Washington, DC–(ENEWSPF)–November 26, 2012 – 2:29 P.M. EST
MR. CARNEY: Good afternoon, ladies and gentlemen. Thank you for being here. Thank you for your patience. We decided that it would be beneficial to you to have Alan Krueger, the Chair of the President’s Council of Economic Advisers, to join me here today. As you know, Alan co-authored a report, a new report from the White House on the impact of middle-class tax hikes if they were to occur on retailers and consumer spending. That report is available on whitehouse.gov if you haven’t read it. He authored this report for Cyber Monday, and I hope that the extra time you had during the delay led to some more purchases online
— I’m sure using private computers and not your companies’ computers.
And with that, I want to turn it over to Alan who has a statement at the top and can take your questions on the importance of extending those tax cuts for the middle class because of the effect on consumer spending and confidence and on retailers. Thanks very much.
MR. KRUEGER: Thanks, Jay.
Let me make a few remarks about this report. The Council of Economic Advisers, together with the National Economic Council, considered what would happen if the Bush-era tax cuts for the middle class are not extended. As you know, the President has supported an extension of the middle-class tax cuts for families earning below $250,000 a year.
And what we did was to use pretty standard economic techniques to say what would happen to middle-class families’ after-tax income if the middle-class tax cuts are not extended, and as a result of the decline in their after-tax income, what would happen to their purchases. And the typical middle-class family with two children would face about a $2,200 tax increase if the tax cuts are not extended for the middle class.
In the aggregate, we calculated that this would reduce consumption by about $200 billion. To put that in some perspective, that would reduce the growth of consumption by 1.7 percentage points and shave 1.4 percentage points off of GDP growth next year.
Our estimates are quite close to estimates of private sector forecasts and also quite close to the Congressional Budget Office’s estimate that GDP growth would be reduced by 1.3 percentage points next year if the middle-class tax cuts are not extended.
We also looked at which sectors would be affected by a $200 billion reduction in consumer spending, and you can see it spread quite broadly across housing, across services — which include things like paying for cell phones, groceries, durable goods, auto purchases, and so on. I think evidence like this is one reason why retailers are so concerned that Congress has not yet extended the middle-class tax cuts.
The Senate passed an extension of the tax cuts and it seems to be a thing that we can all agree on that middle-class families should see an extension of these tax cuts. And that would help the economy in the coming year.
So I’m happy to take questions with that.
QAlan, thanks for coming. The report also suggests that lower consumer confidence would even affect how many retail sales. And the initial report seemed to be that you’ve had record retail sales in the early part of the holiday season. What accounts for that? Do you really think that there could be a slide after this? And what responsibility does the White House have in helping the consumer confidence over the next few days and weeks?
MR. KRUEGER: It’s a great question, and I think we have a lot of evidence that consumer confidence does affect consumer spending and does affect the economy. Our estimates do not take into account any change in consumer confidence. We just look at the effect on incomes, and through the effect on after tax income, the effect of not extending the middle-class tax cuts on family spending and how that circulates through the economy. Businesses would see less revenue. They’d make less profit. That would affect their spending. And we kind of take those second-round effects into account as well.
You’re right that consumer confidence could have an independent effect. We need to look back no further than last year, when Congress didn’t raise the debt ceiling in an orderly fashion, at what happened to consumer confidence and how that affected our economy.
So one of the many reasons why I think it’s important that Congress extend the middle-class tax cuts without delay, without drama, is because it will help to maintain the increase in consumer confidence that we’ve seen since August of 2011. And the report points out that the latest measures of consumer confidence are now at their highest level in five years. And I think it’s important that we can build on that progress.
QYou didn’t fear this report hurting consumer confidence? Because essentially, isn’t this report sort of, hey, the sky may — it’s going to fall, the sky is going to fall in six weeks. Were you worried at all that this would hurt consumer confidence?
MR. KRUEGER: No, what we’re focused on at CEA and NEC and the administration is trying to strengthen the economy, try to put us on a fiscally sustainable path to do this in a balanced way. And a very big step in terms of strengthening the economy, having a balanced approach to our longer-run deficit issues would be to extend the middle class tax cuts.
QAlan, can I ask you a real brief question on the Republican side and the Democratic side in terms of impediments to a deal? On the Republican side, there seems to be people like Eric Cantor digging in and still saying, we don’t want to raise taxes. But are you encouraged by Saxby Chambliss, Lindsey Graham, other Republicans saying they’re open to it?
MR. KRUEGER: My expertise, as you know, is in the economics of these issues. And I can tell you as an economist, I think a balanced approach is the right approach for the economy. I think the approach the President laid out in his budgets, which rely on a mix of spending cuts and additional revenue from higher-income families again through a balanced approach of both higher tax rates as well as reduction in deductions would help to strengthen the economy.
QThere are some Democrats on the left, like Peter DeFazio saying go off the cliff, which is obviously the opposite of what your report is saying, because they believe the President will have an even stronger hand in January when Democrats have more seats on the Hill. Are you concerned about that kind of message, sending mixed signals from the Democratic Party — some saying go off the cliff, the White House putting out a report saying, God, don’t do that?
MR. KRUEGER: Again, Ed, my expertise is on what’s the best approach for the economy, how will various proposals affect the economy. So I won’t comment on the political strategies.
QIs this the best approach for the economy? Or could you get more bang for the buck if the government just took this extra revenue and spent it on infrastructure or something like that, or extended unemployment benefits?
MR. KRUEGER: If you go back to the President’s budget, he has a mix of programs like what you’re suggesting to strengthen the economy. He had in his budget with the American Jobs Act, part of which passed, and the part that didn’t pass, he re-proposed, to invest more in infrastructure, to hire more teachers — that would help the economy in the short run. But middle-class families have been struggling over the past decades.
And if you look at this recovery, I think one could tell the story that the economy has been recovering in large part because middle-class families have been feeling more confident because their prospects have improved. That’s helped them to maintain consumption. Sixty-nine percent of GDP growth over the last 13 quarters has been a result of greater consumer spending, primarily driven by the middle class.
So I think that the best way to strengthen the economy is through a mix of policies that support the economy in the near term, like the President proposed in investing more in infrastructure, as well as putting us on a sustainable fiscal path, and as well as protecting the middle class from tax increases that would take effect in January if Congress doesn’t act.
QYou were just talking about consumption. The payroll tax holiday will end in January. You were just describing the reasons why consumers and the economy have been growing. Is the President satisfied that the holiday should end, and then folks will see their paychecks go down? Or can you describe what CEA thinks the effect on consumption and growth would be when it does end?
MR. KRUEGER: Well, just to go back, the President fought for the extension of the payroll tax cut. I remember last Christmas everyone had to change their plans because it took a while for Congress to go along with the extension of the payroll tax cut. And I think if you look over the past year, the payroll tax cuts has helped middle-class families and has helped to support the economy and support consumption.
There are many tax provisions that are expiring at the end of the year, and the President has said that the payroll tax cut, among others, should be on the table.
QDo you think it has more economic bang for the buck than these income tax rates?
MR. KRUEGER: That’s a good question. I don’t have a really good answer for you because the report is just focused on extension of the middle-class income tax cuts and not on the payroll tax cut.
There are some considerations that would require serious study. For example, we looked at a permanent extension of the payroll — of the minimum — sorry, back up — we looked at a permanent extension of the middle-class tax cuts whereas the payroll tax cuts were explicitly temporary and the economic effects of those are different.
QThe report also talks about the Alternative Minimum Tax and a patch for that. Is there a reason — is there a desire in the White House at all to have more of a permanent patch for that instead of having to do this every year?
MR. KRUEGER: I think one of the problems that we face in our tax policy is lack of certainty — and for the Alternative Minimum Tax, in particular, the fact that it hasn’t been indexed for inflation, which causes ad hoc adjustments every year and creates some uncertainty. I don’t want to go beyond that because that’s not something that we looked into in our report.
QI would like to bring in today, Cyber Monday, and Black Friday into this equation. Just in basic terms, how would the retail sales from today and Friday help retail? We understand 70 percent of retail sales go into the economy, directly affect the economy. How does this affect this economy and — this economy that we’re seeing right now, economic situation now — and then how would it affect if this were — if we would not have the middle-class tax cuts — and the next year, we see situations — could you give us today and next-year possibilities without a tax cut?
MR. KRUEGER: Well, retail spending is extremely important for the economy. As you mentioned, consumption accounts for about 70 percent of our Gross Domestic Product. To put the $200 billion figure in context, if the middle-class tax cuts are not extended and if consumer spending falls by $200 billion next year, that’s four times the amount that was spent over the holiday shopping weekend, the Black Friday weekend or four-day period, I guess — it keeps getting longer — (laughter) — if you go back to last year where we have numbers. So that’s a substantial hit to retailers, and we cite in the report testimony from many retailers — from Walmart, from Walgreen, from Macy’s, and others — their concern and their request that the tax cuts for middle-class families be extended to help their businesses.
QYou don’t look at the other side of the fiscal cliff, the spending side. Are you doing a study about the economic impact of all these sequester cuts that would go into effect?
MR. KRUEGER: We continually try to evaluate policies that might take effect — that’s sort of our role at the CEA.
MR. KRUEGER: Well, we’re — I think you could take it as a yes that important economic policies we’re always looking at and trying to look at independent estimates, come up with our own estimates of how they would impact the economy.
QWill you put something out —
MR. KRUEGER: I don’t know.
MR. CARNEY: Okay. Alan, thank you very much.
MR. KRUEGER: Thank you, Jay.
MR. CARNEY: Appreciate it.
And I’m here to take questions on any subject. Jim.
QThanks, Jay, and welcoming Major back.
MR. CARNEY: Yes, Major, welcome back.
QThank you, Jay.
QOn the fiscal cliff, I wonder if you could give us more of a kind of an update on the progress. We saw several key Republicans — Saxby Chambliss, as was mentioned, Peter King, Lindsey Graham — putting some distance between themselves and Grover Norquist’s no-tax-increase pledge. With that kind of compromise tone coming from Republicans, where’s the President willing to give? Because we’ve been asking you over and over about the tax rates and whether he would, instead of increasing tax rates whether he would settle for closing loopholes and so on. Could you tell us a little bit more about where the President stands on this and what kind of confidence you can give the public that this is going to get done?
MR. CARNEY: Well, let me start at the top by saying that some of the comments you mentioned are welcome and they represent what we hope is a difference in tone and approach to these problems, and a recognition that a balanced approach to deficit reduction is the right approach. It’s the one that’s most beneficial for our economy. It’s the one that protects the middle class and strengthens it and creates ladders of opportunity for those who aspire to the middle class to get there.
I would say also that the President has made clear that he will not sign a bill that extends the Bush-era tax cuts for those making more than $250,000. He has made that clear. I’ve made that clear. Others have made it clear. And that is a firm position. And the reason for that is very practical — because you can’t — math tells us that you can’t get the kind of balanced approach that you need without having rates be part of the equation. It simply — we haven’t seen a proposal that achieves that — a realistic proposal that achieves that.
But the President has made clear also that he understands that compromise has to be part of this. And as he demonstrated in the summer of 2011, as he has made clear all this year and in his comments to the press and to the nation since the election, he’s willing to make tough choices as President in order to achieve that balanced approach to deficit reduction and economic growth that’s so important for our future economic potential.
So it’s a pragmatic, practical approach. And the reality is closing loopholes and ending deductions as an alternative to raising rates on the top earners, top 2 percent, those making over $250,000, sounds good, but you have to look at the actual contents of the proposals. Because the President has made clear in his budget that he is for some of the very things that we’re talking about here. He has put forward a cap on deductions at 28 percent. And he has talked explicitly about wanting to reform our tax code. But you need to do both, and you need to do it in order to achieve the kind of balance that is essential to setting us on a sustainable path, fiscally.
QWhat progress has been made? The President spoke to the Speaker over the weekend. He spoke to Senator Reid over the weekend. Is he confident that there’s movement here, or are they still at odds?
MR. CARNEY: Well, yes, I think we remain confident that we can achieve an agreement. Work has to be done. Work is continuing to take place. The President spoke with both Senator Reid and Speaker Boehner over the weekend, as you noted. He’ll continue to have outreach, as he promised he would, with various stakeholders, business leaders and others this week, as well as conversations that are ongoing between his staff and folks on the Hill. That will continue and we hope to see progress.
QAny new meetings with the leaders themselves?
MR. CARNEY: I don’t have any scheduling updates. But you stole my thunder a little bit, but, yes, he met — rather, he spoke with Speaker Boehner and Senator Reid over the weekend. And he will meet with them at the appropriate time, as well as obviously Nancy Pelosi and Mitch McConnell.
So the process that he began is continuing. We continue to be optimistic that a balanced approach is achievable. We know what the solutions are. I think it was Senator Corker who said in an op-ed that one benefit of all the debates we’ve had and negotiations and discussions over the past couple of years on these issues is that we know what the parameters of a balanced solution to these challenges look like. And they include both spending cuts and revenues and entitlement reforms. They have to have — all three legs of the stool have to be part of it.
QJay, you mentioned Senator Corker. Do you have any more of a reaction to what he said in that op-ed and to some of his proposals, which I guess included putting a cap on deductions at $50,000?
MR. CARNEY: I don’t have reactions to specific proposals. I’ll leave that for the negotiations that are and will continue to take place — except to make the point that I just made in response to Jim’s question but also that others have made, and that is the math has to add up. And that’s why the rate element of this is so important, because making proposals about limiting deductions and closing loopholes are important, but it’s not necessarily realistic to assume that they can achieve the kind of revenue target that’s necessary for a balanced approach to a solution to these problems.
So the President has proposed closing loopholes and capping deductions, and is obviously interested in looking at other proposals along those lines. But he has made clear he will not sign an extension of the Bush-era tax cuts for the top 2 percent, because it’s bad economic policy, and doing so would be bad for the middle class and would harm our long-term economic prospects and would severely limit our ability to achieve the kind of balanced approach to our fiscal challenges that we have to achieve.
QI know you said you have no scheduling announcements, but can we expect there to be a meeting this week?
MR. CARNEY: Again, I don’t have a scheduling announcement, as I just said. The President spoke with Senator Reid and Speaker Boehner over the weekend. I’m sure he will continue to have conversations and meetings when appropriate. He will continue to meet with businesses and civic leaders, as he already has, on this very important issue, because so many people have a stake in this discussion and this debate and in the prospect of finding a balanced solution that everybody can agree on.
And as I think Alan just made clear, the stakes are high and we need to address this in a serious way. And I think there’s a growing consensus — a consensus that has long existed, but growing now in places that weren’t always fertile for growth that we have to do this in a balanced way, and that revenue has to be part of it. And the President looks forward to all the meetings that he’s going to have in the coming days and weeks.
QOne other topic. The President spoke repeatedly last week with President Morsi of Egypt. Was he disappointed or was there any sense of betrayal from him after the move that the President made regarding taking on more powers very shortly after the ceasefire happened?
MR. CARNEY: Well, no. He spoke on several occasions with President Morsi, because President Morsi had such an important role to play in negotiating a ceasefire. And he deserves credit for the role he played.
Separately, as you know, the State Department and I here can tell you that we have some concerns about the decisions and declarations that were announced on November 22nd, and those concerns reflect the concerns that many Egyptians have and that others in the international community have, because we’ve approached this transformation in Egypt with basic principles in mind, and that is that we support democracy, we believe that a government in Egypt ought to reflect the will of the people and we believe that the Egyptian people have to decide what that government will look like.
So we’ve expressed our concerns. But I think that on the issue of the role that Egypt played and President Morsi played in achieving a ceasefire on the one hand, versus the internal deliberations that are ongoing in Egypt — we have to separate those and acknowledge that President Morsi played a very important role and deserves credit for that.
QThe question is what about the timing. The President and you told us it felt like they had started getting a good relationship during those phone calls, and then just right after that, he made this move. So I’m just curious if there is any disappointment there about Morsi using that opportunity after having gotten a lot of accolades to make this power grab.
MR. CARNEY: The issue of timing as regards Gaza was one that had to do very specifically with achieving a ceasefire so that lives were saved.
QThe timing of his move after Gaza?
MR. CARNEY: Again, we see those as separate issues. The President’s interest was in working with the parties involved to help bring about a ceasefire, and President Morsi played a very constructive role in achieving that. We have expressed and raised concerns about the decisions and declarations of November 22nd, and we’ll continue to do that as appropriate.
Our interest in the development and transition to democracy in Egypt is one that reflects what the Egyptian people demanded through the revolution and continue to demand, which is a government that reflects the will of the people. And we will continue to work towards that goal because it reflects what the Egyptian people want.
QSenator John McCain seems to be softening his tone on Ambassador Rice. Where before he said he would block a nomination if it were made, now he’s showing a willingness to hear her out. I’m just trying to get your reaction to that.
MR. CARNEY: Well, I certainly saw those comments and appreciate them. As the President has said, and I and others have said, Ambassador Rice has done an excellent job at the United Nations and is highly qualified for any number of positions in the foreign policy arena. And I’ll leave it at that.
QDoes the President plan to nominate her?
MR. CARNEY: I have no announcements to make on personnel. I can say that now in case you have questions along those lines.
QSpeaker Boehner in an op-ed talked about, in terms of the fiscal cliff negotiations, that the health care law should be on the table because this is not something that this country can afford and certainly all aspects of it should not be kept intact. Is that a non-starter?
MR. CARNEY: Well, let me just say that congressional leaders of both parties, including the Speaker, have said that Obamacare is the law of the land. The Supreme Court has rule and upheld the Affordable Care Act. Implementation continues, as we speak, and will continue.
And then as a third point I would note that as we have in the past, although it’s often overlooked by those who have advocated for repeal, the Affordable Care Act reduces the deficit considerably. And when we’re talking about deficit reduction and taking a balanced approach to deficit reduction, it’s important to remember that fact.
But I would simply point to you — point out to you that the Supreme Court has spoken, the American people have spoken, congressional leaders of both parties have spoken, and we are continuing with implementation
QOn entitlements, last year from this podium, the President expressed openness on the part of a major debt deal to means-testing Medicare or asking higher-income recipients to pay higher premiums. I think his campaign said during the campaign that they would — he would propose a 15 percent hike on premiums for recipients in Parts B and D in 2017, down the road. Does that stuff remain on the table and can you give us a sense of what changes are being discussed right now?
MR. CARNEY: What I can tell you is what the President has said, and that is that he believes and understands that in order to achieve a deal, a compromise that everybody has to make some tough choices, and he remains committed to that principle. It should be noted that through the Affordable Care Act, significant savings in our health care entitlements have already been locked in. It should be noted that in the President’s own proposal in his budget that we — he calls for an additional I believe $340 billion in savings out of health care programs.
So I think he’s demonstrated his seriousness when it comes to recognizing that we need to enact reforms in our entitlement programs that strengthen those programs and produce savings. And that’s the approach he’ll take. But I’m not going to get into the specifics and negotiate line items on what those reforms might look like as part of an overall package. But he understands that compromise requires both sides to make tough choices.
QSo his position on means-testing?
MR. CARNEY: Again, I’m not going to get into specifics, because I think that should be left to the negotiators, left to the leaders. But as a general principle, he believes that we — that compromise requires compromise and that it requires tough choices on all sides.
QCan I ask you real quickly, on the situation in the Congo that we’re seeing unfold in Eastern Congo. The country is on the verge of war. By many accounts, it’s a humanitarian disaster already. Is the administration engaged on this issue, and is there any consideration of appointing an envoy to the region there?
MR. CARNEY: I can tell you that Assistant Secretary Carson is in the region working on this issue. I would refer you to the State Department for more on his activity. The President is updated through his PDB on the issue, on the developments there in the Congo and is obviously very concerned about the violence and the loss of life. But for more details I would refer you to the State Department.
QJust two quick things. One is, when you say entitlement reform, does that mean Social Security as well? Because sometimes when you’ve said in the past, you’ve meant Medicare and Medicaid. Social Security — when you say it’s in there, is that — when you say entitlement reform —
MR. CARNEY: Well, I referred to health care programs and health care entitlements, and I think that the President has long made clear that he is open to discussions about strengthening Social Security as part of a separate track because it is —
QBut not as part of this deal? When you say entitlement — when you say the three legs of the stool, and entitlements was one of them, was that also including Social Security?
MR. CARNEY: As a principle, we believe that we have to address the issues — when it comes to a deficit-reduction deal that also ensure future economic growth, we should address the drivers of the deficit. And Social Security is not currently a driver of the deficit. That’s an economic fact.
And while the President supports engaging with Congress on a separate track to strengthen Social Security for the long term, we need to — when it comes to entitlements, we need to look at Medicare and Medicaid, as we have already.
QWhen you said —
MR. CARNEY: I’m not — again, I’m not going to —
Q– we should be including — I understand that. But we should not assume —
MR. CARNEY: You should certainly not assume.
Q– that Social Security is a part of that when you say entitlements?
MR. CARNEY: Correct.
QAnd when the administration says entitlements.
The second is, given what Mr. Krueger came out and said, does the White House have an opinion on the fiscal cliff divers, if you will, those in the Senate — some Senate Democrats who say, hey, go over the cliff. Are you saying don’t? Is this — are you guys asking them not to do this? Are they wrong?
MR. CARNEY: Well, we’re engaged —
Q– of your own party.
MR. CARNEY: We’re engaged in a process here that has a goal of achieving a bipartisan compromise for a reason, because we believe that the best answer for the economy is to reach that compromise before the end of the year.
I think Alan effectively laid out one of the reasons why we need to address this issue because of its impact — because of the impact of raising taxes on the middle class, for example — it would have on the economy, on consumer confidence, on retailers and overall spending.
The President’s approach here has always been what’s best for the economy, what’s best for the middle class, what’s going to keep our recovery moving and hopefully speed it up, lead to stronger economic growth and even stronger job creation. Because we were all here, we know how deep the hole was at the depths of the Great Recession. And his primary objective as President has been and will continue to be strengthening the middle class, creating more opportunities for those who aspire to the middle class to get there. And it certainly is his position that we — that these are solvable problems, and that we can —
QSo is fiscal cliff diving irresponsible?
MR. CARNEY: Well, I don’t know what fiscal cliff diving specifically means —
QMeaning the idea of saying, let it all go and wait till after the New Year.
MR. CARNEY: Look, I think that — you’re talking about sort of I think political analysis of an economic impact. And our interest is in achieving a deal that maximizes benefits for the middle class, maximizes benefits for the economy, and that is best achieved I think before the end of the year.
Yes, Major. Welcome. Major, I didn’t realize you were starting so soon. That’s great. Congratulations.
QNeither did I. (Laughter.) First on Egypt. What does the President believe is happening there? Some people described it as an autocratic power grab, as something that is injurious to the revolution, that’s hostile to it. What specifically does he believe is happening right now? And when you say he’s registered some concerns, what specifically are those concerns? And to do what degree is the administration involved in trying to resolve them?
MR. CARNEY: Well, let me just say that one of the aspirations of the Egyptian revolution was to ensure that power would not be overly concentrated in the hands of any one person or institution. And the United States supports Egypt’s democratic transition, consistent with Egypt’s international commitments and the democratic principles that Egyptians fought so hard to secure. Democracy depends on strong institutions and the important checks and balances that provide accountability.
It’s our view that the current constitutional impasse can only be resolved by the adoption of a constitution that respects fundamental freedoms, individual rights, and the rule of law, consistent with Egypt’s international commitments, and is written through a consultative, inclusive process. And so we call for calm, and we encourage all parties to work together and call for Egyptians to resolve their differences over these important issues peacefully.
So there’s a process underway in Egypt, and I think we’ve long made clear —
QA process that was going on before Mr. Morsi made these moves? Or you’re talking about his process?
MR. CARNEY: No, I’m talking about the process that began with the revolution and a democratic transition that I think everyone knew would not be perfectly smooth but that is important to continue because it’s in the interests of the Egyptian people. And it is the President’s belief that it is in the national interests of the United States and the American people that that process continue and that a government in Egypt reflect the role of the Egyptian people, and that it respects the rights of minorities, that it gives voice to Egyptians so that they can help their economy grow and help their culture flourish.
So we have been and continue to be engaged very substantially with Egypt as that process continues. And when there are reasons to raise concerns, we raise them.
QHas the President raised this specifically on the phone or in any other way with Prime Minister Morsi?
MR. CARNEY: He has not spoken with President Morsi, as I understand it, since the ceasefire. But if I have updates on foreign calls, I’ll bring them to your attention.
QOkay. On the fiscal cliff, shortly before this briefing, Senator McConnell described the talks on the fiscal cliff as “at an impasse.” And he said, “it’s up to the President to break that impasse, and if he doesn’t, it won’t be broken. It’s that simple.” Would you like to respond to that? Do you think this is at an impasse already?
MR. CARNEY: We remain hopeful and optimistic that we can achieve a deal.
QYou don’t disagree that it’s at an impasse then?
MR. CARNEY: Well, I think that there are issues that need to be resolved. But we’ve been very clear about both the President’s interest in and willingness to compromise, but also his clear insistence that he will not sign an extension of Bush-era tax cuts for the top 2 percent, for those making over $250,000. And his —
QIs he as adamant about that position as he is about avoiding going over the cliff?
MR. CARNEY: I don’t think that’s a choice that has to be made here. Here’s the problem with that dynamic, and I think it’s both a — more importantly, a substantive economic issue, but also a political issue for those who advocate holding middle-class tax cuts hostage to tax cuts for the wealthiest Americans. It’s untenable. It’s bad economic policy, and it is untenable politically. Because I don’t think members on Capitol Hill would look forward to explaining to their constituents why, on average, their tax cuts for almost all of their constituents went up at the beginning of the year — I mean, rather they lost those tax cuts and their taxes went up at the beginning of the year because they insisted that millionaires and billionaires needed a tax cut, too. I just don’t think that’s politically palatable to most members of Congress.
So we believe that there’s a way to get from here to there. We’re actively engaged with our Capitol Hill counterparts and with businesses both large and small, and other stakeholders in this process. And we’re going to continue and hopefully get to a deal that works and that broadly can be supported.
QLast question on this, about the optics. There are some Americans who say — or they might react and say a phone call on a weekend to Senator Reid and Speaker Boehner, that doesn’t really suggest presidential muscularity. Why not have more frequent meetings? Why not do this in a more structured way that has several days committed to — address the optics for those Americans who say this sounds urgent to me; I’m beginning to get nervous about this. Why doesn’t the President, at least to my point of view, engage more directly on a more persistent basis to get this deal, which you said is achievable?
MR. CARNEY: Well, Major, as you know, the President met with congressional leaders here in the White House prior to his trip to Asia and spoke with the leader of the Senate and the leader of the House over the weekend, and will continue to engage with congressional leaders going forward.
I am highly confident that for the most part, outside of the Beltway, the preoccupation among the American people over this issue is simply that they want action. As the President said, the mandate he has is the same mandate that everyone else who was elected has, which is for action, and not for political posturing, and certainly not for the proposition that tax cuts ought to go up on 98 percent of the people unless the top 2 percent get tax cuts.
So I know there’s a school of thought that imagines that meetings are the sole way to accomplish a deal. What I think was clear from what I said earlier, quoting Senator Corker, is that we know what the parameters of a deal look like. We know what the substance beneath the parameters of a deal look like. And we are working, as we speak, with our counterparts on Capitol Hill to try to reach that goal. And the President will meet with not just congressional leaders, but others who have an enormous stake in resolving these issues, both this week and going forward.
And his goal is to protect the middle class, help it grow, and help those who aspire to getting into the middle class, and to make sure that he’s true to those principles when he sits down with congressional leaders, when he sits down with business leaders, when he sits down with civic leaders.
QJay, on the question of muscularity in terms of leadership, when the President’s economic team is saying this is such an urgent priority, we’ve heard that the President may go public, may go on the road, et cetera. Why hasn’t he started even making public comments on this when you have some Democrats, as Chuck said, saying, let’s just go off the cliff; other Democrats saying, protect our domestic priorities? I know he spoke with Boehner before the Asia trip, made some public comments, but why have we heard very little from the President directly to the American people?
MR. CARNEY: Well, I know in my home and in most Americans’ homes, last week was about Thanksgiving. It certainly was for the President and, I assume, for the Speaker and others. He spoke — he made a public statement about it. He gave a press conference where he discussed it at length with you and others, and will continue to do so. And it is certainly true that public communication is essential, and we are always looking for ways to engage the public in a debate like this because everyone here should be acting on the public’s behalf. And hearing from them, hearing their voices and hearing their priorities is essential to helping compel this process forward.
So we are actively engaged. I think you’ve seen a number of measures that we’ve taken to try to bring the public into this discussion, and will continue to do that going forward.
QOne other topic. James Clapper — over the break, he faced some heat from lawmakers who are upset that he at first said he didn’t know why the Benghazi talking points were changed, why al Qaeda was taken out of it, why the word “terrorism” was taken out. And now he’s saying that it was the DNI office. Does the President still have confidence in the DNI?
MR. CARNEY: Absolutely.
QThanks. I had a couple questions around President Obama’s upcoming meeting with the Mexican President-elect on immigration and on gun control. And I’m wondering what kind of assurances can the President give the incoming Mexican leader about any improved prospects for immigration reform? And if we can revisit the topic of the assault weapons ban? Is he looking at pushing for a reintroduction of the ban any time soon? Can you tell us anything specific? Is this going to be part of their discussions when they meet?
MR. CARNEY: I don’t have an agenda for their discussion. I think it is something the President looks forward to, meeting the President-elect of Mexico, President-elect Niño — sorry —
MR. CARNEY: Thank you. But as for immigration reform, I can tell you that the President does believe, as he’s made clear — made clear I think on Election Night and has frequently since — that there is a real opportunity here to move forward. And the President is committed to that.
He believes that comprehensive immigration reform is achievable, that it requires bipartisan support and that that is achievable, because there has been in the past bipartisan support for immigration reform. And he thinks it’s important not just for specific communities that would be affected by it, but for the American economy. And we’ll be pressing for action on immigration reform. And to the extent that might come up in the President’s meeting with the President-elect that would be his message.
QDoes the President believe that the 2012 general election results give the Republicans added incentive to get on board with an immigration reform deal? Is that something that he would tell the incoming Mexican leader?
MR. CARNEY: Well, I don’t want to put words in his mouth, but I think it is certainly true that there’s been a lot of analysis around that subject. And the President is certainly a keen observer of politics in Washington and how they work, and I don’t think any of us would disagree with the general proposition that there is both substantive and political incentive to try to achieve immigration reform when it comes to the Republicans.
QAnd the assault weapons ban?
MR. CARNEY: Well, the President has long supported the reinstatement of that. When he’s asked about this — and was not that long ago — made clear that Congress — that there are issues here in dealing with Congress on taking those kinds of measures.
So I don’t have any update for you on what his approach will be moving forward, but he has certainly supported reinstatement.
QJay, I’m going to follow up on Ed’s question, just to press you for more details. Is the President planning to go on the road between now and the end of the year to talk about the fiscal cliff? Or do you feel like he did that during the campaign when he went from stop to stop?
MR. CARNEY: I will stick to the general principle that communicating with the public on this issue and others is very important, but I don’t have any travel announcements to make today.
Q– travel with anything else? I mean, you guys have brought other regular Americans to the White House at times. You’ve started even Twitter hashtags around these kind of subjects very effectively for the payroll tax cut debate last year. Can you give us any guidance about how the President intends to harness this public —
MR. CARNEY: I would simply say that all of us here I think are — have a better and clearer understanding about how to engage the public in these important policy debates, because these policy debates are about the American people. They are about the American middle class. And everyone on an issue like this has a deep interest and stake in the outcome. And we will continue to bring the American people into these debates using a variety of means.
But I don’t have a specific —
QIs there any way the — I mean, one way for the —
MR. CARNEY: It would ruin the fun if I gave you all the details now.
QWell, can you talk at all about what — I mean, the President said during the campaign send a message; break the deadlock; we can’t change Washington inside, we need it from the outside. It seems that — did the election send that message already? Or is there more you can do in the next month to harness that?
MR. CARNEY: I think the President was serious about that going forward, not just looking back. And we need to continue to engage the public, because that’s what this is about. And I think that some of the lessons that we learned over the last four years have to do with always being mindful of the fact that engaging the public on these sometimes chewy policy debates is important because they care and they have a deep stake in the outcome of the debates. So we’ll continue to do that.
QThank you, Jay. Is the President — as you do a reevaluation of the last four years, is the President likely to change the way he engages members of Congress? For example, we’ve seen in past years the President play golf with John Boehner, we’ve seen him invite members over to watch football games — things like that. There’s been talk of him inviting members to Camp David. Might these kinds of steps be helpful in deepening relationships on Capitol Hill, which could in turn be effective in advancing the President’s agenda?
MR. CARNEY: Well, look, the President is very interested in engaging with lawmakers of both parties in order to achieve their shared goals, which have to do with growing the economy, increasing job creation, making America safer and stronger. And he will continue to do that. You cited some ways that he did that in his first term, and I’m confident he’ll continue to do that.
I think that the reality of modern-day Washington is a little different than it was in 1801, to use a timely example. And so the notion that you can solve all problems over a cocktail I think is a little overrated. But he is certainly interested in engaging not just with lawmakers but civic leaders, business leaders, labor leaders and others on all these important issues, because, as I was saying earlier, engaging with not just the denizens of Washington but with the broader American public is very important to him.
QThanks, Jay. I wanted to ask about Afghanistan and — there’s been reports that the President has decided on the troop levels that he wants after 2014. Is that the case, and is it —
MR. CARNEY: Well, it’s not the case, and I’m not sure that that report you’re citing says that he’s decided. He has not. He will review options for both — there are two things to look at here, as we’ve made clear and the President made clear when he visited Afghanistan not that long ago, that we will entertain a continued presence in Afghanistan that will — that might focus — that would focus if there is a continued presence on counterterrorism operations and training of Afghan forces. And that’s continued beyond the 2014 deadline when we will wind down our participation in the war in Afghanistan.
The separate issue, again, that he has not reviewed options on and has not made any decisions on, is fulfillment of his commitment that he made very clearly to continue to draw down forces in Afghanistan from their levels now that we’ve drawn down the surge forces over the course of the next two years. And the pace of that draw down is a decision that he will be making in coming weeks and months.
QSo is the — the report suggested that General John Allen had recommended between — leaving between 6,000 and 15,000 U.S. troops there. Is that not true?
MR. CARNEY: I’m not — that’s different from what you said, which is the President had decided on, and he has not decided on anything. He will evaluate proposals from the Pentagon and elsewhere on what we might negotiate with the Afghan government on a future presence in Afghanistan after we fulfill our commitment and NATO’s commitment to end the war in Afghanistan in 2014. That commitment and that presence would be very limited in scope, as we’ve talked about — focused on counterterrorism operations and training of Afghan forces.
QAnd very last one. Meeting with business leaders today, did he meet with the chamber — Tom Donohue from the Chamber and other business leaders, and is he making progress on that front?
MR. CARNEY: The President did not have meetings with business leaders today. I believe Tom Donohue and John Engler in separate meetings are meeting with some senior folks over here — Jack Lew, Gene Sperling, Jeff Zients. But that’s part of the process that we’re engaged in that I described earlier, which is an ongoing conversation with leaders on Capitol Hill, rank-and-file members on Capitol Hill, staff on Capitol Hill, and business leaders small and large, as well as civic and labor and other leaders who all have a stake in this very important debate.
QThank you, Jay.
MR. CARNEY: And then Mark.
QDid the President meet with other stakeholders today? Meetings that aren’t on the public schedule?
MR. CARNEY: Not that I am aware of, no.
QAnd also you mentioned at the top that you came out here to say that the President had spoken to the Speaker and to Senator Reid over the weekend. Did you say everything you could say about that? (Laughter.)
MR. CARNEY: I did.
QHow long the call lasted, in terms of —
MR. CARNEY: I don’t have any more details for you, but I know it had begun to get out that he had had these conversations so I was prepared to break some news and confirm those reports.
QCan you say this — were you planning — did you guys — did the White House leave the schedule open today in hopes that a meeting would develop? And is that the plan for the rest of the week? You’ve got some open spots.
MR. CARNEY: No, the President will continue to engage with leaders of Congress as appropriate as this process moves forward. And the process — we are engaging with Congress at the staff and member level on this important discussion and will continue to do that.
The President will meet — continue to meet with business leaders and other leaders this week. He will continue to engage in different ways on this issue in the hope of achieving a goal here which he knows and believes is widely shared by the American people, which is a balanced solution to our longer-term deficit challenges — a solution that protects the middle class, that protects seniors, that makes sure we’re making the necessary investments in our economy and infrastructure and research and development and education that will help the economy grow for years into the future. All of that is achievable. And with a little give, we can get it done.
QJay, when you say that a deal is best achieved before the end of the year, does that rule out the President agreeing to kicking it over into next year?
MR. CARNEY: Well, I’m not going to — the point was I was asked if he supports the — what did you call them? “Fiscal cliff divers?” (Laughter.) And it is our belief that —
QCopyright. I’m going to copyright it.
MR. CARNEY: It is our belief and the President’s belief that, as spelled out in Alan — in the plan that Alan presented to you today that was co-authored by the CEA and the NEC, that there would be damage done to the economy if we don’t extend the tax cuts for the middle class, and if we don’t address the other elements of the fiscal cliff, and if we don’t more broadly speaking address our longer-term fiscal challenges in a way that grows the economy and creates jobs.
So we believe we can get this done, and that’s what we’re working on.
QWait a minute. (Laughter.)
MR. CARNEY: Let’s see. Olivier, then Alexis, and then April.
QAll right. A couple on Egypt. You said repeatedly, we have expressed concerns. Do you know who in the administration addressed who in the Egyptian government?
MR. CARNEY: Well, I would refer you to the State Department. They have more specifics.
QAnd were you forewarned that Mr. Morsi was going to do this, or was the administration caught by surprise?
MR. CARNEY: Well, again, we view these as separate issues. So these were not — this was not —
QI didn’t link it to any issue.
MR. CARNEY: I understand. But I think we have raised our concerns, and I think that in part answers your question. But the President was focused on, and Secretary Clinton was focused on working with President Morsi and others — Prime Minister Netanyahu — to help bring about a ceasefire so that lives could be saved and that the possibility of moving forward on negotiations for a more enduring peace could be realized. And that was very important, and President Morsi played an important role in that.
Separately, we’ve raised concerns about some of the decisions and declarations that were made on November 22nd, and we continue to engage with the Egyptians on this. And I think that the important issue here is that the Egyptian people want a government that reflects their will, and we certainly support that.
QQuick clarification. Because the fiscal discussions are aiming at deficit reduction and that’s the goal, and because it was murky before Thanksgiving, can you clarify the President is shooting for $4 trillion in deficit reduction over 10 years at least? That is his goal?
MR. CARNEY: Well, it’s reflected — yes, it’s reflected in his proposal, his budget proposal, which I know you all have read cover to cover, and is still the most substantive proposal put forward by any elected official that actually achieves the target of $4 trillion in deficit reduction over 10 years and does it in a balanced way.
QAnd today, where we are today on Monday, is there consensus around that? Can we say there is consensus among all parties that $4 trillion is the goal?
MR. CARNEY: Well, I don’t want to speak for other parties. I think that that’s the President’s goal when we talk about the longer-term issues, which are part of but certainly separate from the specific fiscal cliff challenges. That has been his position for a long time. He has described that going back to the spring and summer of 2011 as a big deal, one that would be — that would help put us on a sustainable path and create the kind of ratio of deficit to GDP that Alan Krueger and others are so fluid in discussing. But that is his goal when we talk about the longer-term deficit reduction target.
The near-term target, the one that could be resolved tomorrow if the House so desired, would be to pass the extension of the middle-class tax cuts, which would remove a substantial portion of the fiscal cliff right away, would give certainty to consumers and retailers right away. And the President, as he has repeatedly, urges the House to do that, because we shouldn’t hold the middle class hostage. We shouldn’t hold 98 percent of the American people hostage to an insistence that millionaires and billionaires and those making from $250,000 to a million get tax cuts going forward. It’s just not good economic policy, and it’s certainly not good politics.
QJay, two questions.
MR. CARNEY: Last person.
QBecause of all that’s happening, all the historic events that’s happened in the past year in Egypt, could we see the President now, because concerns — you have raised concerns about what’s happening since November 22nd — could we see this President reach out in direct talks — direct communiqué to President Morsi to ask, what are you doing, what is this?
MR. CARNEY: Well, the President, as you know, spoke on numerous occasions with President Morsi over the violence in Gaza, and had spoken to him before that and will continue to speak to him going forward. I’m confident of that. But I don’t have a planned schedule for you of conversations or an agenda for what those conversations would look like.
We’ve raised concerns. I think the State Department put out a statement on this; Victoria Nuland addressed it in a briefing, and I think the State Department might have more information for you on specifically how we’ve communicated those concerns. But our interest is in the process, the transition towards democracy continuing and the development of a government that reflects the will of the Egyptian people. And we’re working towards that, both because we believe it’s in the interest of the American people and of the United States, but also because it reflects the will and the interest of the Egyptian people.
QDoes it look like democracy is in the process? Or does it look like there could be a transformation into dictatorship?
MR. CARNEY: Well, look, I think that it’s important to take a step back in November of 2012 and look at how much the world has changed in that region since late 2010 and how much Egypt has changed since very early 2011. And that transition — if anyone ever promised that it would be smooth, they were foolhardy because that was never going to be the case.
The President focuses on the basic principles that guide his policy towards Egypt and guide his policy towards the overall region when it comes to countries that are attempting to transition to democracy.
QBut you would describe this as disruptive, wouldn’t you?
MR. CARNEY: Again, we’ve raised concerns about it. And we wouldn’t if we — if there weren’t — if we didn’t have concerns.
QRaised concerns, that State Department press release — the State Department release and yours, I mean, you’ve been very careful in what you said. You haven’t really been critical. It’s like you’re concerned but not critical.
MR. CARNEY: Well, I think what’s important here is —
QAnd I know diplomacy is a careful choice of words —
MR. CARNEY: Well, I think it is —
Q– extremely careful —
MR. CARNEY: — and I think that what is important here is that the transition to democracy will be achieved by the Egyptian people not by the manner in which we raise concerns. We have done that and will continue to do that where appropriate. And we are constantly monitoring developments in Egypt and working with the Egyptians with whom we have a very important relationship.
And again, it’s important to take a longer view here, which is not to say that the concerns that have been raised aren’t significant and serious, because they are, and we raise those concerns as appropriate. But it is important to again look at what the goals are, on whose behalf those goals are being achieved and that’s the Egyptian people’s behalf.
QBut you’re not condemning it — to parse this, you’re not condemning what he’s doing?
MR. CARNEY: I certainly don’t have any —
Q– you’re not criticizing —
MR. CARNEY: I don’t have any new language to give to you today on how our view on it — what our view on it is.
QIf one of us wrote or said the White House is criticizing President Morsi, would you say that was an incorrect take —
MR. CARNEY: I would say that we are concerned about it and have raised those concerns.
MR. CARNEY: I’ve got to go. (Laughter.)
QHow is the nomination process coming with the President on all of the key posts that are open? But also, could we expect something before the 36 days of the fiscal cliff deadline?
QAnd who is it going to be? (Laughter.)
QLet’s get —
QLet’s get that out of the way. (Laughter.)
MR. CARNEY: I have no — as I said earlier, I have no personnel news to make of any kind. No timelines. I don’t have anything for you.
QBut you’d accept —
QNothing this week?
MR. CARNEY: Again, I don’t have anything for you.
QIs he just focusing primarily on averting the fiscal cliff?
MR. CARNEY: That’s an important piece of business, but is not the only piece of business.
3:32 P.M. EST