TRANSCRIPT: ABC News Exclusive Interview with President Barack Obama

Nov. 11, 2009— -- JAKE TAPPER, HOST: So, thanks so much for doing this.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you.

TAPPER: Here's a question a lot of Senate Democrats want to know. You said, when you gave your joint address to Congress, that under our plan, no federal dollars will be used to fund abortions. This amendment passed Saturday night which not only prohibits abortion coverage in the public option, but also prohibits women who receive subsidies from taking out plans that -- that provide abortion coverage. Does that meet the promise that you set out or does it over reach, does it go too far?

OBAMA: You know, I laid out a very simple principle, which is this is a health care bill, not an abortion bill. And we're not looking to change what is the principle that has been in place for a very long time, which is federal dollars are not used to subsidize abortions.

And I want to make sure that the provision that emerges meets that test -- that we are not in some way sneaking in funding for abortions, but, on the other hand, that we're not restricting women's insurance choices, because one of the pledges I made in that same speech was to say that if you're happy and satisfied with the insurance that you have, that it's not going to change.

So, you know, this is going to be a complex set of negotiations. I'm confident that we can actually arrive at this place where neither side feels that it's being betrayed. But it's going to take some time.

TAPPER: Do you think that amendment is status quo or does it lean a little bit in one direction or the other?

OBAMA: I think that there are strong feelings on both sides. And what that tells me is that there needs to be some more work before we get to the point where we're not changing the status quo. And that's the goal. The goal here is to make sure that people who have health insurance have greater stability and security, people who don't have health insurance get the ability to buy it affordably and that we're driving down costs.

And, you know, I think everybody understands that there's going to be work to be done on the Senate side. It's not going to match up perfectly with the House side. But obviously, it was a historic night for the House. We've never been this far. And I'm very confident that my colleagues in the Senate are going to say to themselves that we've got to get this done.

TAPPER: One of the concerns about health care and how you pay for it -- one third of the funding comes from cuts to Medicare.

OBAMA: Right.

TAPPER: A lot of times, as you know, what happens in Congress is somebody will do something bold and then Congress, close to election season, will undo it.

OBAMA: Right.

TAPPER: You saw that with the "doc fix".

OBAMA: Right.

TAPPER: Are you willing to pledge that whatever cuts in Medicare are being made to fund health insurance, one third of it, that you will veto anything that tries to undo that?

OBAMA: Yes. I actually have said that it is important for us to make sure this thing is deficit neutral, without tricks. I said I wouldn't sign a bill that didn't meet that criteria. And what I also said in that speech to the joint session was that I'm willing to put in some safeguards where if we don't obtain the savings that have been promised, that we've got to make adjustments in terms of the benefits, because the goal here is to reduce costs for families, give them more security, but do so in a way that is not adding to our deficit, that, in fact, over the long-term, if we can bend the cost curve, will reduce our deficit.

And I promise you, we're already starting to look at the, you know, fiscal year 2011 budget and the out years. And although we are in the midst of recession and we inherited a big structural deficit, nobody is more mindful of me -- than me of the fact that we can't have a -- a bill that simply blows up an additional entitlement that's not paid for.

TAPPER: So Congress needs to know that you'll veto any attempt to walk back what they pass?

OBAMA: Congress needs to know that when I say this has to be deficit neutral, I mean it.

TAPPER: The -- under the House bill, those who can afford to buy insurance but don't -- can afford to do it but don't -- pay a fine. And if they refuse to pay a fine, there's a threat, as there is with lots of tax fines, there's a threat of jail time. And the Senate removed that provision in the Senate Finance Committee. Do you think it's appropriate to have a threat of jail time for those who refuse to buy insurance?

OBAMA: You know, what I think is appropriate is that in the same way that everybody has to get auto insurance and if you don't, you're subject to some penalty, that in this situation, if you have the ability to buy insurance, it's affordable and you choose not to do so, forcing you and me and everybody else to subsidize you, you know, there's a thousand dollar hidden tax that families all across America are -- are burdened by because of the fact that people don't have health insurance, you know, there's nothing wrong with a penalty.

Now, what those penalties are, I think they have to be high enough that people don't game the system. On the other hand, I think it's important for us not to be so punitive that people who are having a hard time suddenly find themselves worse off because of health care reform. And that's why there have been built in some hardship exemptions. There may be situations, relatively rare, where, even after the subsidies that are provided, it's still very hard for people to afford to get the health insurance that they need. And we should at this point and build in those -- those hardship exemptions.

But I -- but I think the general broad principle is simply that people who are paying for their health insurance aren't subsidizing folks who simply choose not to until they get sick and then suddenly they expect free health insurance. That's -- that's basic concept of responsibility that I think most Americans abide by.

TAPPER: But as the Senate puts its bill -- its final bill together and as a House and Senate prepare to vote on a -- on a -- after the conference committee, they should know, does the president think jail time is inappropriate...

OBAMA: Well, I'm -- I'm not sure that's the biggest question that they're asking right now...

TAPPER: No, but the question...

OBAMA: Well, the...

TAPPER: (INAUDIBLE).

OBAMA: I think I put out the principle that penalties are appropriate for people who try to free ride the system and force others to pay for their health insurance.

TAPPER: OK. I know you think you think that -- you look at the last week's elections as a -- as a mixed bag...

OBAMA: Yes.

TAPPER: ...you won some and you lost some. Democrats did well some places and not in others. Is there any message that you got from the exit polls, from the election results in Virginia, New Jersey or elsewhere that you didn't know?

OBAMA: You know, here's, I think, the main message, is that the American people are looking at over 10 percent unemployment and they're nervous and they're worried and they're anxious. And they want to make sure that the people here in Washington are fighting for them. Now, in these state races, I think those were pretty unique.

Virginia has its own political culture and so does New Jersey. The New York 23 race, I do think, sent an important signal, because Bill Owens, the Democrat in a traditionally Republican district, a district that had been Republican for 100 years, did not shy away from saying he supported health insurance reform, that he supported the Recovery Act and the progress that we have made there and ended up winning.

But I don't think there's any denying the fact that people are worried out there. And, you know, what I've said to fellow Democrats is let's get the job done on the health care bill that is so important to this country's long-term wellbeing, we can look back at the end of this year and I think we'll be able to legitimately say that we have had the most productive legislative session at least since 1965.

But there are going to be two things that we've got to focus on next year. And we are already beginning to work diligently on this. Now that we've rescued the economy and the economy is growing, businesses aren't yet hiring. And so what can we do to make sure that job growth is accelerated even as the economy begins to recover?

And the other thing that I think a lot of Independents, Democrats and Republicans, all are concerned about is what are we going to do about this long-term debt?

And we've got to show people that we are responsible stewards for their taxpayer dollars and that we're taking some serious steps to at least lay the foundation -- the pathway for bringing those deficits down over the next several years. We may not be able to do it all in one big gulp because the economy is still very weak right now. And, you know, any steps to take to shrink the deficit could potentially take too much money out of the economy at a time when it needs it. But at least people have to be convinced that we understand the problem

And that we're working on it. And if we do those things, then I think the American people will -- will feel like we have been good and responsible stewards for an economy during some very difficult times.

TAPPER: But are Independent voters, who -- who went for you in Virginia or -- or split in Virginia...

OBAMA: Yes.

TAPPER: ...against McCain and you won in New Jersey, but they went for the Republican and the so-called Obama voters, the young voters...

OBAMA: Yes.

TAPPER: ...are they not convinced of what you just said? Are they not convinced that you're working hard enough for the economy? Are they not convinced that you -- you're doing enough to reduce the deficit?

OBAMA: You know, I think that they are convinced that I am doing everything I can. But they want to see results. And if they are not seeing results on the jobs front, which is the thing that people feel most acutely, most immediately -- their neighbors, their friends, themselves seeing their hours cut or their -- their jobs at risk, then, you know, they're going to hold me -- rightly -- responsible. And they're going to hold Congress appropriately responsible and they're going to hold their respective governors responsible. So, you know, look, we were dealt a tough hand and I think everybody understands that. But ultimately, it's my job to dig us out of this hole. And we are going to keep working

OBAMA: As hard as we can to make the best decisions possible so that we get this economy back on the right footing.

TAPPER: You're about to go to Fort Hood. I know the investigation is -- is early.

OBAMA: Right.

TAPPER: But ABC News has learned that, according to government officials, Major Hasan, through the Internet, had contacted some al Qaeda-affiliated groups. Intelligence services knew about this, passed it onto military intelligence -- I'm sure I'm not telling you anything you don't know -- but there doesn't seem to have been any action taken by the military. Without getting into specifics, are you concerned, based on what you know about the case at Fort Hood, that the government was not talking to itself the way that, after 9/11, we tried to ensure it would?

OBAMA: Here -- here are the two things I can say right now. Number one, we are all heartbroken by what happened at Fort Hood. And, you know, I'll be heading to there tomorrow so that I can personally express the incredible heartbreak that we all feel for -- for the loss of these young men and women.

The second thing I can absolutely commit to is that we are going to complete this investigation and we are going to take whatever steps are necessary to make sure that something like this doesn't happen again. Beyond that, I think it's important for me to let the investigation play itself out so that we know exactly what happened, when it happened, how it happened before -- before I, as president of the United States, comment on it.

TAPPER: Philosophically, what separates an act of violence from an act of terrorism?

OBAMA: Well, look, we -- we have seen, in the past, rampages of this sort. And in a country of 300 million people, there are going to be acts of violence that are inexplicable. Even within the extraordinary military that we have -- and I think everybody understands how outstanding the young men and women in uniform are under the most severe stress -- there are going to be instances in which an individual cracks.

I think the questions that we're asking now and we don't have yet complete answers to is, is this an individual who's acting in this way or is it some larger set of actors? You know, what are the motivations? Those are all questions that I think we have to ask ourselves. Until we have these answers buttoned down, I'd rather not comment on it.

TAPPER: You're about to make a final decision about the new strategy in Afghanistan and Pakistan.

OBAMA: Yes.

TAPPER: What variables play into your decision-making that would cause you to not just take General McChrystal's recommendation and implement it?

OBAMA: Well, keep in mind that I've been asking not only General McChrystal, but all of our commanders who are familiar with the situation, as well as our civilian folks on the ground, a lot of questions that, until they're answered, may -- may create a situation in which we resource something based on faulty premises.

And I want to make sure that we have tested all the assumptions that we're making before we send young men and women into harm's way, that if we are sending additional troops that the prospects of a functioning Afghan government are enhanced, that the prospects of al Qaeda being able to attack the U.S. Homeland are reduced. You know, these

I have an obligation as commander-in-chief to make sure that whatever investments we make are leading to a safer United States, are sustainable, that we have a strategy to make sure that Afghans are carrying the burden of their own security, that we have an effective partnership with Pakistan that is working to achieve our goals in the entire region and that we're not working at cross purposes, that issues of corruption are dealt with, that we are identifying not just a national government in Kabul, but provincial government actors that have legitimacy in the right now.

So, there are a whole host of those questions that we have worked through systematically. I have gained confidence that there's not an important question out there that has not been asked and that we haven't asked -- that we haven't answered to the best of our abilities.

And as a consequence of the process that we've gone to, I feel much more confident that when I issue my orders, that not only do we have a better prospect of success and we are serving our men and women in uniform well, but that we are not also looking at an indefinite stay in -- where we have bought, essentially, a -- a permanent protectorate of Afghanistan that I think would be unsustainable.

TAPPER: A final question, and it will be very brief because I know you have some eager press aides here. You and the last president, you, in the last week, have gone to Dover...

OBAMA: Yes.

TAPPER: You have gone to Walter Reed. Some people might say this would -- this (INAUDIBLE) experiences would cause you to be more reluctant to send troops into harm's way. Some might say that -- we know some of the families have said, you know, don't give up...

OBAMA: Yes.

TAPPER: ...you know, so that these people didn't die -- our sons and daughters didn't die for nothing. Other than underlining the gravity of the decision, does it have an impact on you?

OBAMA: It absolutely has an impact because it reminds me of the costs involved. And it reminds me that -- these aren't abstractions. The decisions that we make in this White House have consequences for our long-term security and they also have consequences for the individuals who are being deployed.

Now, as commander-in-chief, my job is not to just think in terms of one individual or short-term costs, but also what's required to prevent another 9/11, what's required to make sure that we're not seeing another USS Cole. And, you know, ultimately when I make a decision, it's going to be based on the over arching view of U.S. national security.

But I think I would be making poorer decisions if I didn't have to look into the eyes of a family member who had lost a loved one and tell them how grateful we are as a nation that -- that -- that moment, I think, ensures that I'm making the best possible decisions going forward.

TAPPER: Thanks for your time, Mr. President.