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?
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.