'This Week' Exclusive: President Obama on the Economy

President Obama speaks with George Stephanopoulos on the economy and budget battles in Washington.
3:00 | 09/15/13

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Transcript for 'This Week' Exclusive: President Obama on the Economy
The worst day on wall street in six years. As one of wall street's largest investment firms goes bankrupt and another is bought out. That was five years ago today when lehman brothers collapsed, sparking the worst financial crisis since the great depress depression. Five years later, most americans are not convinced we have recovered from it. Five years out, let's take stock. The cover of "time" magazine this week. How wall street won. We have polls showing that two-thirds of the country think we're going in the wrong direction. Think that the economy is no more secure. What do you say to the americans that think that wall street is winning and they're not. Let's think about where we were five years ago. The economy was on the verge of a great depression. In some ways, the economic data and the collapse of the economy was worse than what happened in THE 1930s. And, we came in, stabilized the situation, we have now had 42 straight months of growth. 7.5 million new jobs created. 500,000 jobs in manufacturing. 370,000 in an auto industry that had completely collapsed. The banking system works. It is giving loans to companies who can get credit. And, so, we have seen, I think, undoubtedly, progress across the board. The housing market has recovered. But what is also true is, we're not near where we need to be. And, part of it has to do with a whole bunch of long-term trends in the economy. Where the gains that we have made in productivity and people working harder have all accrued to the people at the very top. 95% of the gains to the top 1%. That is so striking. It is. And the folks in the middle and at the bottom, haven't seen wage or income growth, not just over the last three, four years. But over the last 15 years. And so, everything that I have done has been designed to number one, stabilize the economy. Get it growing again. Start producing jobs again. Number two, trying to push against these trends that had been happening for decades now. That's why we made sure that we had a tax system that was a little bit fairer by asking people to pay more at the top. That's what the affordable care act health care reform is about. Is making sure that folks that have been left out in the cold when it comes to health care have been able to get health care. That's why we strengthened the entire banking system so that too big to fail is far less likely to be in place if, heaven forbid, there is a next time. We have said, banks, you have to be more stable. If you do start going under, you have to have a plan, a living will we call it, so that we don't have to come in and clean up after you. You're going to be on your own. You do all these things and still 95% of the gains go to the top 1%. Do you look at that and say, maybe a president can't stop that accelerating inequality? I think a president can stop it. The problem is that there continues to be a major debate in washington. And that is, how do we respond to the underlying trends? If you look at the data, a couple of things are creating the trends. Number one, globalization. Capital, companies, they can move businesses and jobs anywhere they want. And so they're looking for the lowest wages. That squeezes workers here in the united states even if corporations are profitable. Technology. A lot of companies have eliminated entire occupations. Because they're now robotized. We don't have travel agents, bank materials. It's bigger than washington. Right. So there's a whole bunch of stuff happening in the marketplace. But, if we have policies that make sure that our kids are me paired for higher-skilled jobs. If we have policies that make sure that we're rebuilding our infrastructure because a robot can't build a road. We need new ports and a smarter electricity grid. If we're making investments to make sure that research and development continues to happen here, if we have tax breaks for companies that are investing here in the united states as opposed to overseas, all those things can make the situation better. It doesn't solve the problem entirely. But it pushes against these trends. The problem we have right now is you've got a portion of congress who -- whose policies don't just want to leave things alone. They want to accelerate the trends. There's no serious economist out there that would suggest that if you took the republican agenda of slashing education further, slashing medicare further, slashing research and development further, slashing investments further, that that would reverse -- a stalemate may lead to deja vu all over again. You're a couple of weeks away from a government shutdown. A possible default. Speaker boehner says you have to sit down and negotiate with me. Are you still absolutely refusing to talk in my way, shape, or form. Oh, no, no. Keep in mind my position here, george. I have been through this a couple of times. I've said with respect to the budget, we have presented our budget. And, now, it's the job of congress to come up with a budget that keeps our long-term trends down or our current trends of reducing the deficit moving forward, but also allows us to invest in the things we need to grow. I have told him and the country what I think we need to do. I'm happy to have a conversation with him about how we can deal with this so-called sequester, making across-the-board cuts on things that we shouldn't be cutting. There are ways of doing this. They've not been willing to negotiate in a serious way on that. What I haven't been willing to negotiate and I will not negotiate is on the debt ceiling. But presidents have done it in the past and you've done it in the past. No no, no, no. George, if you take a look, what has never happened in the past was the notion that in exchange for fulfilling the full faith and credit of the united states, that we are wiping away let's say major legislation like the health care bill. No changes in obama care? That's never happened before. And when it comes to budgets, we have never had a situation where a party said that, unless we get our way 100%, then we're going to let the united states default. That's never happened, george, working here. But there were reforms added to the debt limit legislation. Never before in history have we used just making sure that the u.S. Government is paying its bills as a lever to radically cut government at the kind of scale that they're talking about. It's never happened before. There are have been negotiations around the corners because nobody ever presumed you would threaten the united states to default. How does this end then? They say they need changes in owe bah many care. You say you're not going to negotiate. Are you just betting they're going to cave? George, here's the problem. If we continue to set a precedent in which a president, any president, a republican, a democrat, where the opposing party controls the house of representatives. If we, each time the united states is called to pay the bills, the other party can simply sit there and say, we're not going to pay the bills unless you give us what we want, it changes the structure of the government entirely. We can't negotiate around the debt ceiling. If mr. Boehner has ideas of how we can grow this economy, strengthen the middle class, put people back to work in a serious way, of course we're happy to support the negotiations that are taking place between the house and the senate. If we're going to continue to reduce the deficit, and I think a lot of people are not aware of the fact gnat the deficit has been cut many half suns I came into office. It's continuing the trend of further reductions. Let's do it. I'm willing to reform entitlements. I'm willing to cut out additional waste that may be there. But, what I also think we should be doing is eliminating corporate tax breaks that nobody can defend but keep on reappearing each year in the budget. If we're serious about it, there's no reason that we can't do it and do right by the country. How about beyond the deficit? You were re-elected over a year ago. 332 electoral votes. 51% of the vote. You put gun control, immigration reform, climate change. All at the top of the agenda. All of it stalled or is reversing. How do you answer the question that beyond the deficit, this has been a lost year and how do you save it? On immigration reform, we got a terrific bipartisan vote out of the senate. Democrats and republicans in the senate came together. Came up with a bill that wasn't perfect, not my bill, but got the job done. It's now sitting there in the house. Not going anywhere. But what I will say is this, if speaker boehner put that bill on the floor of the house of representatives right now, it would pass. It would pass. So the question then is not whether or not the ideas we put forward can garner a majority of support certainly this the country. I mean, gun control, we had 80%, 90% of the country that agreed with it. The problem we have is that we have a faction of the republican party in the house of re representatives in particular, that view "compromise" as a dirty word and anything remotely associated with me they feel obliged to oppose. My argument to them is simple. That's not why the people sent you here. We're out of time. Final question. Your vice president is in iowa this weekend. At tom harkin's steak fry. Secretary clinton positioning for a run, too. You chose both of them. What do you say to your fellow democrats when they're thinking about that choice? Are you determined to stay neutral? I would say to folks out there, we're tremendously lucky to have an incredible former secretary of state that couldn't have served me better and an incredible vice president who couldn't be serving me better, and I suspect if you ask both of them, they would say it's premature to start talking about 2016. Well, he's in iowa. Well, iowa is a big state. He's an old friend of tom harkins. You're staying neutral? As you pointed out. I just got re-elected last year. My focus is on the american people right now. I'll let you worry about the politics. Thank you, mr. President.

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

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