Obama Discusses Key Efforts to Strengthen the American Economy

The president speaks to influential executives at the annual Wall Street Journal CEO Council.
3:00 | 11/19/13

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Transcript for Obama Discusses Key Efforts to Strengthen the American Economy
Well. It is wonderful to be here and I always look -- order not to speak to. Some of our top businesses across the country who wore. Hiring people investing in America. -- the economy -- and many of you I've had a chance to interact with before as you know. Oftentimes right do something like this I want to spend more time. Answering questions and having -- conversation and giving any formal remarks let me just. Provide a little bit of an introduction. Obviously over the last couple months. Most of the oxygen in the -- be. Been consumed with two things one the government shutdown and the possibility of default that was ultimately resolved. And the second has been the roll out of the Affordable Care Act and the fact that my web -- not work in the -- -- -- And it's entirely legitimate that those are have been issues of great concern. The impact. The shutdown. And the threat of default I think not only. Did some. Significant damage to the economy at a time when. We didn't need. Self inflicted homes but also spoke to. Some larger problems we've seen here in Washington and the sense of dysfunction. In the seeming incapacity. Both parties. In congress to. Work together to advance an agenda that's gonna help us grow. We respect before -- care act I think people are legitimately concerned because. We have a major problem with doctor in this country 41 million people without health insurance a lot of people underinsured. And once again. How we fix. Health care system that's broken for too many people for too long I think ends up. Speaking to how much confidence we have in government and whether we still have the capacity collectively. To bring about changes that are going to be good for our economy good for businesses. But for the American people. I do want to say -- that beyond the headlines. We have made real progress in the economy and sometimes that hasn't gotten enough attention. Some of the tough decisions that we made early on have paid off. Decisions that helped us not only recover from a crisis but begin -- a stronger foundation for future growth. We -- focused on manufacturing and exports and today our businesses sell more goods and services made in America. Than. Ever before around the world. After a decade of shedding jobs are manufacturing sector is now added about. Half a million new jobs and it's led. By an American auto industry that has come roaring back after decades of decline. We decided reverse our dependence on foreign oil and today we generate more renewable energy. Than ever before and more natural gas than anybody in the world. And for the first time in nearly twenty years America now produces more -- foreign oil -- we buy from other countries. When I took office we invested a fraction of what other countries did in wireless infrastructure. And today it's up nearly 50%. Helping companies -- jobs innovation and a booming app economy that's created. More than 500000 jobs. When I took office only 5% of the world's Smartphones ran on American operating systems today. More than 80% of and it's not just in the high tech economy that we're seeing progress for example. American farmers are on pace to have. One of their best years and decades and they have consistently. Been able to export more. Make more profits. And help restore rural economies. Then when we came in office. And yes we decide to take on a broken health care system and even though the rollout of the new healthcare marketplaces been rough to say the least. About half million Americans are now poised to gain health care coverage beginning January 1 that's after only a month -- sign up. We also seen health care cost growing at the slowest rate in fifty years. Employer based health costs are growing at about 13. Of the rape of a decade ago and that has an impact on your bottom line. And after years. But trillion dollar deficits we rein in spending wound down two wars and began to change tax -- that. I believe it was too skewed towards. The wealthiest among us would be expensed middle class and cents office since I took office we have now cut our deficits. By more than half. And it all -- and businesses like yours created seven point eight million new jobs over the past 44 months. We've gone farther and recovered faster. Than most other advanced nations. And so in a lot of ways America is poised for Africa. We are in. A good position to compete around the world in the 21 century. The question is are we gonna realize their potential and that means that we've still got some. More work to do. Our stock markets and corporate profits are soaring but. We've got to make sure that this remains a country where everyone who works hard to get -- -- and that means we've still got to address long term unemployment. We still have to address stagnant wages and stagnant statement. Incomes. And frankly. We've got to stop. Governing by crisis here in this town because of -- for Washington's dysfunction. I think all of us agree we'd be a lot further along. The shut down on the threat of default harmed our jobs market the cost our economy about five billion dollars and economists predict it will Slorc GDP growth this quarter. And it didn't need to happen. It was self inflicted we should not be injuring ourselves every few months we should be. Investing in ourselves and in a sensible world that starts with a budget that cuts what we don't need. Closes wasteful loopholes. And helps us afford to invest in the things that we know will help businesses like yours and the economy as a whole education. Infrastructure. Basic research and develop. We would have a grand bargain for middle class jobs that. Combines tax reform of the financing mechanism that's. Lets us create jobs rebuilding infrastructure that your businesses depend on what we haven't gotten as much take up from the other side is -- we'd like to see so far. We have the opportunity for. Bipartisan authority to negotiate the best trade deals possible so businesses and workers can take advantage new markets that are opening up around the world. We haven't seen the kind of take up from the other side that we'd like to see so far. We've got the opportunity to fix a broken immigration system that strengthens our economy and our national security. The good news here is the senate majority. Passed a bipartisan bill that economists say would grow our economy by one point four trillion dollars and -- our deficits by nearly a trillion dollars over the next two decades. You when turned -- to elect -- congress -- -- -- I'm hoping that speaker -- in the House of Representatives can still work with us to get that done. And we need to be going all out to prepare our kids and our workers for the demands of a 21 century economy. I propose giving every child -- early start success. By making high quality preschool available to every four year old in America. We know that you get more bang for the buck. When it comes to early childhood education than just about anything else. And you've got great examples around the country. It's oftentimes in red states that are doing just that we need to make that same investment. We're working to bring down the cost of a college degree so. More young people can get a higher education and one thing but I'm very excited about this has been -- good example public private partnership is. The idea of redesigning. Our high schools. To make sure the more young people get hands on training and develop the skills that they need particularly in math science and engineering. That businesses are looking for. And in fact today we're announcing a competitive grant program. That won't -- more high schools to partner with colleges and local businesses to better prepare kids for college or career and in December all. Be bringing together college presidents and other leaders to figure out ways to help more low income students attend and succeed in college so. Just to sum up my basic message is this. We know what the challenges. We know what the solutions -- Some of them -- tough. But. What's holding us back is not. A lack of good policy ideas or even what used to be considered good bipartisan. Policy -- We just have to break through the stubborn cycle of crisis politics and start working together. More structured more brinksmanship. Won't help anybody. It doesn't help folks politically. My understanding is nobody in this -- -- particularly well moment when it comes to the opinions of the American people but it certainly doesn't help anybody economic. On many of the issues I think you and I would agree. And want you to know that I'm rooting for your success. And I look forward to. Making sure that we are able in the remaining three years -- -- president to work together two. Not only improve the business climate. But also improve the prospects for Americans all across the country who. Have been treading water feel like they're losing ground. Are anxious about the future of the children's futures but. I think are still hopeful and still possess that fundamental American optimism. If they see leadership working across the border on their behalf. That I'm confident that we can make enormous problems so. We're -- while we get to -- up here and I'll start answering his questions I hope -- If he starts asking me about what happened -- Kansas City Chiefs. The I'm not sure I'll have good answer for them. Thank you Mr. President let me start by thanking -- officially for joining us today I think he probably see a lot of familiar faces out there most friendly most of them. And I would also note that you're getting here a little late. Congressman Paul Ryan is coming later he's gonna get here a little early so if you guys overlap a little bit that we can just get some problems solved right here -- -- -- are. Let's -- -- your chance. We have talked amongst ourselves I tried this or take the sense of the room with some gonna try to reflect some of the conversations that have been going on here in the questions I'm going to ask you. You'll not be stunned that I -- gonna ask you about health care first. You indicated there and you've indicated publicly quite clearly that the -- -- it's been difficult. What do you think you've learned from this experience about. The government's ability to do this sort of thing about the law itself for about your own administration. Well there a couple of -- and number one is that this is. -- a big problem for a very long time and so. It was always going to be challenging not just to pass a law but also to implement. There's a reason why. -- despite. A century of talking about it. Nobody had been able to successfully. Try to deal with some of the underlying problems and in the health care system. The good news is that. Many of the elements be Affordable Care Act. Are already in place and are working exactly the way -- -- so. Making sure that consumers who have. The -- employer based health insurance are getting a better deal. And that are protected. From some of the fine print that left them in the lurch when they actually got sick that's in place making sure the young people. Hundreds -- aged 46 can stay on the parents plan that's help three million children already. That's making a difference. Helping seniors to get better prescription drug prices. That's already helped millions of seniors and and billions of dollars in savings. Rebates for people who. C insurance companies were not spending enough. On. Actual care more on administrative officer or or. Profits. They're getting rebates they may not know it's -- formal -- it's given rebates but it's happening so. There were a number of things that's -- were already in place over the last three years that got implemented effectively the other thing that hasn't been talked about a lot is cost. There was -- lot of skepticism when we pass the Affordable Care Act that. We were gonna be given a lot of people care. But we weren't doing anything about the underlying cost and in fact over the last three years we have seen. Health care costs grow at the slowest pace in fifty years and that affects the bottom lines of everybody here. And there -- a lot of Smart delivery system reforms that. Slowly across the system are being implemented and they're making a big difference -- that saving us money that's why by the way. Some of the projections. That. In terms of what be affordable -- -- would do to deficits have actually proved. Even better than we had originally expected. What I have learned though -- respect to setting up these marketplaces which are essentially. Mechanisms where. People -- currently in the individual market. Or. Don't have health insurance at all. Can join together shop. And insurance companies will compete for their business. Setting those things up is. Very challenging just mechanically. The good news is that choice and competition. Has actually worked and insurers -- -- bids -- were even lower than people expected. -- 16% lower than had beverage when the project. The challenge has been just making sure that consumers are actually able to get on a website see those choices and shop. And I think that we probably underestimated. The complexities of building out a web site that needed to work the way it should. There is a larger problem that I probably. Speak personally but also as the administration. Could have identified earlier and that is. The way the federal government does procurement. And does IT. Is. -- generally not very efficient. In fact. There's probably no bigger gap between the private sector and the public sector -- IT. And we've seen that in for example. The VA and the department defense. Try to deal would electronic medical records for our servicemen as they move into -- Civilian life most of that stuff still done on paper we've spent billions of dollars amounts saying we is in my administration I mean. We've now had about a decade experimentation it spent billions of dollars and it's still not working the way it should so. What we probably need to do on the front end was to blow up how we procure for IT. Be especially on -- system -- complicated we did not do that successfully. Now we are getting -- fixed but. It would have been better to do it on the front -- rather -- the back and and the last point I'll make. Is that. You. -- in terms of expectations that. There's no doubt that. In an environment in which. We had to fight tooth and nail to get this passed. It ended up being passed on -- by on -- partisan basis not for lack of trying because -- met with an awful lot of Republicans try to get the -- to go along but because there was just ideological resistance to the idea of dealing with the uninsured people with preexisting conditions. The other is that there was -- -- to that and it was that it what was already going to be hard. Was operating within a very difficult political environment. And we should have anticipated that. That would create -- -- rocky -- roll out then if Democrats or Republicans were both invested in success one of the problems we've had is. One side of Capitol Hill is invested in failure and and that makes. I think the kind of -- to process of fixing glitches as they come up in fine tuning the law more challenging but I'm optimistic that we can get. Tricks well that's the question is gonna ask next is it possible -- lost enough time here or in enough potential customers in the exchanges that you're not gonna reach the critical mass sign -- that you need to make the marketplace work is that a danger that you have to worry about right now. Well it's it's something that we have to pay attention to but. Keep in mind that this model of marketplaces. Was based on what was done in Massachusetts. And to be experience in Massachusetts was that. In the first month. A hundred and 53 or 63 people signed up. Out of an ultimate 36000. There's there's less than 1% sign up in that first month partly because. By -- insurance. Is. A complicated process for a lot of people. When they have more choices that means that they're gonna take more time. There's no doubt -- we've lost some time but. The web -- getting better each week. By the end of this month it will be functioning for the majority of people who were using -- they'll be able to shop see what their choices are. The prices are good the prices are not changing. For during the open enrollment period goes -- until March. And so I think that we're gonna have time to catch up what's also been expressed as they concern is the mix of people -- sign up so we might end up. You know having the millions of people sign up. They're happy with their new coverage. But we've got more people who are older. More likely to get -- than younger and healthier. We've got to monitor that carefully we always anticipated though that younger folks would be the last folks -- just because. -- it's been awhile since you we're young but a as I -- call. You don't think that you're gonna get sick. You know at that that time so. Look. I am confident. That. The model that we bill which works off of the existing private insurance system. Is one that will succeed. We are gonna have to a fix a web sites -- -- Feels confident about that we're gonna have to obviously re market and rebrand. And that will be challenging in this political environment. But keep in mind and in the first month we also had. Twelve million people. Visit the site. The demand is there they're 41 million people have helped don't have health insurance the folks in the individual market. Many of them are -- -- get a much better deal in the marketplaces and so. We just gotta keep on. Improving the customer. Experience. And make sure that. We're fending off efforts not to fix the problem because if someone wants to help us fix them all game but cutting off service to a completely undermine. -- -- -- turn the economy the broader economy probably that the predominant concern of people in this room we seem to be stuck in an economic growth pattern of okay but not great growth. Your son Larry Summers was here earlier today and said essentially the problem -- one of the problems is that the system can't do two things at once it can't cut deficits and spur growth. It needs to do one of the other right now. He needs to spur growth should not worry so much about deficits do you agree and if you do agree how do you make that happen. You know actually Larry and I. And most my economic team infect all my economic team have. Consistently. Maintained that. There is a way to reconcile. The concerns about debt and deficits -- -- the concerns about growth. What we know is is that our. Our fiscal problems are not short term deficits. Our discretionary budget. That portion of the federal budget that isn't. Defense. War. Social Security or Medicare or Medicaid entitlement programs. Is -- its smallest level in my lifetime. Price since Dwight Eisenhower. We are not lavishly spending on a whole bunch of social programs out there. And in many ways a lot of these programs have become more efficient and pretty effective. Defense we spent a lot from 2001. To 2011. But generally we are stabilizing. And the Pentagon working -- me. Have come up with plans that allow us to meet our security needs. While still bringing down some of the costs. Defense particularly after having ended the war in Iraq and on the brink of ending the war in Afghanistan. So when we talk about our our deficit and debt problems it is almost entirely. Health care costs. You you you eliminate the the delta but the difference between what we spend. On health care and what every other country. Advanced industrialized nation spends on -- and that's our long term debt. And if were able to. Bend the cost for. We help solve the problem now. One way to do that is just to make health care cheaper overall that's I think the best way to do it and that's what we've been doing through some of the measures -- care. There are some other provisions that we could take. That would maintain. Our commitment to seniors. Medicare Social Security the disabled and Medicaid. While still. Reducing. Very modestly -- the cost of those programs if we do those things. That -- our real fiscal problem. And we could take some of that money very modest portion on the -- and and invest in infrastructure. That puts people back to work. Improve. Our research and development so. The idea would be do some things in the short term but focus on growth do some things in long term the deal -- long term debt that's what my budget reflects. That's what a multiple. Series of negotiations -- John Boehner. You talked about. The so called grand bargain we couldn't quite get there in the end mainly because. Republicans had a great deal of difficulty with the idea of putting in more revenue. To balance out some of the changes that were made on entitlement. I would guess a lot of people mystery in the state another way to make some of those things happen would be to fix the corporate tax code that everybody agrees -- she gets some companies that pay way too much comparative international competitors some companies don't pay at all. It's not a -- -- -- on an efficient system everybody agrees but it doesn't. Ever seem to change can you make a change and it can you do something about repatriation of US. Assets overseas. What here's a good news is that. Both. My administration and Republicans have talked about corporate tax reform. And Paul Ryan is going to be. Come after me and said he's interested in corporate tax. And we've reached -- -- we've said let's get to work. We put forward a very specific set of proposals that would lower the corporate tax rate. Broaden the base. Close some loopholes. And in terms of international. Companies and competitiveness what we've said is rather than a whole bunch of tangled laws that incentivized folks to keep money overseas. Let's have a modest. But clear. Global minimum tax. Get rid of some of there -- huge fluctuations that people experience it will save companies money make them more competitive. And in terms -- transition into that system actually allow some people bring back money and in a one time way. Help us finance infrastructure and some other projects that need to get done. I don't expect Republicans to adopt exactly the proposal that we put forward but. There's not that much separation between what Democrats are talking my note chairman Max Baucus put out something today it chairman of finance committee. What Dave Camp. Over in the house has talked about. This should be bridge -- The one thing I would caution. Is and I've said this to the business roundtable and other corporate leaders what talked her. People like the idea of corporate tax reform in theory. In practice if you want to make. The corporate tax reform deficit neutral. Then -- actually have to close loopholes. And people like the idea. A simpler tax system. Until. It's their particular -- that's about to get quote. And what we can't afford to do. Is to keep all the loopholes that are currently in place and lower the corporate tax rate. We would -- boy another hold the deficit that would have to be filled and what -- not willing to do is to have. Higher rates on the middle class. In order to pay for that. The -- of the CEO Syria had a working group earlier today the the mission of which was to address the question of how do you stay competitive and interestingly at least to me. Their first priority first priority was this. Immigration reform US needs immigration reform to retain talented workers educated in the US and attract talent to the US immigration reform. Could provide an instant jolt to the US economy which we need -- -- you agree with that statement. But it's hard to see that happening right now you've got. The senate off on one track -- passed a comprehensive bill the house mourned even agreed to take up Democrats wanted to comprehensive reform Republicans want to do step by step reform. It's a poisonous political atmosphere can you make it happen. -- it. I am actually optimistic the -- and -- -- -- But I am a congenital optimist I I would have to be -- -- Barack Obama ran for president says. And and one and and one twice. So what looked. Keep in mind first of all that. What. The CEOs here said is absolutely right. This is a boost to war -- Everywhere I go I meet with entrepreneur worse and CEOs who say I've got. You know these terrific folks they just graduated from cal sector MIT -- Stanford. -- rated do business here some home. Have these mayors during. New ideas that we think we can commercialize but. Derby in. Dragged back to their home countries not because they -- -- go over because of -- immigration system doesn't work. That the good news is that. Senate bill was a bipartisan bill. And we know what the component parts of this are. We've got -- have strong border security we've got to have better enforcement of existing laws we've got to make sure that. We have a legal immigration system that doesn't cause people. Sit in the queue for five years ten years. Fifteen years in some cases warriors. We should want to get it immediately -- young people who -- helped to educate. In this country you want to stay. We want to hear. And we do have to deal -- about eleven million folks who -- in this country. Most of them just seeking opportunity. They did break the law by coming here -- -- staying -- visa. And they've got to earn their way. Out of the shadows. Pay a fine learn English. Get to the back of -- line pay the back taxes. But giving them a mechanism whereby they can get right by. By our society. And that's reflected in the senate bill now. I actually think that there -- a number of house Republicans including Paul Ryan I think if you ask about it who agree what that. They're suspicious of comprehensive bills but you know what if they want -- -- that thing up and five pieces. As long as all five pieces get done. I don't care what looks like -- laws is that it's actually delivering on those core values that we talk about. Democrats been pretty suspicious that all five piece is well done and and and that's the problem. I mean the key is the -- what we don't wanna do is simply carve out one piece let's say agricultural jobs. Which are important. But. Is easier frankly. Or the high skill jobs that many of them in your audience here would immediately want to do. But leave behind some of the tougher stuff. That still needs to get them we -- not gonna have a situation which eleven million people. Are still. Living in the shadows and potentially. Getting deported on an ongoing basis so we're gonna have to do -- all. In my conversations with the Republicans I actually think the divide is not that one so what we just have to do is find -- pathway where. Republican House in particular feel comfortable enough about process. That they can go ahead and didn't need us. This by the way -- I think is a good example. Of something that's been striking me about -- our politics for awhile. When you go to other countries. The political divisions are so much more stark and wider. Here in America the difference between Democrats Republicans were fighting inside the forty or more. It may be getting useful mostly based on that in the last few months -- that melanoma but it well none of them -- be. I would I would distinguish between them the rhetoric. And the tactics. Vs the ideological differences. And their most countries you've got. If people called me a socialist sometimes but now -- -- got to meet real socialists. You'll you'll have a sense of what what a socialist us. We'll be. The -- I'm talking about lowering the corporate tax rate my Health Care Reform. Is based on that that the private marketplace. Stock markets -- pretty good last time I checked. And -- it is true that I'm concerned about. Growing inequality in our system. But nobody questions. The efficacy. A market economies in terms of producing wealth and and innovation and keeping its competitors but on the flip side. You know most. Republicans even -- even Tea Party you have -- my favorite signs during the campaign was. Folks -- -- governments keep keep keep your hands off my Medicare. Think about it. -- -- -- ideologically they did not like the idea of the federal government. And yet they felt very protected. About the basic social safety net that have been structured so that might -- simple point is this if we can get beyond. The tactical. Advantages that party's perceived. In obtaining. Folks as extreme and trying to keep and I always on the next election. And for a while at least just focus on governing. Then. Did there is probably. 70%. Overlap. On a whole range of issues a lot of Republicans want to get infrastructure -- just like -- a lot of believe in basic research. Just like -- a lot of want -- reform entitlements. To make sure that there affordable for the next generation -- -- A lot of and say they want or former Texas. So -- there are going to be differences on the in those details matter and -- fight very hard form but. We shouldn't think that somehow. The reason we've got these problems as because. Our policy differences are sober. Well the details are obviously important enough to shut down the government just couple weeks ago. And everybody knows were headed back toward showdowns again January budget. February debt ceiling. Jack -- was here earlier your treasury secretary -- -- thought maybe this system crossed a threshold in October and and it has realized it doesn't wanna go back and do that again are you confident it's not gonna go back and do that again and by the way. The OECD the organization for economic cooperation development suggested today that the US just get rid of the debt ceiling entirely would -- of -- that. I think that. The way our system is set up is like a loaded gun. And -- once. People thought we can get leverage on policy disputes by threatening to fault. That was an extraordinarily dangerous precedent and that's a principle that I -- here too. Not just for me but for the next president that you're not going to be able to threaten the entire. US -- world economy simply because you disagree with me about a health care bill. I'd I'd like to believe that. The Republicans recognize that was not a good strategy. And we're probably better off -- -- system in which. That threat is not there on a perpetual basis I do not foresee. What we saw in October. Being repeated. In January. But. -- -- the that the broader point is one that I think all of us have to take to heart we have to be able to disagree on policy issues. Without resorting to the -- extreme tactics that end up. Hurting all of us and that's been my main disagreement. With a lot of -- Republican -- and frankly the American people -- that. That they don't expect us to. March in lockstep there's a reason why we got two parties in this country they do expect that we're constantly thinking about how -- we. -- in -- they can find a job that pays well that their kids can go to college -- That. We are growing and competitive. That. -- -- we are dealing with our fiscal. Position in -- sensible way. And and if we keep them in mind consistently. That I think we're going to be successful you'll want one thing you've got some international. CEOs here and I think -- confirm this. What -- travel what's striking to me is. People around -- were hoping we got a really good hands. -- take the example of energy they say. America. Is poised to change our geo politics entirely because of the advances we've made an oil production natural gas production it means manufacturing here is much more attractive than it used to be. That's a huge competitive advantage -- we've got. The most productive workers just about. In the world and we are workers become more and more productive and a lot of companies look at -- say. We wish we had workers who were able to. Operate the way these folks do. Our university systems -- research. Mecca. You know infrastructure. All those things are. The envy of the world and one of the great things about America sometimes. We. Get worried that we're losing. Traction in the sky is falling. Back in the eighties Japan was -- take over and then. China and obviously before that the Soviet Union and we usually come out okay. Because we change and we adapt. I just want -- waited to remember that. Where have very strong position to compete as long as our political system. Functions it doesn't have to be outstanding this is sort of like Winston Churchill to cures for democracy and you know it doesn't it's always going to be -- But it's got to function better than us. And in the red zone on the clock your ability I do -- -- -- about. A question about international affairs you mentioned the world and -- and and and the US position and it. There's the possibility this week of an agreement with Iran. A preliminary limited agreement in which they would -- some of their nuclear activities. In return for some relief on sanctions. Your Israeli friends have been arguing along with some some of your -- of your friends as well as here foes in congress that. If you give the Iranian regime any relief on sanctions. The sanctions regime will fall apart countries that don't want to be there in the first let's head for the exits it'll all come apart and that's the danger of what your negotiating right now. I know you talked to some senators about this very topic today. Is -- going to be a deal and why can you ease sanctions without having them follow. -- well. Just by way of background when I came in office. We had. Trade embargo the US had done some things unilaterally we did not have. A strong. Enforceable. International mechanism to really put the squeeze on Iran around its nuclear program despite the fact that it violated. A range of UN. And nonproliferation treaty. Requirements. So we built we constructed with the help of congress. The strongest. Sanctions regime -- And it -- put a bite on the Iran -- economy. They have. Seen a 5% contraction last year in there economy it's projected to become another contraction this year. And in part. Because the sanctions have been so effective. We were able to get Iran to seriously. Come to the table and look at how are they gonna give assurances to the international community that they are in fact. Not pursuing a nuclear weapons program. I don't know will be able would have closed deal this week or next week. We have been very firm -- your audience even on the interim deal about what we expect. And yelled some of the reporting out there has been. Somewhat inaccurate. Understandably because the the members of the -- permanent members of the Security Council in addition Japan and Germany as well have. Kept the negotiations fairly tight. But the essence of the deal would be that they would halt. Advances on their nuclear program. They would roll back some elements that get them closer to what we call breakout capacity where they can run for a weapon before the international community. Has a chance to react. That they would subject themselves to more vigorous inspections even than the ones that are currently there in some cases daily inspections. In return what we would do. Would be to open up the -- a little bit for a very modest. Amount of relief that. Is entirely. Subject to. Reinstatement. If in fact they violated any part of this early agreement and would purchase a period of time -- 66 months. During which. We could see if they could get to the -- state. A a position where we the Israelis. In the international community could say with confidence -- not pursuing a nuclear weapon. Now. Part of the reason I have confidence that the sanctions don't fall apart is because we're not doing anything around the most powerful sanctions. The oil sanctions the banking sanctions. Financial services sanctions. Those are the ones that have really taken a big chunk out of Iran -- economy so. -- oil production and oil sales out of Iran have dropped by more than half. Since the sanctions were put in place. They've got over a hundred billion dollars. Oil revenue that is sitting outside of their country the re all there currency. Has dropped precipitously. And all those sanctions. And the architecture for them don't -- anymore. Essentially what we do is we allow them to access. A small portion of these assets that are frozen keep in mind -- That because the oil. And banking sanctions stay in place. There will actually still be losing money even during this six month period relative to remodel also as they head back in 2011. So. What we are what we are suggesting. Both to Israelis. To members of congress here to the international community but also to be -- audiences. Let's. Look what's test. The proposition that over the next six months we can resolve this. In a diplomatic fashion. -- Maintaining. The essential sanctions architecture and as -- United States me. Maintaining all options to prevent them from getting nuclear weapons. I think that is a test. That is -- conducting. And my hope and expectation is not that we're gonna solve all of this just. This week. In and this in -- phase. But rather that were -- ourselves some time to see how serious the Ryan regime might be in reentering. Membership in in the world community and taking. The -- of these sanctions off off the backs of their com. Com.

This transcript has been automatically generated and may not be 100% accurate.

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