half a trillion dollars, to pay for six years of spending. Now, what's the true 10-year cost of this bill in 10 years? That's $2.3 trillion.
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Now, when you take a look at what this does, it is -- according to the chief actuary of Medicare, he's saying as much of 20 percent of Medicare's providers will either go out of business or will have to stop seeing Medicare beneficiaries. Millions of seniors who are on -- who have chosen Medicare Advantage will lose the coverage that they now enjoy. You can't say that you're using this money to either extend Medicare solvency and also offset the cost of this new program. That's double-counting.
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And so when you take a look at all of this, it just doesn't add up. And so let's just -- I'll finish with the cost-curve. Are we bending the cost curve down or are we bending the cost curve up? Well, if you look at your own chief actuary at Medicare, we're bending it up. He’s claiming that we're going up $222 billion -- adding more to the unsustainable fiscal situation we have.
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First question I have is whether your side thinks Medicare Advantage is working well, because I think it’s important just to point out that -- when we keep on talking about cuts in Medicare, what we're really talking about is what Joe alluded to, which is a decision was made a while back to set up a system in which Medicare costs, let’s say, a dollar under the government program that 80 percent of people still use and are perfectly satisfied with and there’s no showing that it’s not working for them. We said we’d give it to private insurers and we’d give them a bonus of a $1.15 for every dollar in the normal plan. And it turns out that people aren’t healthier because of that extra $15 -- or 15 cents. It’s estimated that it’s costing us about $180 billion over 10 years and, say, $18 billion a year.
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And essentially what my proposal would do, and what the House and Senate proposals would do, would say, instead of having the insurance companies get that money, let’s take that money -- the savings are between $400 billion and $500 billion a year -- and let’s devote some of that money to closing the doughnut hole, which has already been talked about. Seniors who need more prescription drugs than Medicare currently is willing to pay for hit this gap where suddenly they’ve got to use it out of pocket, and they just stop taking the drugs, or they break them in half, or what have you. Let’s fill that. That costs around $30 billion a year, or $300 billion. And let’s make some other changes that would result in actually the 80 percent of seniors who aren’t in Medicare Advantage getting a better deal.
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So we can address some of the broader issues, but I just want to focus on Medicare Advantage because I haven’t seen an independent analyst look at this and say seniors are healthier for it or taxpayers are better off for it. That's what we're talking about reforming. We're not talking about cutting benefits under the Medicare program as is required under law. What we're talking about is Medicare Advantage.
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And it may be that some people here think that it’s working. I know that there are some Republicans who are sitting at this table who don't think it’s working. You can argue and say, okay, let’s not do Medicare Advantage and let’s not close the doughnut hole, for example, or there may be other ways you want to spend that money. But I just want to establish whether we've got some agreement that the Medicare Advantage program, which is what we are proposing to reform, is actually not a good deal for taxpayers or for seniors, and certainly not a good deal for the 80 percent of seniors who aren’t in Medicare Advantage, because, by the way, they’re paying an extra premium of about 90 bucks a year to subsidize the 20 percent who are in Medicare Advantage.
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SENATOR McCAIN: I'd just make one comment. Why in the world then would we carve out 800,000 people in Florida that would not have their Medicare Advantage cut? Now, I proposed an amendment on the floor to say everybody will be treated the same. , why should we carve out 800,000 people because they live in Florida to keep the Medicare Advantage program and then want to do away with it?
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SENATOR COBURN: You know, the assumption -- I think it’s important for the American people to hear we have Medicare Part D, except no senior in this country ever paid a tax dollar for it. And we're talking about filling a doughnut hole on a program that they’re already benefiting from that's going to leave $11 trillion in debt for our children. I'm not sure the seniors want us to leave more debt for their children to fill a doughnut hole.
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And when we talk about filling the doughnut hole by taking away from people who can't afford to buy a supplemental policy, that's where Medicare Part A helps poor people in Oklahoma, is they get to buy Medicare Part C -- we never call it Part C, but that's what it is -- and they don't have to buy a supplemental policy. So consequently, they get lots of the benefits that other people who have better buying power in Medicare with a supplemental policy. So it's a tradeoff of whether or not we say, where are we going to give the benefits. What we really should be doing is saying, we're broke, Medicare is broke; we're working and struggling together to get there. Let's not add new benefits anywhere, and let's make sure the benefits that we have today get applied more equitably.
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Well, I think that's a legitimate point. I would just point out that 80 percent of seniors are helping to pay in extra premiums for the 20 percent who are in this Medicare Advantage. And it's not means-tested, so it's not as if the people who are in Medicare Advantage are somehow the poor people who can't afford supplementals. It's pretty random. And what we also know is, and I just want to point this out, Tom, $180 billion of it is going to insurance companies. It's not going to seniors. It's going to insurance companies, including big insurance company profits -- without any appreciable improvement in health care benefits. That's not a good way for us to spend money.
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But the fact of the matter is, is that that was costly. And we do have to deal with that. On the other hand, that -- the problem I don't think is, is that we gave seniors prescription drug benefits. I think the problem is, is that we didn't pay for it. And we should try to find a way to pay for it. Taking some of that money out of Medicare Advantage and putting it into that doughnut hole does pay for it.
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Now, you're right. All the discussion makes it clear it wasn't easy. There are going to be some savings that we extract out of Medicare. What we do do in these bills is try to make the point that as we reduce the deficit, we're not going to put the onus, the burden of those cuts on seniors who receive Medicare. We're asking the providers to stop, as some of my colleagues in the Senate said, over-utilizing or over-spending in services, so that we don't see someone having four different X-rays for chest pain.
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And so what we're trying to do is figure out the ways to reduce the costs without impacting benefits. In fact, that's how in these two bills that the Senate and House passed, we were actually able to close the doughnut hole for prescription drug coverage in Medicare and still extract, according to the CBO, over $100 billion in savings.
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So, , I would just say the thing that I would love for us to get into the details of, in terms of those deficit reductions that are made is the fact that we do it while putting the brakes on Medicare overpayments that went to insurance companies, which were getting reimbursed at greater levels than were doctors and hospitals that relied on a traditional Medicare fee for service, to provide services to our seniors.
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SENATOR GRASSLEY: First of all, to clarify something, if anybody says that Medicare Advantage is a subsidy going to insurance companies, let me say what the statute says. The statute says that 75 -- with a big differential where it goes -- 75 percent goes to beneficiaries and benefits and 25 percent to the federal government.
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"The key point is that the savings to the health insurance trust fund under" the bill "would be received by the government only once, so they cannot be set aside to pay for future Medicare spending and, at the same time, pay for current spending on other parts of the legislation." Then skip a couple sentences and say: "To describe the full amount of the HI Trust Fund savings as both" -- with emphasis upon "both" -- "improving the government's ability to pay future Medicare benefits and financing new spending outside of Medicare would essentially double-count a large share of those savings and thus overstate the improvement in the government's fiscal position."
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If you're going to put 14 -- I don't know whether it was 14 or 18 million people under this bill -- into Medicaid -- Medicaid pays about, in my state, I think about 60-some percent. Medicare pays 80 percent of cost. Doctors don't take Medicaid. So you're going to promise 14 to 18 million people in Medicaid that they’re going to be covered. But if you don't have doctors to service them, isn’t that a little bit intellectually dishonest, to promise something that you can't deliver on?
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And so there are these things in this bill -- Medicare, Medicaid cuts that -- I don't see any future Congress having any more guts than we do to close a rural hospital. So I think that you got to take into consideration -- you’ve got to take into consideration the consequences of the acts or the unproven promises of cuts that aren’t going to materialize. That's just the way I see it.
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Now, when I say that Medicare Advantage is not a useful way for us to spend tax dollars to provide health care to seniors, at least the way it’s currently structured, as I said, that's not a Democratic idea. I mean, there are a whole bunch of Republican commentators and some of the folks who’ve sat around this table before who suggested that that's probably right.
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You can make an argument that whatever savings we get out of Medicare Advantage should not go to filling the doughnut hole, for example. That's a legitimate argument. You can make an argument that it should go just to deficit reduction. Those are all legitimate arguments. But my point is that the savings that are obtained here are from a program in which insurance companies are making a lot of money but seniors who are in these kinds of programs are not better off, and the 80 percent of the people who are [not] in these programs are paying an extra 90 bucks a year to subsidize the folks who are in them. And that just doesn’t seem like a good deal for them or for the taxpayer.
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What we all know that is true is the biggest unfunded liability of the United States is Medicare. What we all know is true, as the trustees have told us, Medicare is going to go broke in eight years. So the idea that we don't have to do anything about Medicare is utterly disconnected from reality. The idea that we don't have to find savings in Medicare is an admission that we are headed for a fiscal cliff that we're going to go right over. And if we really want to endanger the benefits to people who are getting Medicare, the best way to do that is to do nothing, because if we do nothing, we will guarantee that Medicare goes broke.
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First thing is we've just talked -- we've heard from the two budget directors about our fiscal condition. We have Medicare that's going broke. We have Social Security that's going broke. We have Medicaid that is bankrupting not only the federal government, but all the states. And yet, here we are having a conversation about creating a new entitlement program that will bankrupt our country. And it will bankrupt our country. It's not that we can't do health insurance reform to help bring down costs, to help save the system. This bill -- this 2,700-page bill will bankrupt our country.
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Secondly, we've got $500 billion worth of Medicare cuts here. I agree with Kent Conrad. We need to deal with the problem of Medicare. But if we're going to deal with the problem with Medicare and find savings in Medicare, why don't we use it to extend the life of the Medicare program as opposed to spending that $500 billion, creating a new entitlement program?
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But it's not just, , the taxes or the Medicare cuts. You've got -- you've got the individual mandate in here, which I think is unwise and I do believe is unconstitutional. You've got an employer mandate in here that says that employers, you've got to provide health insurance to the American people or you're going to pay this tax. It's going to drive up the cost of employment at a time when we have over 10 percent, or near 10 percent, unemployment in America.
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Paul Ryan is right again and Tom Coburn is right when they point out that we're probably wasting a third of medical spending. Medicare alone is $37 trillion in the hole. And that means for all the folks who want to talk tough and not vote tough -- that's not good enough. It means that for all the folks who want to do this next year or next decade or leave it to their successor -- that's not good enough.
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So, , I'm thankful you appointed a presidential fiscal responsibility commission with Alan Simpson and Erskine Bowles, to try to force us as a Congress and force the nation to address these fundamental problems. Because if you love Medicare, you need to act to save it fast. Every day matters.
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A report will come out issued by the Treasury Department -- it's come out every year; it will come out in the next few days -- it's the only report that uses real accounting to describe America's fiscal problems, and the news is not pretty. It will reaffirm what's been discussed here about Medicare and Medicaid and other vital American programs being deeply in the hole. And the opportunity of cost for delay is extraordinary.
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Because the reason we have a Medicare Advantage program, , as you know, is in 2003 when the other party was completely in charge of everything here, we passed a program that as has been pointed out was almost completely unfunded and added $8 trillion in one bill to our children and grandchildren. Now, these benefits, if offered, should be paid for.
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So this is a challenge for everybody in both parties because nobody's hands are clean in this. But let's have a new day, a new beginning -- I think we could do this. And this bill is a great place to start, because if you don't think this bill reduces the deficit enough according to CBO, vote for more savings. If you want to reform Medicare some more, vote for it -- don't just talk a good game.
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And most worried of all are the seniors, when you go to the senior centers, because they know there’s going to be $500 billion taken away from those who depend upon Medicare for their health care, and it’s not just Medicare Advantage. It’s hospitals; it’s the doctors; it’s the nursing homes; it’s home health, which is a lifeline for people that are home alone; it's hospice, for people in their final days of life. That's all going to be cut. That's why the seniors are most concerned.
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But to put 15 million more people on Medicaid, a program where many doctors in the country do not see them, as Senator Grassley said -- you know, you say, how are you going to help those folks? And, , when I talk to doctors, they say, I have a way: Put all the doctors who take care of Medicaid patients under the Federal Torts Claim Act. That will help them, because they’re not getting paid enough to see the patients. But if Medicare -- if they accept those patients and then their liability insurance is covered under the Federal Tort Claims Act, I think you’d have a lot more participation in that program.
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REPRESENTATIVE WAXMAN: , I just wonder if some of our Republican friends would like to have seniors on Medicare have catastrophic coverage only. I'd say to the seniors in this country, and we've heard mention of them being the people who are worried about this Medicare -- this health care bill -- they ought to worry if we don't do something. Because not only will we hear ideas of putting them on catastrophic coverage only, because that will save a lot of money -- Paul Ryan has a proposal right now to say that Medicare recipients in the future ought to have just a little voucher, and then they can shop for their own insurance. They could be prudent shoppers.
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We have single adults, a lot of them not very healthy, dealing with chronic conditions, parents and families living on low incomes. They need help from Medicaid. We have to hold down the cost by bringing everybody into the system. Now, in Medicare, what does our bill do? It protects the solvency of the program for an additional seven to nine years. For Medicare, we close the doughnut hole, which means that when seniors have to pay for those prescription drugs, they don't have to do it all on their own.
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This bill is good for people on Medicare and if we don't get this passed they're going to get squeezed like crazy. This bill is good for the American working people. This bill is good for our health care system. And for us to take the Republican proposal -- we cover instead of 30 million people, 3 million; we wouldn't hold down the deficit a bit; we would still have all those preexisting conditions that would keep people from getting their insurance coverage. Maybe if people go and pretend to be patients we could stop some of those false claims, but I'm sure those false claims happen in the private insurance market and not just the public insurance market.
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But not only are we covering more people, we're doing innovative ways to deliver the care that will make it less costly. And as we develop innovative ways to deliver care, especially with chronic care, that will hold down the costs of care and those ideas would be picked up by the private sector. They always follow what Medicare does and then they adopt it because they want to hold down costs.
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So you can't solve any problem -- insurance reform, holding down costs, protecting Medicare, dealing with the deficit -- unless you deal with it all. And , you're not going to be able to do this piecemeal and I have doubts about whether the Republicans are going to help you because I haven't heard a lot of willingness to come and work with you now or did I hear it a year ago -- I hope I'm wrong.
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REPRESENTATIVE ROSKAM: Yes. I would put a brighter light on that and say it's entitlement expansion. Think about what we're doing. The CBO when they wrote to Harry Reid -- wrote to Senator Reid a couple of months ago, they said, look, there's about 15 million people that are going to be put on Medicaid. And Medicaid is a house of cards. Medicaid is not something that is serving the public very well.
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Governor Brian Schweitzer of Montana said -- let me give you a quick quote -- "One of the least effective programs in terms of health care in the history of the country is called Medicaid. About 20 percent of America is on a Medicaid program and they would like to shift" -- "they" meaning Washington -- "would like to shift it and grow it to somewhere around 25 or 30 percent."
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Look, the foundation of the expansion is Medicaid. And in my view, and I think the view of folks in my district and I think many, many people across America, it is a flawed foundation. And we can do much, much better. A Republican proposal that's out there would reduce the number of uninsured by 3 million people.
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I should point out this one issue about Medicaid that I think that's important. Most of the people we'd like to be in the exchange and giving them subsidies. And I think over time (inaudible) see as an evolution, if you created a large enough pool, where people could purchase it through an exchange the same way that members of Congress do.
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The problem we've got right now is that very poor people, they've got coverage through Medicaid. And it's somewhat flawed. There are problems with doctor reimbursements, there are problems long-term in terms of solvency both for the state and the federal level, so all those things need to be fixed. But the fact of the matter is if their kid gets sick, they can go to a doctor.
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Now, for those 15 million people who've got nothing, I promise you they would say to themselves having some coverage through Medicaid is a pretty good deal. I'd prefer to have them in an exchange where over time we've got everybody in a pool, similar to the pool that members of Congress enjoyed. But that's not the situation that we have right now. I just want to remind everybody though that the group that is being left out, because you threw out the word "welfare," which is, you know, one that obviously most American people -- they don't want to be part of welfare -- the fact of the matter is, is that very poor people right now have coverage that is superior to what a lot of folks who make a little more money, are working very hard trying to support their families, do not.
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And rest assured, I can assure you that they won't be concerned with how big the bill was. I have no clue as to how big the Social Security bill was, how large, how many pages was in the Medicare bill. And I don't really think that someone sick in the emergency room is concerned about the size of the bill that we are trying to help them with.
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So we have addressed many of these issues in the bill. I think it's really important to note, though, and I want the record to show -- because two statements were made here that are not factual in relationship to these bills. My colleague, Mr. -- Leader Boehner, the law of the land is there is no public funding of abortion and there is no public funding of abortion in these bills. And I don't want our listeners or viewers to get the wrong impression from what you said. Mr. Camp -- Mr. Camp, you said that the Medicare cuts in this bill cut benefits for seniors; they do not. They do not.
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So this will take courage to do. Social Security was hard. Medicare was hard. Health care reform for all Americans -- insurance reform is hard. But we will get it done. And as we leave this debate I think that many of the differences that we have are complicated and they're legitimate. They're differences of opinion about the role of government and the rest. But I think it's really clear in one point that the American people understand very clearly, they understand that there should be an end to discrimination on the basis of preexisting conditions. The proposals that we have put forth end discrimination on the basis of preexisting conditions; the Republican bill does not.
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An interesting thing happened a couple of weeks ago, and that is a report came out that for the first time it turns out that more Americans are now getting their health care coverage from government than those that are getting it from the private sector. And you know what, that's without a bill from the Democrats or from President Obama. Has nothing to do with "Obamacare." It has to do with the fact that employers are shedding employees from health care plans. And more and more, folks, if they can, are trying to get into the Social Security system and the Medicare system earlier through disability or what have you, so that they can get some help.
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Now, it is absolutely true -- and I think this is important to get on the table, because we dance around this sometime -- in order to help the 30 million, that's going to cost some money. And the primary way we do it is to say that, for example, people who currently get all their income in capital gains and dividends, they don't pay a Medicare tax, even though the guy who cleans the building for them does on his salary or his wages.
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What we do say is, if you can afford to provide health insurance, you have more than 50 employees, meaning you're in the top 4 percent of businesses, and you're not providing coverage and you're forcing other businesses or other individuals to pick up the tab because your employees are either going to the Medicaid system or they're going to the emergency room -- we don't think that's fair. So we say, you've got to pony up some. It's not an employer mandate. It just says you've got to pay your fair share, because otherwise all of us have to pick up the tab. And that, by the way, contributes to the overall deficit that Medicaid is running.
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Now, the irony is that that's part of where we got attacked for a "government takeover" because what happened was when we set up the idea of a MedPAC, which is basically a panel of doctors and health care experts who would recommend ways to make the delivery system better so that we can squeeze out that one-third in Medicare and Medicaid that's wasted -- a Republican idea -- that was part of the ammunition you all used to say that the government is going to take away your health care.
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This reform is the right thing to do for our seniors. It makes Medicare stronger and more solvent, extending its life by almost a decade. And it’s the right thing to do for our future. It will reduce our deficit by more than $100 billion over the next decade, and more than $1 trillion in the decade after that.
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Now, for those of us who fought so hard for these reforms, and believe in them so deeply, I have to remind you our job is not finished. We’re going to have to see to it that these reforms are administered fairly and responsibly. And this includes rooting out waste and fraud and abuse in the system. That’s how we’ll extend the life of Medicare and bring down health care costs for families and businesses and governments. And in fact, it is through these reforms that we achieve the biggest reduction in our long-term deficits since the Balanced Budget Act of the 1990s.
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And this year, seniors who fall in the coverage gap known as the doughnut hole will start getting some help. They’ll receive $250 to help pay for prescriptions, and that will, over time, fill in the doughnut hole. And I want seniors to know, despite what some have said, these reforms will not cut your guaranteed benefits. In fact, under this law, Americans on Medicare will receive free preventive care without co-payments or deductibles. That begins this year.
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Remarks by the President on Health Insurance Reform, University of Iowa Field House, Iowa City, Iowa
This year, for the seniors who are in the audience, if you fall in the coverage gap known as the doughnut hole, you’re going to receive $250 to help pay for prescriptions, which will be the first step toward closing that doughnut hole, that gap completely. And I want seniors to know that despite what some have said, these reforms will not cut your guaranteed benefits. In fact, under this law, Americans on Medicare will receive free preventive care without co-payments and deductibles.
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Remarks by the President on Health Insurance Reform, University of Iowa Field House, Iowa City, Iowa
And when I came here three years ago, I told the story of when Lyndon Johnson stood with Harry Truman and signed Medicare into law. That wasn’t perfect either. I’m sure there was somebody who was dissatisfied with it at the time. And as he looked out over the crowd in Independence, Missouri, that day, he said, “History shapes men, but it is a necessary faith of leadership that men can shape history.”
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But I inherited a structural deficit that is going to get worse in the years to come because our population is getting older, health care costs have been going up faster than inflation, more people are on Social Security, more people are on Medicare, and we’ve had two wars that we’ve been fighting. If you combine all that plus the interest on that debt, if we don’t bring it under control we really are going to be burdening the next generation in a way that’s not acceptable.
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So as this debate unfolds, I just want everybody to pay attention to what folks are saying, because a lot of times politicians will tell you, I’m going to cut your taxes, I’m going to lower the deficit, I’m going to expand Medicare -- they’ll tell you, essentially they’ll tell you whatever it is they want you to hear. And you should ask every politician when they say that they’re going to balance the budget and deal with the deficit, what exactly are you going to cut? What spending are you willing to eliminate? Are you going to eliminate funding for sewers? Are you going to reduce the cost of Medicare?
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So we can eliminate all foreign aid, all earmarks, and we’d still have a huge problem, because most of our budget goes to Social Security, Medicare, Medicaid, defense spending. Those things account for about 70 percent of the budget. Everything else we do is only about 30 percent of the budget -- everything from national forests to the Agricultural Department to student loans. All that stuff is only -- is less than a third of our budget.
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As a result, the day I walked into this door -- the Oval Office -- the deficit stood at $1.3 trillion, with projected deficits of $8 trillion over the next 10 years. Partly, this was caused by the recession, which meant the government was taking in less while demanding -- while demand for assistance for those who had lost their jobs was far greater. Another contributor to our deficit has been the rising costs of health care. Each year, more tax dollars are devoted to Medicare and to Medicaid.
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Finally, I’ve proposed a freeze in government spending for three years. This won’t affect benefits through Medicare, Medicaid, or Social Security. And it will not affect national security, including benefits for veterans. But it will affect all other discretionary spending. My budget ends loopholes and tax giveaways for oil and gas companies and for the wealthiest 2 percent of Americans –- because we just can’t afford them. And I kept my promise to pass a health reform bill without adding a dime to the deficit. In fact, by attacking waste and fraud and promoting better care, reform is expected to bring down our deficits by more than $1 trillion over the next two decades.
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Then we had an agenda with respect to making sure that we made the health care system more efficient. And so even before we got into the health care bill, we invested in information technology so that when you go to the doctor, you don't have to take five tests. We’re just going to take one test, and then you’re going to e-mail the five tests to everybody else -- and by the way, you won’t get charged for five tests, or Medicaid or Medicare won’t get charged for five tests.
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Even if -- the financial crisis made it much worse, but even if we had not gone through this financial crisis, we’d still have to be dealing with these long-term deficit problems. They have to do with Medicaid; they have to do with Medicare; they have to do with Social Security. They have to do with a series of structural problems that are not unique to America. Some of it has to do with an aging population. And we’ve got to look at a tax system that is messy and unfair in a whole range of ways.
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And there have always been those who said no to these policies and these ideas. I mean, you look back on the history books. There were people who said that Social Security was socialism, said that Medicare was a government takeover. There were automakers who said that installing seat belts was unnecessary, unaffordable, and would ruin the auto industry. There were skeptics who thought that cleaning our water and our air would bankrupt our economy. Right here in Wisconsin -- if you look at the lake now and look at the lake, what it was like 30 years ago, 40 years ago. And there were people who said, well, there’s nothing we can do about all the sludge and drudge and whatever is going on in there.
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Our big problem is not the emergency steps we took last year. Our big problem is the fact that when you add in what’s happening with Medicare, what’s happening with Social Security, the population is aging -- when you add all those things in, if we don't change how we do business medium and long term, then that's going to be our big problem.
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Now, this is reform that finally prevents insurers from denying or dropping coverage because of an illness; reform that cuts taxes for small business owners who cover their employees, so they’re now getting a -- 35 percent of the premiums they’re paying for their employees they’re now getting a tax break for. It allows young adults to stay on their parents’ coverage until they’re 26. It lowers the price of prescription drugs for our seniors. It’s going to lower the cost of health care for every American. The actuaries just reported two weeks ago that this is going to extend the life of Medicare, making it more secure for the next generation.
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My campaign, you’ll recall, our slogan was, “Yes, we can.” Their slogan is, “No, we can’t.” On every item. On health care, how many times, Nancy, did we reach out to them and say, you know what, we are willing to work with you to come up with some sort of cooperative way to make sure that people aren’t prohibited from getting health care because of preexisting conditions and to take seriously how we’re going to cut costs in our health care system and strengthen Medicare and make sure that people aren’t having unnecessary tests when their results could just be emailed to doctors because of electronic medical records? All kinds of ideas that we kept on offering up, and, “No, we can’t.”
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If we did not deal with our health care system now, we were looking at the possibility that health care alone -- Medicare and Medicaid -- would consume all of our discretionary spending at the federal level -- all of it -- because of the direction that health care cost was going. If we didn’t tackle the education system now, then not only have we slipped already from first to 12th in college graduation rates, we might have slipped even further.
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And the final aspect of health reform that's important is, is that by changing the incentives for how doctors get paid under Medicare and under Medicaid, we’re actually encouraging doctors to become more efficient so that over time health care costs actually start leveling out a little bit instead of skyrocketing each and every year. Because everybody here who’s got health insurance, what’s been happening? Your premiums have been going up; co-payments, deductibles, all that stuff has been going up. So we’ve got to actually try to control the costs of it, and part of it is just a matter of making sure that we get a better bang for our health care dollar.
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And when I started working for this practice 25 years ago, we are now getting reimbursed one-third of what we got paid for -- I’m just going to pick cataract surgery -- yet our operating costs continue to go up. My boss is kind enough to provide health care costs entirely for all of his employees. How does he continue to do that when Medicare continues to reduce what they're paying, and there’s the threat of more cuts coming and the private insurance companies follow suit?
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Well, it’s a great question. And let me talk about Medicare generally. Medicare I think is one of the cornerstones of our social safety net. The basic idea is, you’ve been working all your life, you retire; just like you’ve got Social Security that you can count on, you’ve also got health care that you can count on and you’re not going to go bankrupt just because you get sick.
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But in the same way that Social Security has to be tweaked because the population is getting older, we’ve got to refresh and renew Medicare to make sure that it’s going to be there for the next generation, as well. And the key problems are not just that more people as they retire are going to be part of Medicare. The big problem is just health care inflation generally. The costs of health care keep on skyrocketing.
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And that’s part of what health care reform was all about. I’ll just give you a couple examples. One of the things that we were doing in Medicare was we were giving tens of billions of dollars of subsidies to insurance companies under the Medicare Advantage plan, even though that plan wasn’t shown to make seniors any healthier than regular old Medicare.
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So we said, all right, we’re not going to end Medicare Advantage, but we are going to have some competitive bidding and we’re going to force the insurance companies to show us, well, what exactly -- what value are you adding? How are you helping to make these seniors healthier? And if you’re not helping, then you shouldn’t be getting paid. We should be giving that money to the doctor and the nurse and the other people who are actually providing care, not the insurance companies.
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Well, there was a lot of hue and cry about this, but it was absolutely the right thing to do -- because now we just found out -- the actuaries for Medicare said the changes we’ve already made have extended the life of the Medicare trust fund for another 12 years -- which is, by the way, the longest it’s ever been extended as a consequence of a reform effort.
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Because there’s no doctor out there who doesn’t see Medicare as the $800 gorilla. If Medicare is saying you’ve got to improve your quality and efficiency, then they will because they’ve got a lot of Medicare patients. But they also have a lot of regular patients. So hospitals, doctors, everybody starts getting more efficient as Medicare gets more efficient. The key is making sure that we’re not just cutting benefits.
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And, frankly, this is an argument that I have with my friends in the Republican Party sometimes. One big change that some of them have advocated is to voucherize the Medicare system. You basically -- instead of once you have Medicare, you knowing that you can take that and go get care anywhere you want, we would just give you -- all right, here is whatever it is, $6,000 or $7,000 or whatever. You go shop and figure out what kind of best deal you can get.
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If we do that -- if we understand what’s at stake, and we step up to the plate and we realize that change is not a spectator sport and that no, it won’t come easy and you’re not going to get it all in one fell swoop, and you won’t even then get a hundred percent; if you remember that every bit of progress we’ve made from emancipation to women’s suffrage to civil rights to Social Security to Medicare -- each and every one of those steps were laborious and difficult, and there were people who were trying to block that progress and people who were saying that’s socialism and people who were saying this was undermining the country -- every step of the way -- there were people who were fighting it. But people didn’t lose heart. Instead, people stood up and they said, you know what, we’re just going to keep on pushing. We’re going to keep on fighting.
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I want to acknowledge our mayor, Dwight Jones. Thank you so much for being here. And of course, I’ve got to say thanks again to Ms. Shelton for being here. We are graced by your presence.
This is really a casual setting, so I hope that we just open it up for a good conversation about where the country is at, where it’s going, how folks are feeling down here in Richmond. I want to hear from you at least as much as you’re hearing from me.
I find this really useful to me because when you’re in Washington all the time and you’re in these battles, sometimes you’re in what’s called the bubble. And I’m always trying to do what I can to break out of it and be able to get back with folks and have a conversation.
What I want to do is -- what I want to do is just speak briefly about what’s going on in the economy, and then just open it up.
Obviously we’re going through a tough time. And these last two years have been as tough as any that we’ve seen in most of our lifetimes, except for Ms. Shelton. Because the truth is, is that the financial crisis that we experienced was the worst since the Great Depression. We lost about 4 million jobs in the six months before I was sworn into office. We lost 750,000 jobs the month I was sworn into office; 600,000 jobs the two months after I was sworn in. So before any of my economic policies were put into place, we had already lost most of the 8 million jobs that we ended up losing in this recession.
And my first job was to make sure that the banking system did not completely collapse, and to make sure that we didn’t dip into a second depression. And we’ve done that. The economy that was contracting is now growing. We’ve had eight straight months of private sector job growth. So we’re making some progress.
But the truth is, is that people were having a tough time even before the crisis hit. We had gone -- from 2001 to 2009, there was a period in which the average middle-class family lost 5 percent of their income -- 5 percent of their wages -- during that period. At the same time, the costs for health care and college tuitions were skyrocketing. It was the slowest period of job growth since World War II, from 2001 to 2000.
So middle-class families were generally having a very difficult time even before the crisis hit. And obviously the crisis just made things worse. And this is all at a time when we’ve got increased global competition. You’ve got countries like China and India and Brazil that are really moving. They’re educating their kids much more aggressively than they ever were. They are exporting much more than they ever were. And so we’re having to compete at levels that we didn’t have to compete before.
And so part of the reason I ran for President was because I felt it was very important for us to start grappling with some longstanding issues that we’ve been putting off for way too long.
We had to stop a health care system that was broken from bankrupting families and businesses and the federal government, so we initiated health reform so that we could start getting a better bang for our health care dollar.
And it’s estimated that we’ll end up saving over a trillion dollars because we make the system more efficient over time, even though we’re going to be insuring more people.
We had to re-regulate the financial system so we never have a system where we’ve got taxpayer bailouts again. And so we passed financial regulatory reform. We had to transform our education system. And one of the things I’m most proud of, although it hasn’t gotten some of the fanfare that some of these other issues have gotten, is we’ve initiated reforms across the country through a program called Race to the Top where we’re encouraging states to reform how they do business, emphasizing more math, emphasizing more science, making sure that we’ve got the very best teachers in the classroom, making sure that we’re focusing on low-performing schools -- because it’s unacceptable where you’ve got schools in which a third of the kids or half of the kids drop out, and even the kids who graduate aren’t graduating at grade level.
We use to be at the top in terms of math and science performance. Now our kids typically rank around 21st in science and 25th in math. That’s just not acceptable.
We used to have the highest proportion of college graduates in the country -- now we rank around 12th. And that’s going to affect how we can compete long term, so part of what we did was to shift tens of billions of dollars that were going to subsidies to financial services groups in the direct student loan program, give those dollars directly to students, and we’ve got millions more students who are now getting grants and cheaper student loans.
Now, the other thing that we had to do is we had to confront all these problems -- a financial crisis, people losing their jobs, small businesses not getting the financing they need to open or expand their businesses -- we had to all do this in the context of a really bad budget.
When Bill Clinton left office, we had a record surplus. We hadn’t had a surplus since World War II. And suddenly by the time I took office, we had a $1.3 trillion deficit. And this was a direct result of some policies that thought only about the present and didn’t think about the future.
So we had tax cuts, mostly for millionaires and billionaires, in 2001 and 2003 that weren’t paid for, and there weren’t the cuts to go with it. So that ballooned the deficit. Then we had two wars that weren’t paid for. That further ballooned the deficit. We had a prescription drug plan that was put into place that cost about $800 billion. That wasn’t paid for. So you add all those things up, by the time I got into office we already had a $1.3 trillion deficit and we had exploded the national debt.
So one of the challenges now that I’ve got, having stabilized the economy but we still need it to grow, we still need small businesses to get help, we still have to help people find work, we want to invest in research and development and technology -- we’ve got to do all that but we’ve also got to think, how are we going to get our budget under control over the long term.
And I was amused as I was driving in, there were some signs there that said “cut spending” -- which sounds plausible and I know your congressman here I think has strong ideas about what he says he wants to do. Last week, the Republicans put forward what they called a Pledge to America, which purported to say we’re going to cut your taxes and we’re also going to control spending and we’re going to somehow balance the budget. But when you actually looked at the numbers, it was hard to figure out how they all added up.
Now, I’m not a math teacher. But I know a little bit about math. They’re proposing about $4 trillion worth of tax cuts. About $700 billion of those tax cuts are for people who typically are millionaires and billionaires, and on average would get $100,000 in tax relief -- $700 billion that we don’t have, we’d have to borrow in order to provide these tax cuts. And 98 percent of Americans wouldn’t see any benefit from it.
And keep in mind that because we don’t have it, it would actually end up costing more than $700 billion, because we’d end up having -- since we’re borrowing it, we’d have to pay interest on it.
Now, just to give you some sense of how they are proposing to pay for this, they’re recommending a 20 percent cut in education spending. They are proposing essentially that we lower our support to students on student loans who want to go to college and grants for students who want to go to college, which would affect millions of students all across the country. They are proposing to roll back tax cuts that we had put in place during the Recovery Act that give 95 percent of working Americans tax relief.
So when you add it all up, essentially their proposal would drastically expand the deficit instead of shrinking it. Now, what they’ll say is, well, we’re going to have additional cuts. But they don’t specify what those cuts would be. And one of the things I’m here to tell you -- and then I want to sort of hear from you in terms of what your priorities are -- is I’ve got some very smart people working for me in my budget office. But they will tell me that one thing they can’t do is cut taxes for the wealthiest Americans by $700 billion, protect Social Security, protect Medicare, protect veterans funding, and balance the budget. They just can’t do it. The math doesn’t add up.
And so part of the challenge, I think, particularly if we’re thinking about the next generation, is making sure, as we move forward over the next couple of years, that we have an honest and serious conversation about how we’re going to get control of our budget. That is going to be a big challenge.
And the choice that you make in this election I think should be based on facts and making sure that whatever politicians are saying, that they can back it up with some actual figures and numbers that work.
I know that here in Virginia and all across the country, there are a lot of people who are genuinely, legitimately and sincerely concerned about the deficit and the debt. And no matter how much I say to them, well, this really has to do with problems that we inherited, it’s not because of the emergency measures we took last year, their attitude is, okay, but it’s still your job to solve it.
And I think that’s a legitimate point of view. But if you are genuinely and sincerely concerned about debt and deficits, then you have to understand the other side just is not presenting a serious idea of how to balance our budgets and put us on a stable fiscal footing.
What they’re selling is the same thing that they sold back in 2000 and 2001, which is you could slash taxes, including for the wealthiest Americans, and somehow that’s not going to affect anything. And that’s just not how it works. It’s not how it works in your household, right? So it’s not going to work for the country, either. And we’ve got to have an honest conversation about it. All right?
So, with that -- I know it’s a little warm in here, but if anybody wants to pull out their fans, feel free. If gentlemen want to take off their jackets, I’m sure nobody will mind. And let’s just open it up for questions and comments.
And as I said, I don’t -- it doesn’t have to be a question. You can give me a suggestion. If you’ve got good ideas, I need to hear them.
And we’ll start with this gentleman. Please introduce yourself.
Q Thanks, . I manage a small business. We serve ESOP companies -- hundreds of ESOP companies. And I’ve just found it extraordinary in visiting many of these ESOP companies with the culture that they’ve developed, and the productivity and competitiveness, and it’s a good model for keeping jobs here in the U.S.
You want to just explain to everybody what ESOPs are? These are employee-owned businesses -- I just want to make sure everybody understands.
Q Exactly, exactly. And I wanted to just -- the ESOP laws that have been in place for over 35 years have allowed employee owners to share a piece of the action of the business while not having to get in their -- dig in their own pockets for that, so it’s helped them get to retirement, which is tough these days long term.
My main question is just, with your good initiatives -- you’re for focusing on small business in the new act -- will you consider encouraging or expanding the law to help more small privately held companies look to the ESOP model? Thank you.
I would absolutely be interested in taking a look at it. The idea behind these ESOPs is that if employees have a piece of the action -- they’re essentially shareholders in these companies -- then you are aligning the interests of workers with the interests of the company as a whole.
Now, what that means is, is that when a company has a tough time, workers have to take a hit because they’re owners, essentially. On the other hand, when things are going well, they’re getting a share of the profits. And so theoretically, at least, it’s something that can help grow companies, because the workers feel like they’re working for themselves, and they’re putting more of themselves into their job each and every day.
I think that it’s something that can be encouraged. I have not seen specific proposals that are out there legislatively, but I’m sure you can share them with me.
Q Yes, there actually has been a lot of strong research recently.
Good. So I’ll be interested in taking a look at that stuff.
Let me say something more generally about small businesses. As part of the Recovery Act, we actually cut taxes for small businesses eight different ways. And I make mention of that because -- and then I just signed a bill this week on Monday, before I went on the road, that further cuts taxes for small businesses, including eliminating capital gains for investments in startup businesses, making sure that small businesses can invest in inventory or in plant and equipment now and be able to take these deductions now so it gives them an incentive to start investing earlier on.
We have provided tax breaks for small companies who are providing health insurance to their employees because typically it’s -- small businesses are the hardest folks to be able to provide health insurance because they -- they’re not part of a big pool. And what we’ve said is, let’s give them a tax break -- they can get up to a third of the premiums that they’re paying for their employees as a credit so that it’s just cheaper for them to provide health insurance.
So I wanted to point that out because somehow there’s a myth out there I think that we have raised taxes on small businesses. If you listened to the other side, you’d be thinking, boy, Obama is just trying to crush small businesses with these high taxes. We’ve lowered taxes on small businesses over the last two years. In fact, we’ve lowered taxes on just about everybody over these last two years. And -- but when you look at the polls, there’s a decent number of folks who still think that somehow their taxes have gone up instead of gone down.
And that debate is going to be coming to a head now. I mentioned this $700 billion in tax cuts that they want to provide to the top 2 percent. We’re in danger of seeing lapse tax breaks that everybody here probably is getting on their paychecks every two weeks. A lot of people didn’t notice that they were getting a tax break because we did it incrementally, paycheck -- it wasn’t in one lump sum; it was like each paycheck you had a little bit less taken out in taxes. That’s going to lapse if we don’t renew it and the proposal -- the Republicans are proposing to eliminate it.
So this is an example of where we’ve got to know what the facts are in order to make sure that the broadest base of people are getting the broadest base of help.
Yes, sir.
Q President Obama, my name is Dan Ream. I’m a librarian at Virginia Commonwealth University here in Richmond, the state’s largest public university.
We love libraries.
Q We thank you. Libraries love the love. VCU, where I work, has benefited tremendously from your stimulus program. In fact, there are countless librarians, faculty and staff members there who have their jobs today thanks to the stimulus program. So thank you for that. It’s very important to us.
Thank you. I appreciate it.
Q My son, by the way, is a student at Davidson College. He is a swim coach here at the Southampton swim team, and he is in Madrid today. And he said, this is the most exciting thing that has ever happened on my street and I’m out of the country. So, Dad and Mom, would you ask my question?
Okay, go ahead.
Q May I?
Although I have to say being in Madrid is not that bad.
Q It’s not.
I mean, that’s a pretty good deal.
Q He loves it. Anyway, this is from Paul Ream, who is probably watching this on TV somewhere in Madrid.
Good.
Q His question is this: In this public discussion of the economic crisis and in the nation’s political discourse in general, I feel like Democrats have lost hold of the populist attitude and rhetoric that truly embody the party’s foundations.
Our swim team community here at Southampton provides a wonderful example of that attitude. Like politics, it’s a sport that focuses on individual performance. But what leads to success is a team-oriented, sportsmanlike approach. Respect for each other and respect for one’s opponents are key to the success. And I think those are important elements of the Democratic Party.
With that in mind, what are the ways we can change the dialogue to really emphasis this? Doing what’s best for the people is not characterized by doing what’s best for some individuals at the cost of others, which is the interpretation of some citizens today, especially with regard to the economy. How can we reframe the debate and really highlight the respectful and sportsmanlike nature of policies directed at benefiting the American people as a whole?
Well, that’s a pretty good question.
Q It’s from Paul Ream.
I like that. And you read it very well, too. So I’m sure he’ll --
Q Thank you. I have my own question, too, if we have time.
-- he’ll be very happy with your presentation.
Q Thank you.
Look, I think he makes a terrific point, and I’ve tried to make this point in most of my speeches when I talk about the economy. Part of what makes America the greatest country on earth and what has made our economy the envy of the world for the last hundred years is that we combine this incredible sense of individual freedom and entrepreneurship and the profit motive and dynamic capitalism so that if you’ve got a good idea, if you want to start a whitewater rafting company or you want to open a new restaurant because you’ve got this great recipe, you can do it. And you don’t have to go through a lot of bureaucracy, and you don’t have to pay a bribe. And that is the wellspring of our wealth and how well we do.
Now, at the same time, part of what our strength has been is what we do in concert, in common, just like a team. Dwight Eisenhower built the Interstate Highway System. Nobody individually could build a highway system. So we pool our resources together to build the highway system, and that then provides opportunity and a platform for businesses to grow and prosper.
The Internet was direct -- a direct result of a investment in research and science, through the government, that created the initial platforms that evolved into the Internet. And now there are all kinds of Internet companies that are starting, and you’ve got Facebook, and -- a lot of wealth has been generated, a lot of jobs have been created. But those individual initiatives couldn’t have happened if we hadn’t made that initial investment, through our government, in the resources and development, because there was no sure thing. It wasn’t like there was money to be made tooling around with these computers, trying to figure out how to communicate with each other more efficiently.
Clean energy is a good example as we move forward. Right now all of us would benefit if we had a cleaner, more efficient energy policy in this country. But nobody individually has that much incentive to do it. The oil companies -- they’ve got tons of money, but they’re making tons of money by selling oil. And the more oil they sell, the better off they’re going to be. So they’re not making huge investments in solar or wind or biodiesel.
A lot of people I think would benefit from retrofitting their homes or their buildings or hospitals. But it turns out that even though they’ll recoup their money, they might not be able to afford up front to make the investment without some help. And so they don’t do it, which means that we probably use 30 percent more energy because we’ve got buildings that are poorly insulated or poorly designed. And it would make sense for us to help small businesses and individuals make that investment.
If we gave them some loans on the front end, then all of us would benefit, and individually each of us would benefit. But the point is, is that Abraham Lincoln, the first Republican President, I think had it right. He basically said, we should never do things for people that they can do for themselves. But government’s role is to do what people can’t do better by themselves -- whether it’s our collective defense, whether it’s our firefighters, whether it’s our libraries, whether it is our infrastructure or investments in research and development.
And I think that that’s part of what the choice we’re making in this election and over the next several years is going to be: Are we still able to make those decisions together about how to move the country forward, or are we each going to just be looking out for ourselves, in which case, what’s going to happen is, is that if you’ve got enough money that you an afford to live in a gated community, then you don’t have to worry about police. If you can afford to have private schools, then you don’t have to worry about public schools.
But over time what happens is, as a group, we’re going to get poorer, even though some people do very well. All right?
Q Thank you.
Thank you. Yes.
Q Hello, . I’m a teacher at Albert Hill Middle.
What do you teach?
Q I teach civics. I teach eighth graders.
This is a good thing. You’ll be able to tell your class tomorrow that you --
Q Yes. Actually, I have some questions --
Oh, no --
Q -- that I would love to give to you from my students.
All right. I will try to respond to some of them.
Q Okay. Especially if you can send a picture and some autographs to them.
Okay. All right, sounds good.
Q I’m from a education family -- my mother is a teacher, my husband is a teacher also for the city at Thomas Jefferson High School, and I’m a mother of three. And the main focus has been on the middle class and the poor, but what about working-class families? They seem to be on the fringe, not able to get a lot of these incentives and other programs of help. Childcare is a major issue. Education for our children. Proper nutrition -- being able to afford proper food is an issue for working families. What is the government going to do for that?
And then I also have another question, if I could ask about the education reforms that you’re going to do. A lot of my students are concerned about those education reforms and they would like some explanations about how is an extended day and how is going to school for an extra month going to make them more competitive in the global world.
Well, let me take the second question first, because I want to be clear -- I haven’t passed a law that everybody has got to go to school for an extra month. I was asked about this on the Today Show and I made the observation, which is absolutely true, that most of our competitors, most other advanced countries, have their kids go to school about a month longer every year than we do. The three-month summer is a direct result of public schools having been started when most of us still lived on farms, and so you took three months off because you had to help on the harvest.
But there’s nothing written in stone that says we’ve got to have the organization, the school year the way we have it. There is a -- studies show that kids lose something during that three-month period. Poorer kids lose more during that three-month period because they may not have as many books at home, supplemental activities. They may not be going to the museum or on field trips during the summer. And so they tend to lose more of what they’ve learned. And that’s part of what contributes probably to the achievement gap and them falling behind.
So I think it’s important for states to look at what they’re doing and finding ways that potentially kids don’t lose ground compared to kids in China or South Korea or other parts of the country.
Now, it’s going to cost some money if we decide to make the school year longer because teachers and custodial workers, that means that they’re in -- they’re working even longer than they’re already working. And so we’d have to make some choices budgetarily.
Keep in mind, though, that this is why the choice in this election is so important. I’ll give you an example. During just a couple months ago, we had a debate in the House of Representatives. The Democrats decided to -- because they were worried about states laying off teachers, decided to close a corporate tax loophole that actually incentivized investment overseas instead of investment here in the United States. So they decided to close one of these loopholes.
And that saved enough money to send several billions of dollars to the states so that they could keep their workforce intact. This is at a time, by the way, where there are states like Hawaii that had gone down to a four-day a week school week because they couldn’t afford to pay teachers for the fifth day.
Now, I promise you we can’t compete against other countries if our kids are going to school four days a week. We can’t compete if teachers are being laid off and classrooms get more crowded and teachers are having to dig more into their pockets for basic supplies in their classroom.
But when we had this proposal, we could not get any Republicans to support this position. And they had the usual rhetoric about Obama’s trying to kill business and raise taxes, et cetera. No, we’re just trying to make sure that we’re making investments in the long term for our kids, which will be good for business -- because businesses in this country aren’t going to succeed if we don’t have engineers and scientists developing new products and so forth.
So I don’t want to lose the votes of all your kids by saying that they need to be in school another month. I do think that we have to have a debate, state by state in local school districts, about making sure what we can do to ensure our kids keep up.
Now, in terms of the issue that you raised about sort of middle class versus poor versus working class, my attitude is that everybody who is working hard, who’s meeting their responsibilities, trying to raise a family, trying to send their kids to college, trying to retire with dignity and respect, trying to get health care -- those folks -- that’s what it means to be middle class in this country.
This is who Michelle and I came from. I mean, I was raised by a single mom. I lived most of my formative years in an apartment that probably was smaller than this room right here, living with my grandparents, and sometimes when my mother was -- when I was living with her, it definitely was an apartment smaller than this.
Michelle, her dad worked as a blue-collar worker for the City of Chicago. And he had multiple sclerosis, but he never missed a day of work. He never graduated from college. Her mom never graduated from college. And yet somehow they were able to -- both of our families were able to give us the best education in the world, and we grew up to be President and First Lady.
Now, that’s what the American Dream is about. So I don’t make a distinction between middle class, working class, poor folks who are trying to get into the middle class. As long as you’re working hard, trying to meet your responsibilities, trying to better yourself and your family, that’s what the American Dream is about.
All the policies that we’ve put in place have been designed to help those folks. So if you are a working family, whether you’re making -- your family income is $100,000 a year or $50,000 a year or $30,000 a year, if you’ve got a kid with a preexisting condition and you can’t get health insurance, because of health reform that child is going to be able to get insurance. And if you can’t afford it because your boss doesn’t offer health insurance, you’re going to be able to be part of a big pool and buy the same health insurance that members of Congress get.
Regardless of where you fall on that income spectrum, if you’ve got a credit card, then the new financial reform bill says credit card companies can’t jack up your interest rates without letting you know. And they can’t increase your interest rates on your existing balances. They can’t run a bait-and-switch and say you’re on -- this is a zero percent interest credit card, then you get $5,000 on your credit card, and you get a letter saying suddenly interest is 29 percent. Can’t do that.
Mortgage brokers can’t steer you into interest rates on buying a house that are more expensive than what you could have gotten because they’re getting a kickback.
A lot of the consumer protections that we put in place, they affect everybody out here.
The student loan programs that we put into place, that impacts families across the board, because, again, whether you’re making $100,000 or $50,000 or $30,000, if you’re trying to send your kid to college, they’re going to probably have to take out some debt. And what we did to take billions of dollars that were going to banks in unjustified subsidies and us saying, no, we’re going to give that money directly to young people in the form of more grants or cheaper loans, capping how much they’re going to have to repay in college to 10 percent of their income -- that helps everybody.
So I think that that -- what will make our economy grow is if this beating heart of our economy, middle-class folks who are working hard, pushing to improve their lot in life, if they’re given some hands up to help them get to where they want to go, then I think our economy as a whole will do well.
Okay. Yes, sir.
Q I’d like to ask you about a local and regional issue -- the James River that runs through Richmond here and the Chesapeake Bay into which it goes. The Perrys depend on the James River to make a living with their outfitting company. Your EPA has very thankfully initiated a wonderful effort to finally clean up all the waters that enter the Chesapeake Bay.
However, our state government is resisting playing its part, whereas going ahead with this cleanup would create thousands of private sector jobs as well as the benefits from clean water and better fish. They’re saying that we can’t afford to do this in this economy, when actually doing it would be the kind of thing that would help the economy and our waters recover. Do you have anything to say about that?
Well, I agree with you, and I’ll pass on your suggestions to Mr. McDonnell -- because -- look, the point you make I think is important as sort of a general point, which is for a long time we tended to think of the environment in conflict with the economy, right? The notion was clean air, clean water is nice to have, but if it comes down to it, it’s more important that we have jobs.
The point you’re making is that clean air and clean water can improve the economy and create new jobs if we think about it in creative ways. And that’s part of the argument that I’ve been making about clean energy.
Let me give you an example. When I came into office, we were producing about 2 percent of the advanced batteries that are used in hybrid cars and electric cars -- 2 percent of the market. And we were probably just barely hanging on. Eventually, if you only got 2 percent of the market, you’re going to end up with zero percent of the market.
So what we did was we said as part of the Recovery Act, let’s invest in a Made in America, homegrown battery manufacturing effort. And we now have across the country people working in factories making advanced batteries that are going into American-made cars, because what we also did at the same time was we raised fuel-efficiency standards on cars and trucks for the first time in 30 years. We didn’t do that, by the way, through legislation. We actually got autoworkers and auto companies and environmentalists and all the stakeholders to agree on raising fuel-efficiency standards nationally. So it didn’t get a lot of attention, because there wasn’t a big ruckus in Washington, we just did it.
And so automakers now want to make more fuel-efficient cars, and we now have the advanced battery manufacturing here in the United States to take advantage of that new market. We estimate that by 2015, we’re going to have 40 percent of the advanced battery market.
So you’ve got a homegrown manufacturing industry here in the United States, putting people to work in good jobs and good wages. But that wouldn’t have happened if there wasn’t a market for clean cars.
That’s one of these guy’s -- one of those mics is going off, so I think we’re good.
But I want everybody to understand there are going to be some times where we do have to make some choices. I mean, coal is a good example, where -- coal is a dirty-burning fuel, and mining coal can often be environmentally really destructive, particularly to rivers and waterways. On the other hand, we’ve got tons of coal. We’re the Saudi Arabia of coal.
So what I’ve said is, well, let’s invest in research and development to see if we can burn coal cleanly. And if we have regulations that provide incentives for coal companies to burn coal cleanly and mine coal cleanly, they’ll adapt and they’ll start using new technologies, and that will create a more future-oriented growth industry.
But a lot of folks resisted. Their attitude is, well, no, we don’t want to change anything. We just want to keep on doing what we’ve been doing.
Sooner or later, the world passes you by. China, India, Japan -- all these countries are all thinking about new ways to find clean energy. And if we’re not the ones who get there first in terms of figuring this stuff out, then they’re the ones who are going to get the jobs of the future. And I don’t want them to get those jobs. I want us to have those jobs right here in the United States.
So, yes, sir.
Q My name is Bob -- I’m retired.
Here, Bob, why don’t you grab a mic, although you’ve got a good strong voice.
Q And I had one question for you regarding interest rates. The federal government’s current policy seems to be to keep interest rates at a historical low level. The impact this has on retired seniors is the loss of income they receive on interest on CDs and IRAs. When do you see this policy changing so rates can get back to more normal levels?
Well, first of all, I just want to make clear the administration doesn’t make decisions on interest rates. The Federal Reserve makes decisions on interest rates. And so the -- they really are an independent agency. I have to be very careful when I have a conversation with Ben Bernanke, the head of the Federal Reserve. I can talk generally about the economy, but I can’t tell him “lower or jack up interest rates.” So I want to make that clear.
But your general point I think is an important one. Interest rates are at a historic low because that was part of the way to avoid us tipping into a depression. By keeping interest rates very low, that meant that businesses that had seen consumer demand really shrink were still able to service their debt and to keep their doors open. And so it was the right thing to do to keep interest rates low.
You are absolutely right that that does have an adverse impact on savers, and particularly seniors on fixed incomes because they’re not getting as much of a return on their savings. The flip side of it is, though, is that inflation is also at a historic low. And so in terms of actual purchasing power, inflation is still low enough that savers are not losing a whole lot of money; they’re just not seeing sort of the compounded interest expand their nest egg like it once did.
I think that you will see a return to higher, more normal interest rates when the economy gets stronger; you naturally start seeing more inflation than you’re currently seeing. And when that happens, that will I think change the position of the Federal Reserve Bank. But as I said, this is not -- this is one of those areas -- the President has got a lot of power, a lot of juice. This is not one area where he’s got juice.
Q What about the over 70 1/2 mandatory deduction you have to take from your savings, IRA savings? Last year you changed it -- we didn’t have to do it.
Yes, we did that temporarily as part of an effort because we understood that people were really going through a tough time and might have to dip into savings. We wanted to make sure they weren’t penalized for it.
Q But we’re still doing that.
Yes, the -- well, things don’t always get through Congress the way you want them. But we’re going to be working on this. We’re going to have to examine a lot of these issues moving forward as part of how we think about simplifying the tax code, making it fairer, and also making sure that folks in fixed incomes aren’t harmed in this environment where it’s harder and harder to save for retirement. So thank you for the question.
Q , my name is --
Well, hold on a second, though -- just because -- I’ll get to you, but this gentleman had his hand up first. Or somebody over here did. It was over here.
Q President Obama, I’m a small business owner, and one thing for sure about small business owner -- tremendously busy.
What kind of business are you in?
Q It’s an arborist firm, tree care. And get home at night, I feel like now I’m one of the few Americans who doesn’t think he can watch a little bit of cable TV and tell everything you know about how to run the economy.
I don’t have time to watch it. It’s over my head. A good percentage of what we talk about here, the economy, I know I’m too busy working to understand how to tell you how to fix the economy.
So what I like to do is elect an official and send him to Washington and have all you smart guys figure that out. Returning to Dan’s question that we didn’t get all the way through, and a young person can recognize it, and I certainly recognize it trying to build team in small business -- is there hope for us returning to civility in our discourse to healthy legislative process to something that I can trust, so as I strap on the boots again tomorrow morning I know you guys got it under control? Because I’m not smart enough to fix it. I’d love to send you guys to Washington and have you do it. And it’s hard to have that faith right now.
Well, look, the -- first of all, I think you give everybody too much credit when you say everybody in Washington is smart guys. I -- we might dispute that.
But you’re making such a powerful point. I think a lot of people were inspired by our campaign because we tried to maintain a very civil tone throughout the campaign. And part of my agenda was changing Washington, right? I mean, I came into national notice when I made a speech in Boston talking about there aren’t red states and blue states, there’s the United States of America. I believe that so profoundly.
I will tell you that changing the culture in Washington is very hard, and I’ve seen it these last two years, because I think that folks in Washington tend to think about how to stay in power more than they think about how to solve problems.
Now, if you look at what happened over the course of these last two years -- and look, I’m sure I made some mistakes -- but essentially what happened was the other side made a calculated decision. They said, “You know what, we really got beat in 2008 bad. The economy is a mess. It’s probably going to take us a while to dig our way out of it. We’ve got two choices. One choice would be to cooperate with the President and work with him to kind of solve these problems, in which case if things don’t work, we get to share the blame, and if things do work, he gets all the credit, and he’ll stay in power.”
So just from a pure political calculation, they said, “We’re better off just saying no to everything, blocking everything. If things don’t work, then Obama will get all the blame. And if things get a little bit better, we won’t be any worse off than we would have been.” That I think was the political calculation.
Now, I have to give them credit -- that from just a raw political point of view, it’s been a pretty successful strategy, right? Because right now people are frustrated. All the good feeling that we had coming into the campaign is dissipated. Everybody is thinking to themselves, well, gosh, you know, we sent Obama up there, we thought the tone would change, folks are arguing just as much as they were before, so we’ve kind of lost hope and we’re a little discouraged, and that means a lot of the people who were supporting me may stay -- are talking about maybe just staying home in the election. And meanwhile, the other side is all ginned up -- we can take power back.
I think that the only way this is going to change is if the same folks who supported me in 2008 -- not just Democrats, but independents and Republicans who want to see the country move forward -- if they don’t sit on the sidelines, they don’t give up, you don’t give up, but you say I’m going to keep on looking for folks who are trying to offer serious solutions to problems. And, you know, we don’t expect our elected officials to be perfect but we do expect them to be honest and real with us about what we’re going to do about education or what we’re going to do about energy or what we’re going to do about this problem or that problem.
And I’ve just got to assume that if people more and more insist and demand on that kind of attitude and are willing to punish folks when they go over the top, whether it’s on the left or the right, in being not so civil, that eventually politicians adapt because they start saying to themselves, well, you know what, this is what voters want.
Now, there’s one last aspect of this that makes it tough and that is the media has gotten very splintered. So what happens is these cable shows and these talk show hosts, they figure -- a lot of them have figured out, the more controversial I can be, if I’m going out there and I’m calling Obama this name or that name or saying he wasn’t born in this country or -- that will get me attention. I will then write a book, I’ll go and sell it, I get -- right?
And there are folks on the left who do the same thing, trying to be purposely provocative, saying the meanest, nastiest things you can say about the other side. They get rewarded in the way our media is set up right now.
So part of the challenge is figuring out how to create a space for people saying we’re all Americans and we’re just going to try to solve our problems, and we’re going to have some differences, because some of these issues are hard -- is there a way where those voices get heard, because right now they’re not really getting heard.
I was amused -- Jon Stewart, the host of “The Daily Show,” apparently he is going to host a rally called something like Americans in Favor of a Return to Sanity or something like that. And his point was, you know, 70 percent of the people, it doesn’t matter what their political affiliation are, 70 percent of the folks are just like you, which is they’re going about their business, they’re working hard every day, they’re looking after their families. They don’t go around calling people names. They don’t make stuff up. They may not be following every single issue, because they just don’t have time. But they are just expecting some common sense and some courtesy in how people interact. And having those voices lifted up is really important. So hopefully, since they’ve got a whole bunch of cameras here, somebody was just listening to you.
Q We’re counting on you, because if you can’t do it, I’m not sure who is going to.
Well, I appreciate that.
Q So my wife and I are counting on you.
Thank you so much. It means a lot. All right, you get -- I’m going to have to make this the last question. Go ahead.
Q Okay, lucky me. , I’m the President of a very small community bank locally. And my question is this. Do you believe that our country, our nation, is stronger as a result of your leadership, having been elected President? And the reason I ask this question is, I was reading earlier today that the consumer confidence index is down almost to the lowest point this year in the last September reading. And the expectations index is also trending downward. And I wonder if you think our nation is strong -- which I would hope you do -- the question is, what is the disconnect between consumers’ perception of the nation, of our economy, and yours?
Right. Well, it’s a great question. There is no doubt in my mind that the country is stronger now than it was a year ago. And so the policies we put in place have reversed a contracting economy. It’s now growing.
As I said before, we were losing hundreds of thousands of jobs a month; now each month we’re adding jobs in the private sector.
Businesses are very profitable, which is why the stock market has actually recovered a lot of its value is because companies are making a profit. But I think that the reason there is a disconnect has to do with a couple of things. Number one, it’s the point that -- I’m sorry, what was your name?
Q Scott.
The point that Scott made. I think people just -- it seems like everybody is out there yelling at each other and angry, and so that kind of is disquieting. It makes people feel like the country just is pulling apart as opposed to coming together.
And then that adds to an atmosphere -- oops -- remember I talked energy-efficient buildings, we got to -- (laughter.) So I think that’s part of it. But obviously the most important part of it is just that people are still hurting economically. Even though things have gotten modestly better, you’ve still got millions of people out there who are out of a job.
You’ve still got hundreds of thousands of folks out there who are losing their homes. I hear from them every day in settings like this. I hear from them because I get letters every night from folks who are asking me, why aren’t we seeing faster progress in terms of the economy picking up.
And so, you know, this has been now -- this was the longest recession and the deepest recession by far that we’ve experienced since the Great Depression. Basically, unless you were of age during the Great Depression, folks have never seen anything like this.
So understandably, people are nervous. And I think those two things combine because if you don’t have confidence that the country can pull together and you know that the problems are hard to solve and you know that we’ve got competition from China and India and Brazil and Europe, then you start thinking, well, maybe we’re not going to be the same land of opportunity 20 years from now or 30 years from now as we were. And I think even people who are doing okay right now are anxious about the future of the country.
And I guess my response then to people is to say, look, in our own individual lives each of us go through times where it just seems like we get -- it feels like we get some bad breaks or we make some mistakes, something happens in our life where we’re kind of in a hole. And the deeper the hole sometimes the harder it is to muster up the energy and the go-get-’em attitude to be able to climb out of it.
But if you persist -- at least I’ve found in my life and I’m sure everybody here has found in their lives -- if you persist, if you stay with it, if you have a positive attitude that doesn’t ignore problems but says, “I can solve these problems, as long as I apply myself, and if something doesn’t work I don’t brood on the fact that it doesn’t work; I’m going to try something different. But I’m just going to keep my eye on a better future,” then eventually you get out of the hole. You figure it out. And America has always done that. We’ve been in tough times before, but we’ve always figured it out. Eventually -- this isn’t the first time we’ve had such contentious politics. I mean, shoot, I was -- some people may remember when Bill Clinton was President, folks were going nuts, calling him names, and Hillary names, and frankly, when Ronald Reagan was President, the first couple of years, they were -- the economy went through a very tough time.
And even though now everybody remembers him as a great communicator, at the time, everybody was saying, “Oh, the country is falling apart.” We had inflation and high unemployment. But we got our way -- we found our way through it.
And I think we’ll find our way through this as well. We’re just going to have to be persistent. And the one thing I think everybody has to admit about me, even my detractors, is I’m stubborn. I just -- I stay with it. And I’m not going to lose heart about this country because I know what this country has given to me in my own life.
This is the only country in the world where somebody born in my circumstances could stand before you as the President of the United States -- or as the President of their country. There’s no other country that can provide that kind of opportunity. And if that was true for me, that’s going to be true for the next generation. But we’re just going to have to keep on pushing. And being with families like all of yours gives me great confidence in the future.
So thank you very much, everybody. Appreciate it.
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But I guess the main message I just want to communicate -- because there was a lot of misinformation during the health care debate -- I just want to communicate that if you’re happy with what you’ve got, nobody is changing it. And you and your mom are going to be able to have -- your mom is going to have her Medicare and -- the core benefits of Medicare aren’t changing. And if you’ve got health care through your employer, that’s not going to change, except to make it a little bit safer and more secure.
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This means further reducing health care costs, including programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficit. The health insurance law we passed last year will slow these rising costs, which is part of the reason that nonpartisan economists have said that repealing the health care law would add a quarter of a trillion dollars to our deficit. Still, I’m willing to look at other ideas to bring down costs, including one that Republicans suggested last year -- medical malpractice reform to rein in frivolous lawsuits.
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And I can report that granny is safe. In fact, grandma’s Medicare is stronger than ever. And if she was one of the millions of seniors who fell into the doughnut hole last year, she received a $250 check, or soon will, to help her afford her medications, and a new 50 percent discount on brand-name drugs, as part of the Affordable Care Act.
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Health reform is part of deficit reform. We know that health care costs, including programs like Medicare and Medicaid, are the biggest contributors to our long-term deficit. Nobody disputes this. And this law will slow these costs. That’s part of the reason why nonpartisan economists, why the Congressional Budget Office, have said that repealing this law would add a quarter of a trillion dollars to our deficit over the next decade, and another trillion dollars to our deficit in the decade after that. They’re not just making this up. And what’s more, repeal would send middle-class premiums up, would force large employers to pay that extra $2,000-$3,000 per worker, and shift control of your health care right back to the insurance companies.
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But we know that this kind of spending, domestic discretionary spending, which has been the focus of complaints about out-of-control federal spending, makes up only about 12 percent of the entire budget. If we truly want to get our deficit under control, then we're going to have to cut excessive spending wherever it exists -- in defense spending -- and I have to say that Bob Gates has been as good a steward of taxpayer dollars when it comes to the Pentagon as just about anybody out there, but we're going to have to do more -- in health care spending, on programs like Medicare and Medicaid, and in spending through tax breaks and loopholes. That’s going to be a tough conversation to have, but it’s one we need to have, and it’s one I expect to have with congressional leaders in the weeks to come.
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So, yes, we need a conversation about pensions and Medicare and Medicaid and other promises that we’ve made as a nation. And those will be tough conversations, but necessary conservations. As we make these decisions about our budget going forward, though, I believe that everyone should be at the table and that the concept of shared sacrifice should prevail. If all the pain is borne by only one group -- whether it’s workers, or seniors, or the poor -- while the wealthiest among us get to keep or get more tax breaks, we’re not doing the right thing. I think that’s something that Democrats and Republicans should be able to agree on.
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We also know that the biggest driver of the federal debt is Medicare costs. Nothing else comes close. We could implement every cut that the House of Representatives right now has proposed and it would not make a dent in our long-term budget, wouldn’t make a dent in our long-term deficits -- because of healthcare costs. We know it’s one of the biggest strains in your state budgets -- Medicaid.
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I also share your concern about Medicaid costs. I know this has been a topic of significant conversation over the last couple of days. We know that over half of all Medicaid costs come from just 5 percent of enrollees, many of whom are what’s called dual eligibles -- seniors in Medicare as well as in Medicaid. The Affordable Care Act helps address this by changing the incentives for providers so that they start adopting best practices that will work to reduce cost while improving quality.
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But we understand the pressure you’re under. We understand that we’ve got to do more. So today -- and I mentioned this to Christine last night -- I’m asking you to name a bipartisan group of governors to work with Secretary Sebelius on ways to lower costs and improve the quality of care for these Americans. And if you can come up with more ways to reduce Medicaid costs while still providing quality care to those who need it I will support those proposals as well.
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We’ll also reduce health care spending, and strengthen Medicare and Medicaid through some common-sense reforms that will get rid of, for example, wasteful subsidies to insurance companies. Reforms that can actually improve care -- like making it easier for folks to buy generic drugs, or helping providers manage care for the chronically ill more effectively. And we can reform the tax code so that it’s fair and it’s simple –- so the amount of taxes you pay doesn’t depend on whether you can hire a fancy accountant or not.
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We can’t just tell the wealthiest among us, you don’t have to do a thing. You just sit there and relax, and everybody else, we’re going to solve this problem. Especially when we know that the only way to pay for these tax cuts for the wealthiest Americans is by asking seniors to pay thousands of dollars more for their health care, or cutting children out of Head Start, or doing away with health insurance for millions of Americans on Medicaid -- seniors in nursing homes, or poor children, or middle-class families who may have a disabled child, an autistic child.
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And my view is, we need to live within our means while still investing in our future -– cutting where we can while investing in education, investing in innovation, investing in infrastructure, and strengthening the safety net provided by programs like Medicare so that they’re there for this generation and for next generations.
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Hi, . I’ve lived overseas for the last 15 years and there has been very good medical care, but now that I’m here back in the States and on Medicare I find something interesting, and that is that Medicare won’t pay for any expenses overseas; it has to be here in this country, and that costs you money, the government, and it costs me money, but it’s good, of course, for the health care industry. Would you be interested in changing that?
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Well, I think you’re raising an interesting point. First of all, Medicare is one of the most important pillars of our social safety net. And so before I get to your specific point, I want everybody to understand what the debate right now about Medicare that’s taking place between Democrats and Republicans is, because you’re going to need this as this debate unfolds over the next several months.
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The House Republicans just passed a proposal, and their main plan to reduce our long-term deficits and debt is to turn Medicare into a voucher program. What would happen would be that right now seniors, when they get -- once they’re on Medicare, you basically are able to get the care that you need and Medicare covers it for you. What would happen under this proposal is you’d get a set amount of money; you could then go out under the private market place and buy insurance, but if the voucher you were getting for $6,000 or $7,000 and the insurance company said it’s going to cost you $12,000, well, you’re going to have to make up that difference.
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Now, I think that is the wrong way to go. That would fundamentally change Medicare as we know it -- and I’m not going to sign up for that. Having said that, we are going to have to reform Medicare and our entire health care system in order to improve quality for the amount of money that we spend -- because we spend much more money in this country on health care than any other industrialized country, and our outcomes aren’t better.
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So there are a whole host of steps that we can take that could make a big difference in reducing health care costs overall. And keep in mind, even if you’re not on Medicare, the overall costs of health care are being driven up for you and for -- even if you’re on private health care -- you’re paying about $1,000 per family in extra costs because of all the uncompensated care that comes in, all the folks who show up at the emergency room, all the medical errors that take place at hospitals that end up costing the system money as a whole. So if we can squeeze those inefficiencies out of the health care system, then we can maintain Medicare as we know it, but still reduce the cost to the federal government and to everybody in society.
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So before we went on the path of you can go somewhere else to get your health care, let’s work to see if we can reduce the costs of health care here in the United States of America. That’s going to make a big difference. And Medicare is a good place to start because Medicare is such a big purchaser that if we can start changing how the health care system works inside of Medicare, then the entire system changes. All the doctors, all the hospitals, they will all adapt to these best practices.
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Well, let me talk about Social Security. The big drivers of our deficit are health care costs. I mean, the thing that we’ve really got to get control of is Medicare and Medicaid. That’s what’s skyrocketing really fast. Because not only is the population getting older, but health care costs are just going up a lot faster than people’s wages and salaries -- or tax revenues to the federal government.
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I believe that people who have been really blessed in this society like me and have a very, very, very good income can afford to pay a little bit more -- nothing crazy, just go back to the rates that existed when Bill Clinton was President. That wasn’t that long ago -- that that’s a fair thing to do, especially if it makes sure that seniors are still getting their Medicare and kids are still going to Head Start. Why wouldn’t I want to make that sacrifice? Look, and I think most wealthy Americans feel the same way.
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So now what we’ve got is a situation not only do we have this accumulated debt, but the baby boomers are just now starting to retire. And what’s scary is not only that the baby boomers are retiring at a greater rate, which means they're making greater demands on Social Security, but primarily Medicare and Medicaid, but health care costs go up a lot faster than inflation and older populations use more health care costs. You put that all together, and we have an unsustainable situation.
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Now, there’s one last component of this -- and I know this is a long answer but I wanted to make sure everybody had the basic foundations for it. Even if we get this $4 trillion, we do still have a long-term problem with Medicare and Medicaid, because health care costs, the inflation goes up so much faster than wages and salaries. And this is where there’s another big philosophical debate with the Republicans, because what I’ve said is the best way for us to change it is to build on the health reform we had last year and start getting a better bang for our health care dollar.
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At the same time, what they’ve said is let’s make Medicare into a voucher program, so that retirees, instead of knowing that they're always going to have health care, they're going to get a voucher that covers part of the cost, and whatever health care inflation comes up is all going to be on them. And if the health insurance companies don't sell you a policy that covers your illnesses, you’re out of luck.
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Their basic view is that no matter how successful I am, no matter how much I’ve taken from this country -- I wasn’t born wealthy; I was raised by a single mom and my grandparents. I went to college on scholarships. There was a time when my mom was trying to get her PhD, where for a short time she had to take food stamps. My grandparents relied on Medicare and Social Security to help supplement their income when they got old.
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And then, as I said, there’s a fundamental difference between how the Republicans and I think about Medicare and Medicaid and our health care system. Their basic theory is that if we just turn Medicare into a voucher program and turn Medicaid into block grant programs, then now you, a Medicare recipient, will go out and you’ll shop for the best insurance that you’ve got -- that you can find -- and that you’re going to control costs because you’re going to say to the insurance company, this is all I can afford.
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So what we’ve said is let’s make sure instead of just pushing the costs off on to people who individually are not going to have any negotiating power or ability to change how providers operate, or how hospitals or doctors operate, how insurance companies operate, let’s make sure that we have a system both for Medicare but also for people who currently don’t have health insurance where they can be part of a big pool. They can negotiate for changes in how the health care system works so that it’s more efficient; so that it’s more effective; so that you get better care, so that we have fewer infection rates, for example, in hospitals; so there are fewer readmission rates; so that we’re caring for the chronically ill more effectively; so that there are fewer unnecessary tests. That’s how you save money. The government will save money, but you’ll also save money.
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So we think that’s a better way of doing it. Now, what they’ll say is, well, you know what, that will never work because it’s government imposed and it’s bureaucracy and it’s government takeover and there are death panels. I still don’t entirely understand the whole “death panel” concept. But I guess what they’re saying is somehow some remote bureaucrat will be deciding your health care for you. All we’re saying is if we’ve got health care experts -- doctors and nurses and consumers -- who are helping to design how Medicare works more intelligently, then we don't have to radically change Medicare.
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Q So the biggest threat we have fiscally is the rise in health care costs. Unfortunately, a lot of the solutions we hear to Medicare and Medicaid don’t involve actually slowing down the rise in health care costs. Instead, they involve shifting costs to beneficiaries and states. So my question is: Can you talk a bit more about what provisions of the Affordable Health Care Act are designed to slow down the rise of health care costs, and what policies you’d like to see enacted in the future to continue to slow down the rise of health care costs?
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It’s also, though, how we reimburse doctors and how we reimburse hospitals. So right now, what happens is, when you’ve taken those two tests, if you’re old enough to qualify for Medicare, well, each doctor sends their bill to Medicare and Medicare pays both bills. And let’s say that you end up getting an operation. They’ll send the bill for that, and Medicare pays that. Let’s say they didn’t do a very good job, or you got sick in the hospital, and you are readmitted and you have to be treated again and they have to do the operation all over again. Medicare then gets billed for the second operation.
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I mean, imagine if that’s how it worked when you bought a car. So you go, you buy your car. A week later, the car doesn’t work. You go back to the dealer and they charged you to fix the bad job that they did in the first place. Well, that’s what Medicare does all the time. So we don’t provide incentives for performance. We just provide -- we just pay for the number of qualified items that were procedures that were performed or tests that were performed by the provider.
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So what we want to do is to start changing how folks are reimbursed. Let’s take a hospital. We want to give -- this is sort of like Race to the Top, what Mark was talking about in education. We want to be able to say to a hospital, if you do a really good job reducing infection rates in the hospital, which kill tens of thousands of people across America every year and are a huge cause for readmission rates, and we know that hospitals can drastically reduce those reinfection rates just by simple protocols of how employees are washing their hands and how they’re moving from room to room and so forth -- there are hospitals who have done it -- if we can say to a hospital, you’ll get a bonus for that, Medicare will reimburse you for instituting these simple procedures, that saves the whole system money.
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Our hope is, is that over the next five years, we’re able to see significant savings through these mechanisms, and that will save everybody -- not just people who are on Medicare and Medicaid -- it will save everybody money including folks here at Facebook. Because I’m sure that you guys provide health insurance and I suspect if you look at your health insurance bills they don't make you happy. Okay.
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Next, we’re going to need to reduce health care spending, and strengthen Medicare and Medicaid through some common-sense reforms that build on what we already have done with the health care reform bill -- eliminates wasteful subsidies to insurance companies, for example; actually improves care by making it easier for folks to buy generic drugs; helps providers manage care for the chronically ill. And we need to reform the tax code so that it’s fair and simpler. I know that’s on people’s minds. Some of you just had to file, and I know I looked at my bill -- and I have actually done my taxes quite a few times. I admit I don’t do them now. But all of us have gone through the experience of saying this is just too complicated. It doesn’t make sense. The amount of taxes you pay shouldn’t depend on a high-priced accountant or lawyer that you can hire. It should be fair and simple.
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I’ve been incredibly blessed by this country -- son of a single mom, went on scholarships to get through school. And so the fact that I’m now well off, I want to be able to give a little bit something back so that the next generation can achieve that same success. I don’t need additional tax cuts, especially when I know that extending those tax cuts may end up meaning that some senior citizens are getting less health care; or thousands of kids on Head Start might not have that opportunity available to them; or people who are on Medicaid, seniors who are in nursing homes, or families who have got a child who’s autistic or disabled, that somehow they’re left to fend for themselves. That’s not a good option, from my perspective. That’s not a trade-off I’m willing to make.
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Both Democrats and Republicans agree that we need to cut the deficit. In fact, there is general agreement on the need to cut about $4 trillion over the medium term to hit our targets. And when folks in Washington agree on anything that’s quite an accomplishment. So the debate isn’t about whether to cut the deficit, the debate is about how we cut the deficit. And my view is we can live within our means while still investing in our future. We can take a balanced approach, cutting where we can while investing in education and innovation and infrastructure, strengthening the safety net of Medicare and Medicaid to make sure that they’re there for future generations.
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Then, when Medicare was passed in the middle ‘60s, low and behold, it turns out it was very controversial. And everybody said this is socialized medicine, and there were efforts to repeal it. And then once it got up and running, lo and behold, people said, you know what, it’s a good thing that our senior citizens now, if they don’t have the health care that they need, they don’t have money, they have something to count on so that if they get sick they’ve got some support.
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Senior citizens, you’re getting a $250 rebate on your drugs because of the health care bill. And by the time we’ve fully implemented it, that doughnut hole that used to be there, where if you got sick, you’d pay -- Medicare would pay only up to a certain point, and then suddenly you had to pick it up in your own pocket because of that doughnut hole, that’s going to be fully closed. So we are making all sorts of reforms right now.
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The other thing that we did in health care reform bears on what I was talking about earlier, which is our deficit reduction. We were giving -- we were giving about $180 billion worth of subsidies to insurance companies under the Medicare program. It wasn’t making seniors healthier, but it was making the profit margins for those insurance companies a lot healthier.
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That’s the big debate that we’re having about Medicare as part of this budget. There has been a proposal -- it passed through Congress -- that would essentially make Medicare a voucher system. Essentially what Medicare would become is you’d get a certain amount of money and then you could use that money to buy health insurance on the private marketplace. But guess what. If health inflation keeps on going up, you’re out of luck. If the insurance that you buy isn’t good enough to cover you, too bad.
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So what we’ve said is, no, we’re not going to change Medicare as we know it. What we will do is work inside of Medicare to make sure that providers -- the health care system as a whole is more efficient. We think that’s the better way to go. And I think most folks on Medicare do, too.
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Q , my name is Courtney Miller (ph). And I want to thank you for returning science to the national priority. And I need to ask for some help for my family. My husband has chronic fatigue syndrome, which is an illness very much like multiple sclerosis. And we spend billions of dollars in this country on roughly a million patients for disability and Medicare and lost tax revenue and lost productivity, and we spend less than $6 million for NIH research on this illness. And I’m asking you for my husband and my kids, who want their father to be able to go to their baseball games, if there’s a way to make improvements on that.
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And what I’ve said is, at minimum, we should say, for those like myself who can afford it, let’s pay a little bit more. Let’s go -- we can go back -- if we went back to the Clinton rates for the wealthiest 2 percent, going back to the Clinton rates -- you remember back in the ‘90s, the economy was doing really well, and rich people were doing just fine. And I can afford it. It’s not that I like paying taxes. I don’t like paying taxes. Nobody likes paying taxes. But if the choice is keeping my tax break, or 33 seniors having to pay an extra 6,000 bucks for their Medicare, why would I want that -- why would I wish that on those 33 seniors? If the choice is between me keeping my tax cut and a couple hundred kids being to go get their Head Start, why would I want that?
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We’ve got a serious deficit and debt problem. There is no doubt about it. It’s one that we inherited, but it’s real. And we’ve got a responsibility to fix it. The question is how do we fix it. Are we going to fix it by making sure that we eliminate spending that we don’t need, as I’ve proposed, but also making sure that everybody shares the burden, and we’re raising additional revenues by making sure that those of us who have done so well in this society can afford to pay a little bit more? Or do we end up balancing our budget and reducing our deficit by fundamentally reworking our social compact, so that suddenly kids on Head Start don’t have those opportunities anymore; so that we say to our seniors Medicare is no longer a guarantee that you will have health care when you are older -- here’s a voucher; we’re going to shift the costs on to you, and if you can’t get the health care that you need on the open market, then tough luck?
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Or cut children from Head Start, or doing away with health insurance for millions of people on Medicaid, seniors in nursing homes, or poor kids, or middle-class families who’ve got an autistic child. That's not a tradeoff I’m willing to make. And that's not a tradeoff most Americans are willing to make, regardless of party. We can do better than that. We are better than that! We are better than that!
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And we’ve got a very stark choice. You’ve got a Republican vision right now in Congress that says we are going to slash clean energy funding by 70 percent, education funding by 25 percent, transportation funding by a third; we’re going to cut taxes further for the well-to-do; and we’re going to make up the entire deficit not only by cutting programs for things like Head Start, but we’re also going to fundamentally change our social compact so that Medicare is no longer something that our seniors can count on.
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Look, I don’t want a $200,000 tax cut for me that’s paid for by asking 33 seniors each to pay more than $6,000 in extra Medicare costs. I don’t want my tax cut paid for by cutting children from Head Start, or doing away with health insurance for millions of people on Medicaid, for seniors in nursing homes, or poor children, or families that have a disabled child. I don’t want to make that trade-off.
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And I’m confident -- because I travel around the country, and my poll numbers go up and down depending on the latest crisis, and right now gas prices are weighing heavily on people. But when I talk to ordinary folks, they are not always paying attention. If you ask them what the makeup of the budget is, they’ll say 25 percent of it goes to foreign aid. If you ask them about Medicare, they’ll say, I love that program but I wish government wouldn’t get involved in it. Just because they’re busy and they’re tired and they’re working hard. They’re looking after their families, they’re looking after their kids.
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I’m talking about myself. Look, I don't want a $200,000 tax cut that's paid for by asking 33 seniors each to pay $6,000 more in Medicare costs. I don't want that. I don't want a tax cut that's paid for by slashing Head Start slots for young people here in New York City -- or eliminating health insurance for millions of people currently on Medicaid, seniors in nursing homes and poor kids and families with children with autism or other disabilities. That's not a tradeoff I’m willing to make. That's not a tradeoff most Americans are willing to make. That's not who we are. We are better than that. That's what this debate is about. We’re better than that.
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If I’m driving by Central Park and I see an elderly couple strolling, holding hand-in-hand, and I think to myself someday Michelle and me, we’re going to be strolling hand-in-hand. And I’ll be able to take a walk in Central Park again, and nobody will recognize me. But it makes me to feel good to know that that couple, they’ve got Social Security, they’ve got Medicare, that they’ve got a sense of dignity and security in their golden years.
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It’s not about numbers. We all agree that we have to reduce our deficit and get a hold of our debt. We even agree on roughly the amounts by which the deficit and the debt have to be reduced. This argument is not about numbers; it is about values. Because on one side you have folks who believe that we can slash education funding by 25 percent, or transportation funding by 30 percent, or investments in clean energy by 70 percent, and we can turn the Medicare system into a voucher program so that we’re shifting costs onto seniors. It’s a vision of a small America, of a shrunken America, where those of us who are lucky do great and don’t have to give anything back, and we can pull up the ladder behind us.
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We do it not just out of charity but because it makes our lives better. We know that when we see that elderly couple strolling through Central Park, holding hands, and they know that they’ve got the security of Medicare and Medicaid and Social Security, that that makes us better, because we think, you know, someday I want to be Michelle -- I want it to be me and Michelle strolling down Central Park. There’s going to be a time where I can go walking again. And I would want to make sure that I’ve got some security in those golden years.
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One of the disagreements that we have is even after we’ve made all these cuts -- and we’re making some painful, difficult decisions. The notion that I, who, because a bunch of you guys bought my book, am actually doing very well -- should not have to pay a little more; the notion that I’d get a $200,000 tax break, and as a consequence of that tax break, hundreds of kids might not be able to go to Head Start, or as a consequence of a tax break for me, that senior citizens might end up having to pay thousands of dollars more for their Medicare -- see, that's not who I think we are.
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I met Janice Lang-ben, who was barred from the bedside of the woman she loved as she lay dying, and I told her we were going to put a stop to that discrimination. And I issued an order so that any hospital in America that accepts Medicare or Medicaid –- and that means just about every hospital in America -– has to treat gay partners just as they have to treat straight partners. Nobody in America should have to produce a legal contract.
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But we’re going to have to also, if we want to achieve this goal, make sure that we do two tough things that, frankly, neither party wants to do but have to be done. The first is we’re going to have to make sure that we continue to focus on how do we reduce Medicare and Medicaid costs, and the second is we’re going to have to have more revenue. And what I’ve said to the Republican Party and what I’ve said to the Democratic Party in Congress is, there’s a way to do this that makes sure that we still maintain our sacred commitment to our seniors so that they have the security that they need in retirement, and there’s a way to do it that makes sure that businesses aren’t over-burdened and that success is still rewarded in our society. We can make changes that are balanced, that involve some shared sacrifice, but assure that we’re still making the investments we need to win the future and assure that we’re not mortgaging our future because of irresponsible fiscal practices.
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But I hope you understand that the stakes are enormously high. And, again, as you watch this debt limit and deficit debate unfold, I hope you remember, we can make sure that Medicare is there for future generations and that we are maintaining our commitment to our seniors, and we can make sure that we have a tax code that is simpler and fairer and is not inhibiting business and is not inhibiting the free market. We can accomplish those things while still bringing down the deficit, but we’ve got to do it in a way that is fair and balanced so that we’re still investing in things like medical research, we’re still investing in our infrastructure, we’re still investing in our kids.
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So here's where we stand. We have a Democratic President and administration that is prepared to sign a tough package that includes both spending cuts, modifications to Social Security, Medicaid and Medicare that would strengthen those systems and allow them to move forward, and would include a revenue component. We now have a bipartisan group of senators who agree with that balanced approach. And we’ve got the American people who agree with that balanced approach.
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Neither party is blameless for the decisions that led to this problem, but both parties have a responsibility to solve it. If we don’t solve it, every American will suffer. Businesses will be less likely to invest and hire in America. Interest rates will rise for people who need money to buy a home or a car, or go to college. We won’t have enough money to invest in things like education and clean energy, or protect important programs like Medicare, because we’ll be paying more and more interest on this national debt and that money just flows overseas instead of being spent here on the things that we need.
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So, for my part, I’ve already said that I’m willing to cut a historic amount of government spending in order to reduce the deficit. I’m willing to cut spending on domestic programs, taking them to the lowest level since Dwight Eisenhower. I’m willing to cut defense spending at the Pentagon by hundreds of billions of dollars. I’m willing to take on the rising costs of health care programs like Medicare and Medicaid, so that these programs will be there for the next generation, for folks -- for a population generally that’s getting older and living longer. We’ve got to make sure that these programs, which are the crown jewels of our social safety net, that -- sort of mixed metaphors there -- that those are there for the future.
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Now, here’s the thing, though -- and this is what the argument is about -- we can’t just close our deficit with spending cuts alone, because if we take that route it means that seniors would have to pay a lot more for Medicare, or students would have to pay a lot more for student loans. It means that laid-off workers might not be able to count on temporary assistance or training to help them get a new job. It means we’d have to make devastating cuts in education and medical research and clean energy research -- just at a time when gas prices are killing people at the pump.
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And it’s why I’ve said if we’re going to reduce our deficit, then the wealthiest Americans and the biggest corporations should do their part as well. Before we stop funding clean energy research, let’s ask oil companies and corporate jet owners to give up the tax breaks that other companies don’t get. I mean, these are special tax breaks. Before we ask college students to pay more for their education, let’s ask hedge fund managers to stop paying taxes that are lower on their rates than their secretaries. Before we ask seniors to pay more for Medicare, let’s ask people like me to give up tax breaks that we don’t need and we weren’t even asking for.
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Now, we’re not going to solve the entire debt and deficit in the next 10 days. So there’s still going to be more work to do after this. And what we’re doing is to try to make sure that any deal that we strike protects our core commitments to Medicare and Medicaid recipients, to senior citizens, to veterans. We want to make sure that student loans remain affordable. We want to make sure that poor kids can still get a checkup, that food stamps are still available for folks who are desperately in need. We want to make sure that unemployment insurance continues for those who are out there looking for work.
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Q I have cerebral palsy, as does my brother. And I come to you to implore you to do as much as you can to protect services and supports for people with disabilities in your negotiations with Speaker Boehner and Leader Cantor. I know that's hard because Mr. McConnell has said he wants to make you a one-term President. But the issue is we need the vital therapies that Medicaid provides. We need a generous IDEA budget so people like me with severe disabilities can graduate from high school with a diploma and go to college. So please don’t leave us holding the bag. I know that a lot of people at Easter Seals are very worried, but given your experience with your father-in-law, I know you’ll do the right thing, sir. It’s an honor to speak with you.
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Essentially what we had offered Speaker Boehner was over a trillion dollars in cuts to discretionary spending, both domestic and defense. We then offered an additional $650 billion in cuts to entitlement programs -- Medicare, Medicaid, Social Security. We believed that it was possible to shape those in a way that preserved the integrity of the system, made them available for the next generation, and did not affect current beneficiaries in an adverse way.
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And so the question is, what can you say yes to? Now, if their only answer is what they’ve presented, which is a package that would effectively require massive cuts to Social Security, to Medicare, to domestic spending, with no revenues whatsoever, not asking anything from the wealthiest in this country or corporations that have been making record profits -- if that’s their only answer, then it’s going to be pretty difficult for us to figure out where to go. Because the fact of the matter is that’s what the American people are looking for, is some compromise, some willingness to put partisanship aside, some willingness to ignore talk radio or ignore activists in our respective bases, and do the right thing.
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So that wasn’t the reason this thing broke down. We were consistent in saying that it was going to be important for us to have at least enough revenue that we could protect current beneficiaries of Social Security, for example, or current beneficiaries of Medicare; that we weren’t slashing Medicaid so sharply that states suddenly were going to have to throw people off the health care rolls. And we were consistent in that.
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If I’m saying to future recipients of Social Security or Medicare that you’re going to have to make some adjustments, it’s important that we’re also willing to make some adjustments when it comes to corporate jet owners, or oil and gas producers, or people who are making millions or billions of dollars.
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The hard part is actually dealing with the underlying debt and deficits, and doing it in a way that’s fair. That’s all the American people are looking for -- some fairness. I can’t tell you how many letters and emails I get, including from Republican voters, who say, look, we know that neither party is blameless when it comes to how this deft and deficit developed -- there’s been a lot of blame to spread around -- but we sure hope you don’t just balance the budget on the backs of seniors. We sure hope that we’re not slashing our commitment to make sure kids can go to college. We sure hope that we’re not suddenly throwing a bunch of poor kids off the Medicaid rolls so they can’t get basic preventative services that keep them out of the emergency room. That’s all they’re looking for, is some fairness.
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So I’ve already said I’m willing to cut spending that we don't need by historic amounts to reduce our long-term deficit and make sure that we can invest in our children’s future. I’m willing to take on the rising costs of health care programs like Medicare and Medicaid to make sure they’re strong and secure for future generations.
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And that’s why people from both parties have said that the best way to take on our deficit is with a balanced approach –- one where the wealthiest Americans and big corporations pay their fair share, too. Before we stop funding energy research, we should ask oil companies and corporate jet owners to give up special tax breaks that other folks don’t get. Before we ask college students to pay more to go to college, we should ask hedge fund managers to stop paying taxes that are lower in terms of rates than their secretaries. Before we ask seniors to pay more for Medicare -- before we ask seniors to pay more for Medicare, we should ask people like me to give up tax breaks that we don’t need and weren’t even asking for.
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Now, I've said from the beginning that the ultimate solution to our deficit problem must be balanced. Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions. Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.
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When folks tell you that we’ve got a choice between jobs now or dealing with our debt crisis, they’re wrong. They’re wrong. We can’t afford to just do one or the other. We’ve got to do both. And the way to do it is to make some -- reform the tax code, close loopholes, make some modest modifications in programs like Medicare and Social Security so they’re there for the next generation, stabilize those systems. And you could actually save so much money that you could actually pay for some of the things like additional infrastructure right now.
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And, by the way, when you hear folks saying, well, you know what, that’s job killing -- that’s not job killing. When Bill Clinton was President we created 22 million jobs with a tax rate that was much higher across the board than it is now. We don’t have to go all the way back up there on the estate tax or any other taxes for us to close our deficit and our debt, but we should ask oil and gas companies that are making record profits that they don’t benefit from a special tax loophole that the mom-and-pop store in Alpha doesn’t get. And I don’t think there’s anything wrong with asking me to pay a little more so our senior citizens don’t have to pay an extra $5,000, $6,000 a year for their Medicare. That’s what we’re looking for, is balance in terms of our tax policy.
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The bigger problem is Medicare and Medicaid. And the reason that’s a problem is because health care costs keep on going up faster than inflation, people’s wages, people’s incomes at the same as folks are getting older, so we’ve got more people into the system. And if we didn’t do anything, then Medicare and Medicaid would gobble up basically the entire federal budget -- and we couldn’t pay for our schools, we couldn’t pay for fixing our airports, we couldn’t pay for basic research. All the things that we expect out of our federal government we couldn’t do. All we’d be doing is just paying doctors and hospitals and nursing home facilities. That would take up the whole budget. That’s no way to run a country.
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So there are a whole bunch of things we can do to make the health care system more efficient. But even if we do all those things, we’re still going to have a problem with Medicare and Medicaid. And my basic principle is, let’s make sure that we keep this program intact, both programs -- Medicare and Medicaid -- for people in need: for our seniors, for disabled kids, for folks who’ve got a parent who’s severely ill and they’ve only got a certain capacity to support them and help them. But let’s also make sure that we’re making some common-sense changes that allows the program to be there in the future. This is in contrast to the approach that’s been taken, I’ve got to admit, by the House of Representatives when they passed their budget.
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They passed a budget that basically called for voucherizing the Medicare system. This is the Republicans in the House of Representatives. And basically what they say is, here’s a flat rate that you get for Medicare, and you know what, if it turns out that it doesn’t buy you enough insurance, that’s your problem; that’s not our problem.
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But I want to be honest with folks: We are going to have to make some modifications to Medicare and Medicaid. They don’t have to be radical, but we’re going to have to make some modifications to them in order for them to be there for the next generation. That’s part of our obligation, because we can’t just be not thinking about our kids and our grandkids as we move forward.
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Well, first -- this is a very well-informed young man here. You’re exactly right that the way the Social Security system works, there’s what’s called -- there’s basically a cap on your Social Security, which there isn’t, by the way, on Medicare. But Social Security, it only goes up to the first $107,000; and you’re right, somebody who makes -- who has net assets of $250 million and are making maybe $5 million a year just on interest or capital gains or something, just a fraction of it’s going to Social Security. I think there’s a way for us to make adjustments on the Social Security tax that would be fairer than the system that we use right now.
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If everybody took an attitude of shared sacrifice, that we’re not going to put the burden on any single person, we can solve our deficit and debt problem next week. And it wouldn’t require radical changes, but it does have to be balanced. I don’t want a tax break, as lucky as I’ve been, if that tax break means that a senior citizen is going to have to pay an extra $6,000 for their Medicare. That’s not fair.
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And basically what they recommended was what I’ve been talking about, which is a balanced approach in which we’re making some modifications to what’s called discretionary spending -- that’s the spending we do every year on everything from farm programs to student loan programs to food stamps to you name it -- that we cut defense spending in a sensible way, that we look at how we can make modifications that strengthen Social Security and Medicare for the next generation, and how we raise additional revenue so that we bring the overall budget into a sustainable place.
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And then we had a big prescription drug plan that was added to Medicare, and that wasn’t paid for. Then the recession hits, which means less money is coming in but more money is going out in terms of helping the unemployed or helping states and local governments not lay off teachers and firefighters and so on.
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Well, here’s -- it’s just math. If you have a deal that does not have revenue in it and you still want to close the deficit by, say, $4 trillion, which is what the experts say is required in order to stabilize our debt and our deficit -- and this is over a 10-year period -- if you have no revenue, then the only way to do that is you’ve got to drastically cut things like Medicare. You have to -- there’s no two ways about it. You’ve got to drastically cut Medicare; you’ve got to drastically cut Medicaid; you’ve got to cut back on education support in significant ways that affect schoolkids right here in Atkinson and all across the country.
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While we’re on the topic of Social Security, though, I want to make sure everybody understands Social Security is not in crisis. We have a problem with Medicare and Medicaid because health care costs are going up so fast. Part of the reason we passed health care reform was to make sure that we could start changing how the health care system operates and try to reduce health care inflation.
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This debate is about priorities. If we want to create new jobs and close the deficit and invest in our future, the money has got to come from somewhere. And so, should we keep tax loopholes for big oil companies? Or should we put construction workers and teachers back on the job? Should we keep tax breaks for millionaires and billionaires? Or should we invest in our children’s education and college aid? Should we ask seniors to be paying thousands of dollars more for Medicare, as the House Republicans propose, or take young folks’ health care away? Or should we ask that everybody pay their fair share? This is about fairness. And this is about who we are as a country. This is about our commitment to future generations.
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So what I did over the last two weeks was say to members of Congress -- Democrat and Republican, but particularly to the Republicans -- I’m prepared to work with you, but these games have to stop. And given how high unemployment is right now, we’ve got to act. We can’t just be engaged in the usual partisan bickering here in Washington. We put forward a jobs act that would -- it’s estimated to grow the economy by an additional 2 percent, and put as many as 1.9 million back to work. And we’re paying for all of it -- by continuing to make cuts in programs that we don’t need and making adjustments to entitlement programs like Medicare and Medicaid, but also making sure that we’ve got a tax code that is fair.
So we are just going to keep on pounding away at this issue. How they will respond, we don’t yet know. And part of it is going to depend on how much pressure they’re feeling from people all across the country, here in the Pacific Northwest, but everywhere else. And yet we are going to just keep on drawing a clear contrast between a vision that we have for where we want to take this country, one in which we’re living within our means but also investing in infrastructure, and investing in schools, and investing in education, and investing in basic research and innovation.
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So would you rather keep tax loopholes for oil companies? Or would you rather put construction workers and teachers back on the job? Would you rather keep tax breaks for millionaires and billionaires -- or do you want to invest in medical research and new technology? Should we ask our seniors to pay thousands of dollars more for their Medicare -- or should we ask the most profitable corporations to pay their fair share?
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Every bit of progress that's been worth making has been a struggle -- whether it was civil rights, or women's rights, the movement to expand educational opportunities to all, the institution of our basic safety net like Social Security and Medicare -- always been a struggle. And there have been points at every juncture where it's been discouraging. People have felt like, well, maybe things can't happen. Maybe we're stuck. Maybe America's best days are behind us. And what's prevented that from happening has been the American people -- that sense not only of innate decency and sense of fairness that is just in the DNA of America, but also that sense, you know what, we're not somebody who -- we're not a people who sit back and give up. We don't just let things happen "to" us; we make things happen.
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And so what I said was not only will we put a jobs act that puts a couple million people back to work, and it’s estimated it will raise our GDP by a couple of percent, but we can also pay for it in a responsible way -- building off the work we did this summer, which is, we made some judicious cuts spread out over 10 years so it doesn’t impact our recovery, but we’ve cut a trillion dollars from the budget. We’re proposing that we can actually find an additional half a billion dollars in savings, making some modest modifications to Medicare and Medicaid to bend the cost curve, but not in a way that hurts beneficiaries. And once we’ve done that we’ve also got to make sure that we’ve got a tax code that is fair and in which everybody does their fair share.
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First of all, let me talk about Social Security and Medicare, because this has obviously been an issue that has been discussed a lot in the press lately as we think about our long-term finances. You can tell your mom that Medicare and Social Security will be there for her -- guaranteed. There are no proposals out there that would affect folks that are about to get Social Security and Medicare, and she’ll be qualifying -- she already is starting to qualify for Medicare, and she’ll be qualifying for Social Security fairly soon.
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Medicare is a bigger issue because not only is the population getting older and more people are using it, but health care costs have been going up way too fast. And that's why part of my health care reform bill two years ago was let's start changing how our health care system works to make it more efficient. For example, if your mom goes in for a test, she shouldn’t have to then, if she goes to another specialist, take the same test all over again and have Medicare pay for two tests. That first test should be emailed to the doctor who's the specialist. But right now that's not happening. So what we've said is let's incentivize providers to do a more efficient job and, over time, we can start reducing those costs.
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So we are going to be pushing back against that kind of proposal. And that raises the point I made earlier. If people like myself aren’t paying a little more in taxes, then the only way you balance the budget is on the backs of folks like your mom, who end up paying a lot more in Medicare and they can’t afford it, whereas I can afford to pay a little more in taxes.
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So that’s on Medicare and Social Security. In terms of her finding a job, the most important thing we can do right now is to pass the American Jobs Act, get people back to work. Because, think about it, if she’s been in the food service industry, that industry is dependent on people spending money on food, whether it’s at a restaurant, or a cafeteria, or buying more groceries. And if a construction worker and a teacher or a veteran have a job because of the programs that we proposed in the American Jobs Act, they’re going to be spending more money in food services, and that means that those businesses are going to have to hire more, and your mom is going to be more likely to be hired. All right?
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And so I am extraordinarily confident about America’s long-term future. But we are going to have to make some decisions about how we move forward. And what’s striking to me is, when we’re out of Washington and I’m just talking to ordinary folks, I don’t care whether they’re Republicans or Democrats, people are just looking for common sense. The majority of people agree with the prescriptions I just offered. The majority of people by a wide margin think we should be rebuilding our infrastructure. The majority of folks by a wide margin think that we should be investing in education. The majority of people by a wide margin think we should be investing in science and technology. And the majority of people think by a wide margin that we should be maintaining programs like Social Security and Medicare to provide a basic safety net.
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Are we going to ask millionaires and billionaires to pay a little bit more of their fair share in order to make sure that we’re rebuilding America -- which, by the way, they benefit from, and businesses benefit from, and makes us more competitive? Or are we going to ask seniors who are barely getting by to pay thousands of dollars more in Medicare?
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This is the fight that we’re going to have right now, and I suspect this is the fight that we’re going to have to have over the next year. The Republicans in Congress and the Republican candidates for President have made their agenda very clear. They have two basic economic principles: first, tax cuts for the very wealthiest and the biggest corporations, paid for by gutting investments in education and research and infrastructure and programs like Medicare. That’s agenda item number one. Second is just about every regulation that's out there they want to get rid of -- clean air, clean water -- you name it.
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So this is the fight that we’re having right now. And this is, frankly, what the next year is probably going to be about. The Republicans in Congress and the folks running for president have made their agenda crystal clear. They have two basic economic priorities -- two basic proposals: tax cuts for the wealthiest individuals and biggest corporations paid for by gutting investments in education and research and our infrastructure -- all the things that helped make America an economic superpower; weaken programs like Medicare and our basic social safety net. That’s one proposal. And the second proposal is to gut just about every regulation that you can think of.
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Remember in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history. And what did it get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class -- things like education and infrastructure, science and technology, Medicare and Social Security.
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That’s what you affirmed last night. But more importantly, it’s what you affirm every day with your words and your actions. And I promise you that as you pray with your feet, I will be right there with you every step of the way. I’ll be fighting to create jobs, and give small businesses a chance to succeed. I’ll be fighting to invest in education and technology. I will fight to strengthen programs like Medicare and Social Security. I will fight to put more money in the pockets of working families. I won’t be afraid to ask the most well-off among us -– Americans like me –- to pay our fair share, to make sure that everybody has got a shot. I will fight alongside you every inch of the way.
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The American people know what the right choice is. So do I. As I told the Speaker this summer, I’m prepared to make more reforms that rein in the long-term costs of Medicare and Medicaid, and strengthen Social Security, so long as those programs remain a guarantee of security for seniors.
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Or, alternatively, if we’re going to close that deficit, somebody else is going to have to pick up the tab. It might be a senior who now suddenly has to pay more for their Medicare. It’s got to be a student who’s suddenly having to pay more for their student loan. It might be a family that’s just trying to get by and suddenly their tax rates go up. That’s not right. That’s not who we are.
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A senior suddenly is going to have to start paying more for their Medicare, or a student is going to have to pay more for their student loan, or a family that’s trying to get by, they’re going to have to do with less. And that’s not right. That’s not who we are. Each of us is only here because somebody somewhere felt a responsibility to each other and to our country and helped to create all this incredible opportunity that we call the United States of America.
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And when we've got a trillion -- more than $1 trillion worth of tax breaks that were supposed to be temporary for the top 2 percent slated to continue, we've got a tax code full of loopholes for folks who don't need them and weren't even asking for them -- we've got to ask ourselves, what's more important to us? Is it more important for me to get a tax break, or is it more important for that senior to know that they've got Medicare and Social Security that's stable? Is it more important for me to get a tax break, or is it better for that young person to get a break on their college education? Is it more important for me to get a tax break, or is it more important that we care for our veterans?
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There have been some who have been saying, well, the only reason you’re saying that is because you're trying to stir people up, make them envious of the rich. People don't envy the rich. When people talk about me paying my fair share of taxes, or Bill Gates or Warren Buffett paying their fair share, the reason that they're talking about it is because they understand that when I get a tax break that I don't need, that the country can't afford, then one of two things are going to happen: Either the deficit will go up and ultimately you guys are going to have to pay for it, or alternatively, somebody else is going to foot the bill -- some senior who suddenly has to pay more for their Medicare, or some veteran who's not getting the help that they need readjusting after they have defended this country, or some student who’s suddenly having to pay higher interest rates on their student loans.
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The recovery is accelerating. America is coming back -- which means the last thing we can do is go back to the same failed policies, the very same policies that got us into this mess in the first place. And that’s what’s at stake in this election. That’s exactly what the other candidates want to do. They don’t make any secret about it. They want to go back to the days when Wall Street played by its own rules. They want to go back to the days when insurance companies could deny you coverage or jack up premiums without reason. They want to go back to spend trillions of dollars more on tax breaks for folks like me, for the wealthiest Americans, even if it means adding to the deficit, or gutting things like education or clean energy or making Medicare more expensive for seniors.
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This has nothing to do with class warfare. It has nothing to do with envy. It has everything to do with math. If somebody like me gets a tax break that I don’t need, wasn't asking for, at a time when we're trying to get our fiscal house in order, then one of two things happens. Either that adds to our deficit, or, alternatively, we've got to take something else away from somebody else. Maybe a student suddenly has to pay higher interest on their student loans, or a senior has got to pay more for their Medicare, or a homeless veteran doesn’t get the support that they need, or a family doesn’t have the opportunity to get the kind of job training they need to adapt in this changing economy.
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And unless you think that it makes sense for us to cut basic research by 35 percent, and education support from the federal government by 35 percent, and add about $6,000 of additional costs on every senior, whether they can afford it or not, for Medicare and Medicaid, then this election is going to require a lot of work.
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And it means that we have a tax system that encourages economic growth, that helps to bring down our deficit, that pays for the investments that we need, and says folks like me can afford to do a little bit more -- that it doesn’t make sense to give me tax breaks I don’t need if it means making some senior citizen pay more for her Medicare, or making a student pay more for their student load, or a veteran maybe doesn’t get the kind of help that they need coming home and they’ve got Post Traumatic Stress Disorder.
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Now, that’s what the other candidates want to do. I don’t know if you guys have been watching the Republican primary debates, in case you need an incentive. They make no secret about what they want to do. They want to go back to the days when Wall Street played by its own rules. They want to go back to the days when insurance companies could deny you coverage or jack up your premiums without reason. They want to spend trillions more on tax breaks for the wealthiest individuals, for people like me, who don’t need it, weren’t even asking for it -- even if it means adding to the deficit, even if it means gutting our investments in education or clean energy, or making it harder for seniors on Medicare. Their philosophy is simple: We are better off when everybody is left to fend for themselves, everybody makes their own rules, a few do very well at the top and everybody else is struggling to get by. That’s their core vision for America.
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That's not class warfare. That's not envy. It has to do with simple math. If somebody like me gets a tax break that the country can't afford, then one of two things happen: Either the deficit goes up, which is irresponsible -- or we're taking it out of somebody else -- that student who is now suddenly having to pay a higher student loan rate, or that senior who's having to pay more for Medicare, or that veteran who's not getting the help they need after having served our country.
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But that’s what the other side wants to do. They make no secret about it. They want to go back to the days where Wall Street played by its own rules. They want to go back to the day when insurance companies could do whatever they wanted to. They want to go back to the days where -- they want to continue to spend trillions of dollars on tax breaks for the wealthiest individuals in America, even if it means adding to the deficit, or gutting education, or gutting investments in clean energy, or hurting Medicare.
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Look, if somebody like me gets a tax break that they don’t need and that the country can’t afford, then one of two things are going to happen -- either it adds to our deficit, or we’re taking something away from somebody else. That student now has to pay a higher interest rate on their student loan because we’ve got to make up the money somewhere. Or that senior has to start paying more for their Medicare because the money has to be made up somewhere. Or that veteran doesn’t get the PTSD care that they needed after serving our country. Or a family that’s struggling to get by maybe is getting less home heating oil assistance.
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But, of course, that’s exactly what the other side -- all those folks who are running for this office -- that’s exactly what they’re proposing. They don’t make any secret about it. They want to go back to the days when Wall Street played by its own rules. They want to roll back health care so that insurance companies can jack up your rates or whatever they want. They want to continue to spend trillions of dollars more on tax breaks for the wealthiest individuals, even if it means adding to the deficit, even if it means gutting things like education, and basic research, and clean energy and Medicare -- all those things that help this economy grow.
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Last year, more than 20 million women received expanded access to preventive services like mammograms and cervical cancer screening at no additional cost. Nearly 2 million women enrolled in Medicare received a 50 percent discount on the medicine that they needed. Over one million more young women are insured because they can now stay on their parent’s plan.
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There is nothing new about these ideas. It’s the same old stuff they've been peddling for years. Though, Bill Clinton pointed this out a few weeks ago -- this time their agenda is on steroids. They want even bigger tax cuts for the wealthiest Americans. They want even deeper cuts to things like education and Medicare, and research and technology. They want to give banks and insurance companies even more power to do as they please.
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And we're not going to let that happen again. We're not going to let another millionaire’s tax cut get paid for by eliminating medical research projects into things like cancer or Alzheimer’s. We're not going to pay for another tax cut by kicking more kids out of Head Start programs or asking students to pay more for college, or eliminating health insurance for millions of poor and elderly and disabled Americans on Medicaid. And I'm not going to allow Medicare to be turned into a voucher that would end the program as we know it. We're not going to do that. We'll reform Medicare -- not by shifting the cost of care to seniors, but by reducing the spending that isn’t making people healthier.
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Of course, the fact is there’s nothing new about these ideas. They’ve been peddling this stuff for years. Although, as Bill Clinton said a few weeks ago, this time their agenda is on steroids. But it’s not new. They want bigger tax cuts for the wealthiest Americans. They want even deeper cuts for things like education and Medicare, and research and technology. They want to give banks and insurance companies even more power to do as they please, and gut and strip out regulations that help protect consumers.
But that’s not new. That was tried, remember? The last guy did all this. Governor Romney, well, he is saying, well, my 25 years in private sector gives me a special understanding of how our economy works. Well, if that’s true, why is he peddling the same bad ideas that brought our economy to the brink of collapse? Most good business people I know, if something doesn’t work, they do something different. So he must either think that there’s going to be a different result, or he's hoping you don’t remember what happened the last time we tried it his way.
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And I refuse to let that happen. We’re not going to have another millionaires tax cut paid for by eliminating medical research for cancer and Alzheimer’s. Another tax cut paid for by kicking kids out of Head Start programs, or asking students to pay more for college, or eliminating health insurance for millions of poor, elderly, disabled Americans on Medicaid. We're not going to voucherize our Medicare system.
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We are going to reform Medicare and Medicaid, but we'll do it the right way, which is to stop spending money on things that don't make people healthier, actually reduce costs, don't just shift them on to seniors, don't just shift them off to folks who can't afford it. That's the right way to do it.
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And then, he and his folks, they’ve got the nerve to go around saying they're somehow going to bring down the deficit. Economists who have looked at his plan say it would swell our deficits by trillions of dollars, even with the drastic cuts he’s called for in things like education and agriculture and Medicare; even with the drastic cuts to the basic research and technology that have always been the strength of the American economy.
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We're not going to pay for another millionaire’s tax cut by eliminating medical research that’s helping people with cancer and Alzheimer's disease. We're not going to pay for it by shortchanging farmers in rural America. We're not going to pay for it by kicking some kids out of Head Start, or asking students to pay more for college, or eliminating health insurance for millions of poor and elderly, and Americans on disabilities who are all on Medicaid.
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And as long as I’m President, we're not going to allow Medicare to be turned into a voucher that would end the program as we know it. We're going to reform Medicare not by shifting the cost of care to seniors -- that’s easy to do, but it's wrong. We're going to reform it by reducing the actual costs of health care, reducing the spending that doesn’t make people healthier. That’s the right thing to do.
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And then they propose turning Medicare into a voucher program. But you know what, that’s still not enough. So, as it was reported in the newspaper just this week, they’ll also have to raise taxes on the middle class by taking away tax deductions for everything from health care to college, to retirement, to homeownership --
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And fifth, we’re going to reduce our deficit by $4 trillion. I have a detailed plan. We’ll cut spending we can’t afford. We’ll strengthen programs like Medicare for the long haul. We can reform our tax code in a way that is fair and responsible -- which, by the way, means let’s stop giving tax breaks to businesses that ship jobs and factories overseas. Let’s reward companies that create jobs in manufacturing right here in the United States of America.
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-- and medical research and clean energy. But that's only $1 trillion. They’ve got $5 trillion that they want to pay for, right? So that’s not enough. So they also propose eliminating health care for about 50 million Americans and turning Medicare into a voucher program.
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The way it was done before. I put forward a detailed plan. It will cut spending we can’t afford. And there's some programs that don't work -- we can eliminate that money -- strengthen programs like Medicare for the long haul, reform our tax code so that the wealthiest Americans pay a little bit more, just like they did when Bill Clinton was President -- just like they did when our economy created 23 million new jobs.
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Well, they start by proposing a trillion dollars in cuts to things like education and training, medical research, clean energy. But that’s only a trillion dollars, so that's not enough. So then they propose eliminating health care for about 50 million Americans and converting Medicare into a voucher program. But that’s still not enough. So then they also have to effectively raise taxes on the middle class by taking away tax deductions for everything from health care, college, retirement, homeownership -- which could cost families thousands of dollars.
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I’m running because we need to reduce our deficit, we need to manage our debt, and so I've put forward a plan -- $4 trillion of deficit reduction that is balanced and responsible, that allows us to cut spending we can’t afford, strengthens programs like Medicare for the long haul, and, yes, reforms our tax code so that the wealthiest Americans pay a little bit more.
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He'd roll back the Affordable Care Act and he'd block-grant Medicaid in such a way where vulnerable people all across the country, folks who may be disabled, seniors who are relying on those services -- that would be eliminated.
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Passing health care reform that provides 30 million people, for the first time, the opportunity to get health insurance that didn’t have it before. And it makes young people -- it makes it possible for young people to stay on their parents’ health insurance -- 2.5 million young people already taking advantage of that. Preventive care, including mammograms and cervical cancer screenings for women, contraceptive care.
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Soon, insurance companies will no longer be able to deny coverage based on preexisting conditions like breast cancer, or charge women more just because they’re women. And this year, women will receive new access to recommended preventive care like domestic violence screening and contraception at no additional cost. That’s going to be happening.
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I want to bring down the deficit in a responsible, balanced way. I’ve already put forward a plan -- $4 trillion in deficit reduction, spending cuts for things that we don’t need, strengthen Medicare and our health care system so that we get a better bang for our buck -- and asking the wealthiest to pay a little bit more. And you know what, when you talk to folks around the country, successful Americans, they want to do a little more. If it’s done right, they want to contribute to making America stronger.
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And we're not going to let that happen again. We're not going to let another millionaire’s tax cut get paid for by eliminating medical research projects into things like cancer or Alzheimer’s. We're not going to pay for another tax cut by kicking more kids out of Head Start programs or asking students to pay more for college, or eliminating health insurance for millions of poor and elderly and disabled Americans on Medicaid. And I'm not going to allow Medicare to be turned into a voucher that would end the program as we know it. We're not going to do that. We'll reform Medicare -- not by shifting the cost of care to seniors, but by reducing the spending that isn’t making people healthier.
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You can decide, you choose whether to re-fight the battles we just had over financial reform and health care reform. Or you can decide that ending taxpayer bailouts of Wall Street banks was the right thing to do, and that allowing 3 million young people to stay on their parent's health insurance is the right thing to do, and that preventing insurance companies from discriminating against people with preexisting conditions is the right thing to do. You can decide.
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Or we might have to stop investing in basic science and research that keeps us as a leading-edge economy. Or, as they suggested, maybe you would have to turn Medicare into a voucher program.
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Well, first of all, like I said, the only way you can pay for that -- if you’re actually saying you’re bringing down the deficit -- is to cut transportation, cut education, cut basic research, voucherize Medicare, and you’re still going to end up having to raise taxes on middle-class families to pay for this $5 trillion tax cut. That’s not a deficit reduction plan. That’s a deficit expansion plan.
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But that’s still not enough. Still haven’t gotten to the $5 trillion yet. So then they’ll also have to raise taxes on the middle class by taking away tax benefits for everything from health care to college to retirement to home ownership, and this could cost some families thousands of dollars.
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Their basic view is that if we cut taxes trillions of dollars, mostly for those at the very top -- even if it means cutting education funding, even if it means cutting basic research, even if it means underfunding our infrastructure, and even if it means making Medicare a voucher system -- that somehow that’s going to be good for everybody.
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No, I mean, this is on their website. Their proposal is in Congress right now. And the only way to pay for this would be to gut our investments in transportation, education, basic research in things like Alzheimer’s and cancer, voucherize the Medicare system. And they will not ask for a single dime of additional revenue from those who can afford to pay it. I think that's -- that's not a recipe for economic growth.
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See, my opponent and his allies in Congress, they believe in a top-down economics. They believe that if we spend trillions of dollars on tax cuts -- mostly for the wealthy -- even if we have to pay for it by gutting education, or gutting job training programs, or gutting investments in basic research, or turning Medicare into a voucher system, or increasing middle-class taxes -- that if we do that, somehow all of you are going to benefit. That’s their idea. They also believe that if we roll back regulations on banks and insurance companies and credit card companies -- regulations that are meant to protect people and our economy -- that somehow everybody is going to be more secure. That’s their basic argument. They’ll spend a lot of time talking, but if you cut through all the stuff -- what they’re really saying is tax cuts for the wealthy, roll back regulations. That’s essentially their plan.
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What I've said to Congress is let's make sure that everybody who's making $250,000 a year or less, that your taxes don't go up. That's 98 percent of Americans. But let's ask folks like me who can afford it, the top 2 percent, to do a little bit more -- so that we can still help young people go to college, so that we don't turn Medicare into a voucher system, so that we're still investing in basic research, so that we can still build roads and help folks with the housing situation.
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So right now their main prescription for growing the economy faster is an additional $5 trillion in tax cuts, most of which would go to the wealthiest Americans, even if to pay for it you’d have to gut education programs, or turn Medicare into a voucher program, or eliminate our investments in basic research and science. That's their vision about how you grow an economy.
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No, I mean, that's the great thing about democracy, is people can vote and make up their minds. And so, if that's the case, then you can count on Mr. Romney implementing the plan that he and the Republicans in Congress have put forward. So $5 trillion in tax cuts, massive cuts in a lot of the programs that are so important, from my perspective, to growing the economy -- those will be eliminated. Medicare will be voucherized. They will implement what they say they're going to implement.
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12:45 P.M. CDT
Hello, San Antone! Hello, Texas! Well, thank you so much. Everybody have a seat. Have a seat. It is good to be with all of you, good to be back in San Antonio.
A couple of people I want to acknowledge who helped to make this day possible. First of all, your outstanding Mayor, Julian Castro. Somebody whose name I know you're familiar with because we are in the Henry Gonzalez Convention Center -- a great friend, outstanding leader, great Congressman -- Charlie Gonzalez is in the house. Another fighter for working people -- Lloyd Doggett is here. One of my national co-chairs and just a great friend and a great advocate -- and a really good actress, too -- Eva Longoria. And finally, our FuturoFund co-chair and a wonderful friend and supporter -- Henry Muñoz.
Now, this is my last campaign. It's true, I'm term-limited up. And that got me thinking about some of my first campaigns. I know that Charlie and Julian and others, they think back to your first campaigns. And back then, I didn’t have Air Force One. Didn’t have a motorcade, no helicopter. I did the driving myself, and we didn’t even have MapQuest -- I'd have to unfold the maps. And Illinois, like Texas, is a big state, so I'd have to travel all across the state, and you'd go from urban neighborhoods to rural communities, suburbs. You'd meet folks from every walk of life -- black, white, Latino, Asian, Native American.
And wherever I traveled, what I discovered was that there was a common theme to everyone's story. If I met an elderly couple, I'd think back to my grandparents, and how my grandfather fought in Patton's Army in World War II, and my grandmother worked on a bomber assembly line. And when my grandfather came back home, he was able to attend college on the GI Bill, and they were able to buy their first home with an FHA loan. And I'd think about the distance they'd traveled from the small towns in Kansas, where they had been born.
And if I met a single mom I'd think about my mother, who had to raise me and my sister basically by herself, with some help from my grandparents, because my father had left, so that I didn't even know him, and how she had to work and go to school and look after her kids. But with the help of grants and scholarships, she was able to get an outstanding education and, more importantly from her perspective, give me and my sister a great education. And I thought about how much that would be possible in some other place.
And if I met a working family, I’d think about Michelle’s family. Her dad had multiple sclerosis, so by the time I met him, he could barely walk, had to use two canes, and had to wake up an hour earlier than everybody else to get dressed before going to work. He worked at a water filtration plant, blue-collar worker. And Michelle’s mom stayed at home when the kids were young, and then worked as a secretary. But Michelle’s dad, despite his disability, never missed a day of work, and went to every dance recital and every basketball game, and had just a great joy about him.
And so all across the state of Illinois, I would be traveling and I’d meet people, and I’d say, you know what, their story is my story. And then when I began to run for President I traveled all across the country, including here in Texas -- I’d realize, well, the stories I’ve been hearing in Illinois, those are America’s story. And at the heart of that story was a basic idea, which is, in this country, unlike any other, the basic bargain that binds us together is the idea that if we work hard, if we’re responsible, then you can get ahead; that you’re endowed by our Creator with certain inalienable rights like liberty, but also the pursuit of happiness -- not a guarantee, but the chance to get ahead if you work hard.
And so generation after generation, parents, grandparents, great-grandparents toiling against all odds, understanding that at some point this hard work would pay off and they could climb their way into a middle class. And that middle class didn’t just have to do with how much money you had in your bank account. It had to do with the idea that you could always find a job that supported a family, and you wouldn’t go bankrupt when you got sick, and you could buy a home to call your own, and you could make sure your kids had a good education. Maybe you take a vacation once in a while -- nothing fancy, but time to spend with those you love. And you could retire with dignity and respect. And most of all, you could expect that your children could aspire to things that you never even imagined.
That was the heart -- that is the heart of the American idea. This basic idea that no matter what you look like, no matter where you come from, no matter what your last name is, here in America, you can make it if you try.
And in 2008, when I ran for President and so many of you supported me, we ran because we believed in that idea and we believed that that basic bargain had been fraying. We had seen a decade in which hard work wasn’t paying off for too many people. So people were working harder than ever, but the cost of living, gas, college, health care, all were going up; incomes, wages flat-lining. We’d gone from surplus to record deficits, job growth stagnant.
And so what compelled us together to make this effort was specific issues, but it was also, how do we get that idea back for the vast majority of Americans? And what we didn’t know at the time was, is that we were looking at the worst financial crisis in a generation -- the worst economic crisis since the Great Depression. And so millions of people were losing their jobs even as I was wrapping up the campaign. And people lost their homes, and more and more folks struggled, and it felt as if that dream was slipping even further away.
But we have not been deterred. As much work as we still have to do, over the last three and a half years that focus on how do we build a middle class that is strong and secure and growing, that has remained my central focus. And even as we've created 4.5 million new jobs and 500,000 jobs in manufacturing, and stabilized the financial system -- all the steps we've taken without much cooperation from the other side -- that's still been our North Star.
And what's always helped me every single day move forward is the recognition and the belief and the understanding that although the times have been tough, the American people have been tougher -- and that for everything that happened during that financial crisis and the recession that followed, America's fundamental character did not change. People's willingness to work hard did not change. People's ability to bounce back from adversity had not changed.
And now, as we look out at the future, the question is, how do we best fulfill that goal, that aim that we set for ourselves in 2008? For all the progress we've made, we did not embark on this journey just to get back to where we were in 2007. We worked hard because we want a country where everybody gets a fair shot and everybody is doing their fair share and everybody is playing by the same set of rules. That's why I ran for President in 2008. That's why I'm running for a second term as President of the United States of America.
AUDIENCE: Four more years! Four more years! Four more years! Four more years!
Now, as we think about this election, understand that the challenges we face are solvable. Sometimes it's fashionable among the pundits to say, well, America is in decline, or our best days are behind us. You hear that periodically. This isn't the first time we've heard that about America. And I could not disagree more, because there's not a problem out there that we can't solve. The problem is not that we don’t have technical solutions or big ideas to tackle these challenges. The problem is we've got a stalemate in Washington right now. And it's more than just a difference between two candidates, more than just a difference between two political parties. It is two fundamentally different visions about how to move America forward.
My opponent and his allies in Congress, they believe that prosperity comes from the top down. They believe that if we keep in place the Bush tax cuts for the wealthiest Americans and then we add on top of that another $5 trillion of tax cuts -- most of which would go to people who don’t need tax cuts and, frankly, aren't even asking for them -- if we do all that, even if it means gutting education investments, even if it means slashing transportation, even if it means that we're not able to take care of our veterans as effectively, even if it means that we're not investing in basic science and research, even if it means that Medicare we've got to voucherize -- even if we do all those things, they still believe that those tax cuts that benefit folks at the top will result in everybody being better off. That’s their basic economic theory. It's not complicated.
They've got one other element to it, in fairness. They also say they want to eliminate regulations on insurance companies and Wall Street banks -- regulations we put in place to protect consumers from unscrupulous mortgage practices, and that take regulations off of polluters. If we do those things along with the tax cuts, the market will be freed up, government is out of the way, and happy days are here again. That’s their theory.
AUDIENCE: Booo --
And don’t take my word for it -- go to their websites. Look at the budget that was passed by the House Republicans. That’s their theory. That’s what it boils down to.
Now, it is a theory -- and some of you might be persuaded by this theory if it hadn't been for the fact that we just tried it. We spent almost a decade doing what they prescribed. And how did it turn out? We didn't see greater job growth. We didn't see middle-class security. We saw the opposite. And it all culminated in the worst financial crisis in our lifetimes -- precisely because there were no regulations that were adequate to the kinds of recklessness that was being carried out.
So I don't know about you, I don't know how you guys operate in your life, but my general rule is if I do something and it doesn't work -- I don't go back to doing it. We don't go backwards, we go forwards.
So I’ve got a different idea. I don't believe in top-down economics; I believe in middle-out economics. I believe in bottom-up economics. I believe in fighting on behalf of working families and giving them opportunity and putting some money in their pockets -- because when we do that, everybody does better, folks at the bottom, folks in the middle and folks at the top.
That's not a Democratic idea. That's an American idea. That's what built this country. That's what made us into an economic superpower.
So let’s just be more specific about some contrasts here. My opponent thought it was a good idea to "let Detroit go bankrupt." With a million jobs at stake, I disagreed. I wanted to make a bet on America’s workers and American industry and American manufacturing. And three and a half years later, the auto industry is back. GM is number one; Ford and Chrysler are selling cars. That's my vision for America.
And this is not unique to the auto industry. I want advanced manufacturing locating here in San Antonio. I want us to be making things here in the United States of America, so I want to end tax breaks to companies that are shipping jobs overseas. Let’s give tax breaks to companies that are investing right here in Texas, right here in the United States of America. Let’s put American workers back to work selling goods stamped with three proud words: Made in America. That's my vision for America.
My opponent has a different idea. His main calling card for wanting to be President is his private sector experience. So we asked the voters to examine that experience. He invested -- made money investing in companies that had been called "pioneers" of outsourcing. I don’t want pioneers of outsourcing in the White House; I want somebody who believes in insourcing. Let’s bring those jobs back home. That’s why I’m running for a second term as President of the United States.
In 2008, I made a promise we’d end the war in Iraq -- we ended it. I promised to go after bin Laden -- we got him. We’re transitioning out of Afghanistan and starting to bring our troops home. And what I’ve said is, as we wind down these wars, let’s take half the money that we spent on war to pay down the deficit; let’s use the other half to do some nation-building here at home.
Now, Mr. Romney disagrees with me on this -- said it was "tragic" the way I ended the war in Iraq -- the way I ended the war in Iraq, doesn’t want to set a timetable for ending the war in Afghanistan. But, you know, I’m looking around this country and I know from our history, from world history, that no nation has always been stronger than its economy. That’s an issue of our national defense.
And so because of our outstanding men and women in uniform, we know that we’ve got the greatest military on Earth, but we also have to have the best economy on Earth to support those troops. And that means, let’s start investing, rebuilding roads and rebuilding bridges and laying broadband lines into rural communities. Let’s rebuild schools that are overcrowded and give them state-of-the-art science labs. And let’s rebuild our ports and our runways.
That’s what America is about, is rebuilding. And we’ve got thousands of construction workers out there that are ready to get to work. Let’s put them to work. That will be good for our economy, and over the long term will be good for our strength. That’s a difference between myself and my opponent.
As long as I’m Commander-in-Chief, we’re going to make sure that our veterans are properly cared for. And we have expanded our funding and improved how we are working with our veterans. But we’ve got more work to do and that requires resources. We’re sure not going to spend that money better on tax cuts for me. I want to make sure that a young man or woman who has served our country, who has fought for us, they shouldn’t have to fight for a job or a roof over their heads when they come home.
I'm running to make sure that America has the best education system on Earth -- from pre-K all the way to post-graduate. And that means hiring new teachers, especially in math and science. And it means building on the work we've already done to make sure that student loan rates don’t double, to make sure that middle-class families are getting tuition tax credits. Now we've got to reduce the cost of college, make it more affordable to everybody. I want to expand opportunities for 2 million young people to go to community colleges so they can get trained on the jobs that businesses are hiring for right now. Because today education is not a luxury, today a higher education is an economic imperative for the 21st century. And I want to make sure that the United States of America once again has the highest percentage of college graduates, because that is going to help determine who wins the race in this global economy in the 21st century. And I want America to be number one. That’s why I'm running for President of the United States.
On almost every issue, there's a stark contrast between my vision and my opponent's. When it comes to housing, he wants to just let foreclosure bottom out. I don’t think that’s a solution; that’s part of the problem. So I want to actually help families all across Texas and all across the country refinance -- at these historically low rates, the average family could save $3,000 a year, in your pockets. That will not just be good for you, that will not just be good for the housing market; that will be good for the economy. But we need to get it done.
I don't want to go back to the days when whether you could serve your country or not depended on who you loved. We ended "don't ask, don't tell," and I want to make sure that it stays ended because it was a bad idea.
I don't want to go back to the day when women didn't have control of their health care choices. I’ve got two daughters, and I want them to have the same control over their health care as anybody’s sons out there. I believe that's the right thing to do.
And we don't need another four years of arguments about health care.
AUDIENCE: No!
The Affordable Health Care Act -- otherwise known as Obamacare -- was the right thing to do. And you know what, they're right, I do care. I care about folks who get sick and go bankrupt. I care about parents who don't know whether or not they're going to be able to get treatment for their kids. It was the right thing to do.
And for all the misinformation out there, it’s very simple to describe what’s going to happen. If you already have health care, the only thing that you have to do is enjoy the fact that now insurance companies can't jerk you around because of the small print. You have rights. Your kids can stay on their parent's plan until they’re 26 years old. Senior citizens are seeing reductions in prescription drug costs.
If you don't have health insurance, we’re going to help you get it. And, yes, it’s true we expect everybody to act responsibly, so for the 1 percent or 2 percent of people who still don't get health insurance even though they can afford it, we’re going to say to them, you can't pass off those costs on to somebody else in the form of higher premiums. You’ve got to take responsibility, as well.
It was the right thing to do. We are not going backwards, we’re going forwards. And 30 million people are going to get health insurance because of it.
We’re not going backwards when it comes to immigration. My opponent says the Arizona law should be "a model for the nation."
AUDIENCE: Booo --
I believe we are a nation of laws and a nation of immigrants. I believe we can secure our borders and give opportunities to people who are striving and working hard -- especially young people who have been raised in this country and see themselves as Americans. That was the right thing to do. We're not going backwards, we're going forwards.
And we're going to get control of our deficit and debt, but not with the plan that these folks are promoting. They say this is the most important issue, the thing they care about most, and then, they propose a $5 trillion tax cut that would mostly benefit folks who don't need it, and would blow a hole a mile wide through our budget.
Now, I don't believe government can solve every problem. Not every government program works. We've already cut a trillion dollars out of our federal budget, and we can do more. But we've got to do it smartly and responsibly. I don't believe that government can help somebody that doesn't want to help themselves, but for all those folks who are working hard every day, I want to make sure that we continue to invest so that young people can go to college; that we continue to take steps so that we've got a great transportation system to move people and goods and services across the country. I want to make sure that we're investing in basic research and science that has given us this technological lead that allowed us to grow and become the economic superpower that we are.
So what I've said is, yes, we'll make some more cuts, but let's ask folks who have been incredibly blessed to do a little bit more, to go back to the rates we had under Bill Clinton. And you know what, that theory has been tested as well -- because when Bill Clinton did it, we had surpluses instead of deficits. We created 23 million new jobs -- and people at the top did really well also.
Like I said, that’s been our history -- when middle-class folks are doing well and those striving to get into the middle class are doing well, everybody does well.
And that maybe is what is at the heart of the difference in this debate. See, I believe in individual initiative and entrepreneurship and risk-taking. And I believe that the free market is the greatest system on Earth to create wealth and prosperity. But just like Abraham Lincoln said, there are some things we do better together than we do on our own.
When my grandfather came back home and that generation got the GI Bill that was great for everyone because it upgraded the skills of all of our workers, that wasn’t just good for some, that was good for all. When we invested in the Hoover Dam or the Golden Gate Bridge or the Trans-Continental Rail System, or when we sent a man to the moon or invented the Internet, that was good for everybody.
There are some things we do better together. And we rise or fall as one nation. That’s what I believe. That’s what our history tells us. That’s what our future demands. That’s why I’m running for a second term as President of the United States.
So let me just say this. In the next four months -- you guys won’t see them because you’re not considered one of the battleground states, although that’s going to be changing soon -- but there’s going to be more money spent than we’ve ever seen before. Folks writing $10 million checks to try to beat me, running ads with scary voices -- and basically one message. I mean, it’s a very simple message. Their message is: The economy is not where it needs to be and it’s Obama’s fault. So there will be various -- there will be variations on the theme, but it will be the same message over and over and over again.
That's what they're banking on -- because they can't sell their actual economic plan, so their goal is to see if they can knock us down. More money than we’ve ever seen before. And it’s understandable that some folks get cynical about the political process as a result.
But what you taught me in 2008 is the same thing that I learned in my first campaigns, as I traveling around in my car, going from town to town, talking to people in their living rooms or VFW halls or diners, and trying to get their votes -- and hearing stories about people’s parents and grandparents and great-grandparents, some who came as immigrants, some who were brought here not of their own accord, some who worked in mills or mines, some worked on farms, ranches. The thing I learned was that there is a core decency and grit and faith in the American people. And when the American people decide what’s true and what’s right, and they join together to bring about change, to make this country more responsive to the hopes and dreams of ordinary people -- when that happens, it doesn't matter how much money the other side spends, it can't be stopped. I cannot be stopped.
You showed that in 2008, and I believe you’re going to show it again in 2012. I tried to make promises in 2008 that I knew I could keep, and one of those promises was that I wasn’t a perfect man and I wouldn't be a perfect President, but I’d always tell you what I thought and I’d always tell you where I stood, and I’d spend every waking minute fighting as hard as I knew how for you -- making sure that every single day I was thinking about how to make your lives a little bit better.
And I knew I could keep that promise because I saw myself in you. And when I saw your grandparents, I saw my grandparents. And when I saw your kids, I saw my kids. And I’ve kept that promise. And I still believe in you.
And if you still believe in me, and you're willing to stand up, and knock on doors and make phone calls, and get out there and fight on behalf of a vision in which every Americans has opportunity to pursue their dreams -- I promise you, we will finish what we started in 2008. We will not be going backwards, we will be going forwards. We will win this election. And we will remind the world just why it is that the United States of America is the greatest nation on Earth.
God bless you. God bless the great state of Texas and God bless the United States of America.
END
1:20 P.M. CDT
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My opponent and his allies in Congress, they believe that prosperity comes from the top down. They believe that if we keep in place the Bush tax cuts for the wealthiest Americans and then we add on top of that another $5 trillion of tax cuts -- most of which would go to people who don’t need tax cuts and, frankly, aren't even asking for them -- if we do all that, even if it means gutting education investments, even if it means slashing transportation, even if it means that we're not able to take care of our veterans as effectively, even if it means that we're not investing in basic science and research, even if it means that Medicare we've got to voucherize -- even if we do all those things, they still believe that those tax cuts that benefit folks at the top will result in everybody being better off. That’s their basic economic theory. It's not complicated.
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So we’re going to move forward on health care -- which brings me to one last issue, this whole issue of deficits and debt. Now, the other side says this is the most important issue, we’re concerned for future generations. Now, if you are truly concerned about deficits and debt, it’s puzzling that you would then propose a $5 trillion tax cut that would give the average millionaire a $250,000 tax break, and to pay for it you would then have to gut education, gut investments in science and research, gut our transportation spending, voucherize Medicare, oh, and in the process, eventually, you’re probably going to have to raise taxes on middle-class families.
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And so the question is going to be how bad do we want it? How bad are we willing to work for it? How committed are we to making sure that our kids get a great education? How committed are we to making sure that Social Security and Medicare are there for folks in the future? How committed are we to making sure that our veterans, who have served us valiantly, that we're serving them as well as they've served us? How committed are we to bringing down our deficit in a balanced way? How committed are we to continuing to invest in science and research? How committed are we to that basic American bargain that says if you work hard, you can get ahead?
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He plans to roll back health care reform, forcing more than 200,000 Floridians to pay more for their prescription drugs. He plans to turn Medicare into a voucher program.
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So if that voucher isn't worth enough to buy the health insurance that’s on the market, you're out of luck. You're on your own. One independent nonpartisan study found that seniors would have to pay nearly $6,400 more for Medicare than they do today.
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Now, Florida, that’s the wrong way to go. It's wrong to ask seniors to pay more for Medicare just so millionaires and billionaires can pay less in taxes. That’s not the way to reduce the deficit. We shouldn’t be squeezing more money out of seniors who are just barely getting by right now.
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My plan is to squeeze more money out of the health care system by eliminating waste, and going after abuse and fraud in Medicare. We can cut back government spending that we can't afford, but I will also ask anybody who is making over $250,000 a year to just go back to the rates they were paying under Bill Clinton -- because, by the way, that worked. Nearly 23 million new jobs were created, the largest budget surplus in our history. And when we were doing it that way, where the burden was shared, actually, millionaires did really well.
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And so, there may not be any quick fixes and easy solutions to some of the challenges we face, but we're going to fix them. I have every bit of confidence. In fact, the problem we have right now is not that we don't have good ideas for things like housing and education, making sure that we're bringing down our deficit and protecting seniors' Medicare and Social Security. The problem is not that we don't know how to do it. The problem is we've got a stalemate in Washington.
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But wait, it gets better. To pay for this, he'd have to gut job-training programs for workers, financial aid for our students. He'd potentially have to raise taxes on the middle class -- the folks who can least afford it. He wants to roll back the Affordable Care Act, health care reform, forcing 200,000 Floridians to pay more for their prescription drugs. He plans to turn Medicare into a voucher program.
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Now, understand how that works. If the voucher isn't worth what it takes to buy health insurance in the private marketplace, you're out of luck. You've got to make up the difference. You're on your own. So one independent, nonpartisan study found that under a similar plan, seniors would have to pay nearly $6,400 for Medicare than they do today. Where are you going to get that from? Where are you going to get it from -- $6,400? How many people here think that's a good idea --
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-- to finance tax cuts for folks who don't need them and weren't even asking for them. So, Florida, that is wrong. It’s wrong to ask you to pay for Medicare so that people who are doing well right now get even more. That’s no way to reduce the deficit. We shouldn’t be squeezing more money out of our seniors. My plan is to squeeze more money out of the health care system that is being wasted with waste and abuse and fraud. And we’ve been, by the way, cracking down on Medicare fraud harder than just about anybody because those dollars should be going to you and your care, not to folks who are cheating the system.
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And by the way, just like we tried their way and it didn’t work -- the way I’m talking about, we tried that, too, under a guy named Bill Clinton, and we created 23 million new jobs -- and we had a surplus instead of a deficit, and Medicare was protected, and Social Security was protected. And by the way, wealthy people did pretty well, too.
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I believe it was the right thing to do, to pass health care reform. All of you know what it means to have security when it comes to your health care. A lot of folks here may already be on Medicare. But imagine if you had been unlucky and ended up getting laid off at the age of 55 or 57, and maybe you've already had an illness and now you're trying to get back in the workforce, but it's taking a long time. You'd lose your health insurance. Or you get a job that doesn't offer you health insurance. Or maybe you're a small business person and you've got to go into the individual market, and it turns out that because of a preexisting condition you can't get it or it costs so much you could never even afford it. That's not right. That's not who we are.
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Now, Mitt Romney has a different theory. He actually wants to cut taxes by an additional $5 trillion. And the math is hard to figure. It’s hard to figure how you reduce the deficit by blowing an additional $5-trillion hole in the deficit. And the only way you can pay for it is not only to slash and gut investments in education and research and infrastructure; it’s not only cutting back on the social safety net for vulnerable families; it’s not only that you’ve got to voucherize Medicare, as he’s proposed -- but you also ultimately over the long term end up having to impose a greater tax burden on the middle class. That's not how to grow the economy.
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My opponent’s basic vision can be described pretty simply. You take the Bush tax cuts, you add on top of it an additional $5 trillion worth of tax cuts that would disproportionately benefit folks like us that don’t need them. To the extent that there’s even an attempt to reduce the deficit, it’s done by slashing investments in education, voucherizing critical safety net programs like Medicare, reducing our investment in basic research and science. And along with stripping away regulations that we’ve put in place through the health care bill or Wall Street reform or the enforcement that we think is important to make sure that our air is clean and our water is clean, that somehow, the market is going to be unleashed and prosperity will rain down on everybody. Now, that’s their theory.
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Issue Position |
Romney has recommended Medicare reforms that include a gradual raising of the retirement age and allowing younger generations that retire to use private plans “that provide at least the same level of benefits” with assistance from the federal government. He has rejected the idea of raising taxes to support the program.
He has proposed helping seniors pay for the option they choose, subsidizing lower-income individuals and indicated that he would not cancel prescription drug benefits for seniors.
Romney has criticized Obama's health-care plan for its impact on the program, saying the plan cut Medicare funding by $500 billion -- a claim that Democrats dispute.
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Romney's Statements (24)
Medicaid is a prime example. We need to turn Medicaid back to the states and allow them to craft the healthcare solutions that suit their citizens best. By limiting the growth of Medicaid funding to CPI plus one percent, we will save $100 billion a year.
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My dad used to say that “the pursuit of the difficult makes men strong." Our next president is going to face difficult choices. Among these will be the future of Social Security and Medicare. In their current form, these programs will go bankrupt. I know that, you know that, and even our friends in the other party know that. The difference is that I will be honest about strengthening and preserving them, and they won’t.
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While President Obama has been silent on Social Security, his agenda for Medicare is disastrous. He’s the only president in modern history who has cut Medicare for seniors—do not forget, it was President Obama who cut $500 billion from Medicare, not to preserve it or sustain it, but to pay for his vaunted Obamacare. And he put the future of Medicare in the hands of 15 unelected bureaucrats. These bureaucrats have the power to enact further cuts to Medicare without congressional approval, even if those cuts overturn a law previously passed by Congress. President Obama’s so-called Medicare reforms could lead to the rationing or denial of care for seniors on Medicare.
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Unlike President Obama, our next president must protect Medicare, improve the program, and keep it sustainable for generations to come. Several principles will guide my efforts.
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Third, tomorrow’s seniors should have the freedom to choose what their health coverage looks like. Younger Americans today, when they turn 65, should have a choice between traditional Medicare and other private healthcare plans that provide at least the same level of benefits. Competition will lower costs and increase the quality of healthcare for tomorrow’s seniors.
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These ideas will give tomorrow’s seniors the same kinds of choices that most Americans have in their healthcare today. The future of Medicare should be marked by competition, choice, and innovation—rather than bureaucracy, stagnation, and bankruptcy. Our path for the future of Social Security and Medicare is honesty and security, theirs is demagoguery and deception.
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But cutting spending and bureaucracy alone won’t be enough. In their current form, Social Security and Medicare are unsustainable. And we cannot afford to avoid our entitlement challenges any longer.
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I am the only candidate for President who has offered a sweeping, specific plan to save Social Security and reform Medicare. There are those who say you can’t talk straight to the American people on these key issues and still win an election. I say we can, we must, and I will!
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When it comes to Medicare, tomorrow's seniors should have the freedom to choose between traditional Medicare and a range of private plans. If these future seniors choose a more expensive plan, they would bear the additional cost.
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Third, he said he’d make Medicare and Social Security solvent for future generations. Three years later, he still hasn’t offered a serious proposal for either one.
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A few commonsense reforms will ensure we make good on our promises to today’s seniors while saving Social Security and Medicare for future generations. Tax hikes are off the table, and there will be no change for those at or near retirement. But younger generations will enter a system strengthened for the 21st century.
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When it comes to Medicare, tomorrow’s seniors will have a choice among insurance providers, including traditional Medicare. As with Medicare Part D today, the private sector will compete to offer insurance coverage at the lowest possible price. Seniors will then receive government support to ensure they can afford that coverage. And with Medicare, like with Social Security, lower-income seniors will receive the most generous benefits.
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Starting in 2022, new retirees will participate in this new system. We will gradually increase the Medicare eligibility age by one month each year. In the long run, the eligibility ages for both programs will be indexed to longevity so that they increase only as fast as life expectancy.
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Second, we will return federal programs to the states. I will send Medicaid back to the states and cap that program’s rate of growth. And I will do the same for other programs, like food stamps, housing subsidies, and job training.
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President Obama has yet to offer a single serious proposal for saving Medicare or Social Security. I have a plan to save both – and, unlike him, I have the courage to put my plan on the table.
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President Obama doesn’t have a single serious proposal for saving Medicare or Social Security. I have a plan that saves and strengthens both – and I have the courage to put it on the table.
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One of the reporters covering our campaign is Maeve Reston of the Los Angeles Times. For Maeve’s birthday, I got her a cake and sang her a birthday song. For my birthday, she was kind enough to remind me that I’m now old enough to qualify for Medicare.
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He is the only President to ever cut $500 billion from Medicare. And, as a result, more than half of doctors say they will cut back on treating seniors.
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To control Medicare cost, he has created an unelected, unaccountable panel with the power to prevent Medicare from providing certain treatments. The result will be fewer treatments and services available to patients in need, and nowhere else to turn.
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I have already proposed a plan that will save and strengthen Medicare and Social Security for future generations. And, unlike President Obama, I have the courage to stand behind my plan and the leadership to enact it.
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My plan preserves these programs for those at or near retirement and strengthens them for future generations – without tax increases. I will gradually raise the retirement age for Social Security, and reduce the rate of benefit growth for tomorrow’s higher income seniors. I will introduce market competition and consumer choice to Medicare, while also preserving traditional Medicare coverage as an option, so that future seniors can get higher quality care at lower cost.
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Old-school liberals saw a problem and thought a government-run program was the answer. Obamacare is the fulfillment of their dreams. Federal bureaucrats will tell all Americans what they have to have in their health insurance policies. And an unelected board will tell seniors what treatments Medicare will cover.
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Obamacare was bad policy yesterday. It's bad policy today. Obamacare was bad law yesterday. It’s bad law today. Let me tell you why I say that. Obamacare raises taxes on the American people by approximately $500 billion. Obamacare cuts Medicare, cuts Medicare, by approximately $500 billion. And even with those cuts, and tax increases, Obamacare adds trillions to our deficits and to our national debt and pushes those obligations on to coming generations. Obamacare also means that for up to 20 million Americans, they will lose the insurance they currently have, the insurance that they like and they want to keep. Obamacare is a job killer. Businesses across the country have been asked what the impact is of Obamacare. Three quarters of those surveyed by the Chamber of Commerce said Obamacare makes it less likely for them to hire people. And perhaps most troubling of all, Obamacare puts the federal government between you and your doctor.
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Third, I will reduce government spending. Our high level of debt slows GDP growth and that means fewer jobs. If our goal is jobs, we must, must stop spending over a trillion dollars more than we earn. To do this, I will eliminate expensive non-essential programs like Obamacare, and I will work to reform and save Medicare and Social Security, in part by means-testing their benefits.
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