'This Week' Transcript: Barack Obama

Transcript: Obama Tackles the Economy

STEPHANOPOULOS: Do you want President Bush to request that second $350 billion? And how do you want that spent differently from the first?

OBAMA: Well, I started off with the premise, when this crisis first arose, that we have to keep our financial system stable, and we have to maintain the flow of credit to businesses and families. That's as important as what's happening in terms of consumer spending or business investment, because if companies can't make payroll, people get laid off. If a guy can't borrow for a car loan, that affects not only him, but the car dealer and the car manufacturer.

So keeping flow of credit is critical. And we had to do something last fall. I, like many, are disappointed with how the whole TARP process has unfolded. There hasn't been enough oversight. We found out this week in a report that we are not tracking where this money is going.

I think that when you look at how we have handled the home foreclosure situation and whether we've done enough in terms of helping families on the ground who may have lost their homes because they lost their jobs or because they got sick, we haven't done enough there. So…

STEPHANOPOULOS: Congressman Frank says he wants $50 billion of the new money to go just to that.

OBAMA: Well, so here's what we have done. What I've done is asked my team to come together, come up with a set of principles around how we are going to maintain transparency, what are we going to do in terms of housing, how are we going to target small businesses that are under an enormous business crunch?

Let's lay out very specifically some of the things that we are going to do with the next $350 billion of money. And I think that we can gain -- regain the confidence of both Congress and the American people that this is not just money that is being given to banks without any strings attached and nobody knows what happens, but rather that it is targeted very specifically at getting credit flowing again to businesses and families.

STEPHANOPOULOS: If both of these packages go through, that's more than a trillion dollars in spending in your first couple of months in office.

OBAMA: Right.

STEPHANOPOULOS: When you look at the array of things you want to do, as president, something is going to have to give.

OBAMA: Right.

STEPHANOPOULOS: Which of your ambitions, which of your campaign promises will you have to scale back on because of all of this?

OBAMA: Well, we are going to be presenting a budget in February. And as we learned this week, we are inheriting over a trillion dollar deficit. Unheard of in recent history and…

STEPHANOPOULOS: Eight percent of gross domestic product.

OBAMA: Exactly. So one of the things that I've said is -- and I've said this to my economic team, we are going to have to make some tough choices under my watch to ensure that on the medium term and the long term we're starting to bend the curve where we are getting the deficit under control.

They are going to report back to me in the next month to give me a plan. Now as difficult as it is to spend money wisely, it's going to be even tougher to make some of the adjustments that are needed to get the deficit under control.

STEPHANOPOULOS: But you're going to face some real hard choices. You brought up health care a couple of times…

OBAMA: Absolutely.

STEPHANOPOULOS: … in this interview already. During the campaign you said you would pay for health care by repealing the Bush tax cuts on the wealthy. According to the CBO, you're going to get a $1.2 trillion to $1.8 trillion deficit even if all of the tax cuts are repealed.

OBAMA: Right.

STEPHANOPOULOS: So how do you pay for health care?

OBAMA: Well, you know, these are going to be major challenges. And we're going to have to make some tough choices. Now what I've done is indicated to my team that we've got to eliminate programs that don't work.

And I'll give you an example in the health care area. We are spending a lot of money subsidizing the insurance companies around something called Medicare Advantage, a program that gives them subsidies to accept Medicare recipients but doesn't necessarily make people on Medicare healthier.

And if we eliminate that and other programs, we can potentially save $200 billion out of the health care system that we're currently spending and take that money and use it in ways that are actually going to make people healthier and improve quality.

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So what our challenge is going to be is identifying what works and putting more money into that, eliminating things that don't work, and making things that we have more efficient.

I'm not suggesting, George, I want to be realistic here, not everything that we talked about during the campaign are we going to be able to do on the pace that we had hoped.

STEPHANOPOULOS: Let me press you on this, at the end of the day, are you really talking about over the course of your presidency some kind of a grand bargain? That you have tax reform, health care reform, entitlement reform, including Social Security and Medicare where everybody in the country is going to have to sacrifice something, accept change for the greater good?

OBAMA: Yes.

STEPHANOPOULOS: And when will that get done?

OBAMA: Well, the -- right now I'm focused on a pretty heavy lift, which is making sure that we get that reinvestment and recovery package in place. But what you describe is exactly what we're going to have to do.

What we have to do is to take a look at our structural deficit, how are we paying for government, what are we getting for it, and how do we make the system more efficient?

STEPHANOPOULOS: And eventually sacrifice from everyone.

OBAMA: Everybody is going to have to give. Everybody is going to have to have some skin in the game.

STEPHANOPOULOS: Let me move on to national security and foreign policy. We're now in the second week of the conflict in Gaza between Israel and the Palestinians. I know you've been reluctant to speak out too much on this. Let me show everyone what you said when you were in Israel last July.

(BEGIN VIDEO CLIP)

OBAMA: I don't think any country would find it acceptable to have missiles raining down on the heads of their citizens. If somebody was sending rockets into my house where my two daughters sleep at night, I'm going to do everything in my power to stop that. I would expect Israelis to do the same thing.

(END VIDEO CLIP)

STEPHANOPOULOS: Would you say that in Israel today?

OBAMA: I think that's a basic principle of any country is that they've got to protect their citizens. And so what I've said is that given the delicacy of the situation, the one area where the principle of one president at a time has to hold is when it comes to foreign policy.

We cannot have two administrations at the same time simultaneously sending signals in a volatile situation. But what I am doing right now is putting together the team so that on January 20th, starting on day one, we have the best possible people who are going to be immediately engaged in the Middle East peace process as a whole.

That are going to be engaging with all of the actors there. That will work to create a strategic approach that ensures that both Israelis and Palestinians can meet their aspirations.

STEPHANOPOULOS: But as you know, in much of the Arab world, your silence -- your relative silence has been interpreted as callousness. And we also had a viewer question on this, Marin Guerrero of Riverside, California, asks you: "Why is Obama remaining silent on the Gaza crisis when so many innocent people are being killed?"

OBAMA: Well, look, I have said -- and I think I said this a couple of days back, that when you see civilians, whether Palestinian or Israeli, harmed, under hardship, it's heartbreaking. And obviously what that does is it makes me much more determined to try to break a deadlock that has gone on for decades now.

STEPHANOPOULOS: But more broadly, will your policy in the Middle East, will it be building on the Bush policy or a clean break?

OBAMA: Well, you know, I think that if you look not just at the Bush administration, but also what happened under the Clinton administration, you are seeing the general outlines of an approach.

And I think that players in the region understand the compromises that are going to need to be made. But the politics of it are hard. And the reason it's so important for the United States to be engaged and involved immediately, not waiting until the end of their term, is because working through the politics of this requires a third party that everybody has confidence, wants to see a fair and just outcome.

And I think that an Obama administration, if we do it right, can provide that kind of (INAUDIBLE).

STEPHANOPOULOS: Former Defense Secretary Bill Perry said this week at a conference that you will almost certain face, almost certainly face a conflict, a crisis with Iran in your first year in office.

Based on what you've learned, do you agree with that analysis and are you ready for it?

OBAMA: Well, I think that Iran is going to be one of our biggest challenges. And as I said during the campaign, you know, we have a situation in which not only is Iran exporting terrorism through Hamas, through Hezbollah, but they are pursuing a nuclear weapon that could potentially trigger a nuclear arms race in the Middle East.

STEPHANOPOULOS: And you have to do something about it in your first year.

OBAMA: And we are going to have to take a new approach. And I've outlined my belief that engagement is the place to start. That the international community is going to be taking cues from us in how we want to approach Iran.

And I think that sending a signal that we respect the aspirations of the Iranian people, but that we also have certain expectations in terms of how a international actor behaves, is…

(CROSSTALK)

STEPHANOPOULOS: But a new emphasis on respect.

OBAMA: Well, I think a new emphasis on respect and a new emphasis on being willing to talk, but also a clarity about what our bottom lines are. And we are in preparations for that. We anticipate that we're going to have to move swiftly in that area.

STEPHANOPOULOS: Let me ask you about homeland security. You haven't talked too much about it. This week, President Bush's homeland security adviser, Ken Wainstein was talking about the Mumbai attacks.

And he said: "You could envision it happening in any American city, and it's chilling when you think about it." And, you know, you've been getting the president's daily brief every single day, do you agree with that?

OBAMA: I think that homeland security always has to be our number one priority. When I set up the hierarchy of things that I've got to do, my number one priority every single day that I wake up is how do I make sure that the American people are safe. We've got an outstanding person in Janet Napolitano who's going to be heading up our homeland security department. She is already in deep consultation with the other members of my national security team and we are going to have to stay vigilant and that's something that doesn't change from administration to administration. When you see what happened in Mumbai that potentially points to a new strategy, not simply suicide bombings but you have commanders taking over –

STEPHANOPOULOS: (INAUDIBLE)

OBAMA: I think that the dangers are always there and I think you have to anticipate that having seen the mayhem that was created in Mumbai that there are going to be potential copycats or other terrorist organizations that think this is something they can replicate. And so we're going to have to be vigilant in terms of our intelligence, we're going to have to make sure that we are more effective in terms of anticipating some of these issues and we've got to continue to put pressure on al Qaeda, which is our major target, that's something that I talked about extensively during the campaign. That has to be one of our primary areas of focus when it comes to our international security.

STEPHANOPOULOS: So based on what you've learned during all these intelligence briefings, are we safer or more at risk than you believed during the campaign?

OBAMA: Well George you know I can't say what the --

STEPHANOPOULOS: Without giving me any confidential information, just generally.

OBAMA: I think that we have made progress in certain areas but those dangers are still there. And those dangers are not going to immediately go away because we're not talking about conventional armies where we have very clear measures of what their capacity is. We know exactly what they're planning, where they're positioned. If you have a small group of people in today's world with today's technology who are intent on doing harm and are willing to die, that is something that's always going to be a challenge.

STEPHANOPOULOS: Your smile goaded me into another question. I was thinking about Harry Truman. You know when he took office he didn't even know about the Manhattan project, found out about it after he was president. Have you been shocked by anything you've learned?

OBAMA: Most of what I've learned is -- are things that I've anticipated, partly because I was in the senate and although I wasn't on the intelligence committee we would get top secret briefings. So there hasn't been something that was eye popping. But you know the situation still requires vigilance.

STEPHANOPOULOS: Vice President Cheney has been giving a series of exit interviews and he told Mark Nolan(ph) of CBS that the Bush counterterrorism policies have definitely made the United States safer. And he added this piece of advice for you.

(BEGIN AUDIO CLIP)

DICK CHENEY: Before you start to implement your campaign rhetoric you need to sit down and find out precisely what it is we did and how we did it. Because it is going to be vital to keeping the nation safe and secure in the years ahead and it would be a tragedy if they threw over those policies simply because they've campaigned against them.

(END OF AUDIO CLIP)

STEPHANOPOULOS: Are you going to take it?

OBAMA: I think that was pretty good advice, which is I should know what's going on before we make judgments and that we shouldn't be making judgments on the basis of incomplete information or campaign rhetoric. So, I've got no quibble with that particular quote. I think if Vice President Cheney were here he and I would have some significant disagreements on some things that we know happened.

STEPHANOPOULOS: You would say for example?

OBAMA: For example, Vice President Cheney I think continues to defend what he calls extraordinary measures or procedures when it comes to interrogations and from my view waterboarding is torture. I have said that under my administration we will not torture.

STEPHANOPOULOS: How about them taking that to the next step. Right now the CIA has a special program, would you require that that program -- basically every government interrogation program be under the same standard, be in accordance with the army field manual?

OBAMA: My general view is that our United States military is under fire and has huge stakes in getting good intelligence. And if our top army commanders feel comfortable with interrogation techniques that are squarely within the boundaries of rule of law, our constitution and international standards, then those are things that we should be able to (INAUDIBLE)

STEPHANOPOULOS: So no more special CIA program?

OBAMA: I'm not going to lay out a particular program because again, I thought that Dick Cheney's advice was good, which is let's make sure we know everything that's being done. But the interesting thing George was that during the campaign, although John McCain and I had a lot of differences on a lot of issues, this is one where we didn't have a difference, which is that it is possible for us to keep the American people safe while still adhering to our core values and ideals and that's what I intend to carry forward in my administration.

STEPHANOPOULOS: You also agreed on Guantanamo when you say you want to shut it down. You say you're still going to shut it down. Is it turning out to be harder than you expected, will you get that done in the first 100 days?

OBAMA: It is more difficult than I think a lot of people realize and we are going to get it done but part of the challenge that you have is that you have a bunch of folks that have been detained, many of whom who may be very dangerous who have not been put on trial or have not gone through some adjudication. And some of the evidence against them may be tainted even though it's true. And so how to balance creating a process that adheres to rule of law, habeas corpus, basic principles of Anglo American legal system, by doing it in a way that doesn't result in releasing people who are intent on blowing us up.

STEPHANOPOULOS: So not necessarily first 100 days.

OBAMA: That's a challenge. I think it's going to take some time and our legal teams are working in consultation with our national security apparatus as we speak to help design exactly what we need to do. But I don't want to be ambiguous about this. We are going to close Guantanamo and we are going to make sure that the procedures we set up are ones that abide by our constitution. That is not only the right thing to do but it actually has to be part of our broader national security strategy because we will send a message to the world that we are serious about our values.