'This Week' Transcript: Barack Obama

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 According to the CBO, you're going to get a $1.2 trillion to $1.8 trillion deficit even if all of the tax cuts are repealed.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.

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.

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