TRANSCRIPT: ABC News Exclusive Interview with President Barack Obama

Nov. 11, 2009— -- JAKE TAPPER, HOST: So, thanks so much for doing this.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you.

TAPPER: Here's a question a lot of Senate Democrats want to know. You said, when you gave your joint address to Congress, that under our plan, no federal dollars will be used to fund abortions. This amendment passed Saturday night which not only prohibits abortion coverage in the public option, but also prohibits women who receive subsidies from taking out plans that -- that provide abortion coverage. Does that meet the promise that you set out or does it over reach, does it go too far?

OBAMA: You know, I laid out a very simple principle, which is this is a health care bill, not an abortion bill. And we're not looking to change what is the principle that has been in place for a very long time, which is federal dollars are not used to subsidize abortions.

And I want to make sure that the provision that emerges meets that test -- that we are not in some way sneaking in funding for abortions, but, on the other hand, that we're not restricting women's insurance choices, because one of the pledges I made in that same speech was to say that if you're happy and satisfied with the insurance that you have, that it's not going to change.

So, you know, this is going to be a complex set of negotiations. I'm confident that we can actually arrive at this place where neither side feels that it's being betrayed. But it's going to take some time.

TAPPER: Do you think that amendment is status quo or does it lean a little bit in one direction or the other?

OBAMA: I think that there are strong feelings on both sides. And what that tells me is that there needs to be some more work before we get to the point where we're not changing the status quo. And that's the goal. The goal here is to make sure that people who have health insurance have greater stability and security, people who don't have health insurance get the ability to buy it affordably and that we're driving down costs.

And, you know, I think everybody understands that there's going to be work to be done on the Senate side. It's not going to match up perfectly with the House side. But obviously, it was a historic night for the House. We've never been this far. And I'm very confident that my colleagues in the Senate are going to say to themselves that we've got to get this done.

TAPPER: One of the concerns about health care and how you pay for it -- one third of the funding comes from cuts to Medicare.

OBAMA: Right.

TAPPER: A lot of times, as you know, what happens in Congress is somebody will do something bold and then Congress, close to election season, will undo it.

OBAMA: Right.

TAPPER: You saw that with the "doc fix".

OBAMA: Right.

TAPPER: Are you willing to pledge that whatever cuts in Medicare are being made to fund health insurance, one third of it, that you will veto anything that tries to undo that?

OBAMA: Yes. I actually have said that it is important for us to make sure this thing is deficit neutral, without tricks. I said I wouldn't sign a bill that didn't meet that criteria. And what I also said in that speech to the joint session was that I'm willing to put in some safeguards where if we don't obtain the savings that have been promised, that we've got to make adjustments in terms of the benefits, because the goal here is to reduce costs for families, give them more security, but do so in a way that is not adding to our deficit, that, in fact, over the long-term, if we can bend the cost curve, will reduce our deficit.

And I promise you, we're already starting to look at the, you know, fiscal year 2011 budget and the out years. And although we are in the midst of recession and we inherited a big structural deficit, nobody is more mindful of me -- than me of the fact that we can't have a -- a bill that simply blows up an additional entitlement that's not paid for.

TAPPER: So Congress needs to know that you'll veto any attempt to walk back what they pass?

OBAMA: Congress needs to know that when I say this has to be deficit neutral, I mean it.

TAPPER: The -- under the House bill, those who can afford to buy insurance but don't -- can afford to do it but don't -- pay a fine. And if they refuse to pay a fine, there's a threat, as there is with lots of tax fines, there's a threat of jail time. And the Senate removed that provision in the Senate Finance Committee. Do you think it's appropriate to have a threat of jail time for those who refuse to buy insurance?