James S. Brady Press Briefing Room
2:33 P.M. EDT
MR. GIBBS: It's my never-ending pursuit to try to bring maybe a special guest once every day this week. (Laughter.) So just once a day.
Q: What are you paying them?
MR. GIBBS: Top dollar.
Before we get started, if you have PAYGO questions or want to talk about that, obviously Peter Orszag, OMB Director, will talk a little bit about PAYGO and take a few of your questions on that.
DIRECTOR ORSZAG: Thank you, Robert. Glad to be here.
Today the administration is putting forward a statutory "pay as you go" proposal. This is the same set of statutory rules that applied during the 1990s, an era in which we did restore fiscal discipline and move towards balanced budgets and then surpluses.
The rules are similar to rules that already exist in the House and Senate but are backed up by the power of law. And you saw today the President standing with the House leadership, including the Speaker of the House and the Majority Leader Steny Hoyer, along with membership of the Blue Dogs and others, in support of this legislation, which we hope will be taken up quickly not only by the House, but also by the United States Senate.
MR. GIBBS: You want to take a few questions? (Laughter.)
DIRECTOR ORSZAG: I don't know what Robert means -- that was easy. (Laughter.)
MR. GIBBS: When he stands before the Budget Committee he's not nearly as quick to want to leave as with you guys.
Q: Peter, at Brookings this morning, you talked about health care being deficit-neutral and many other things. Does the deficit neutrality of health care fit in with PAYGO? Are they complementary? And do you want PAYGO before the health care legislation passes so one comes before the other and that's the metric by which you have to fit the cost and spending into?
DIRECTOR ORSZAG: First, the concepts are very similar, and we have said we need to be adopting a health care reform that is not only deficit-neutral, fully paid for, but that also moves toward a more efficient health care system and eliminates or starts to work at eliminating a lot of the variation that we see in the health care system where the higher cost areas don't generate better health outcomes.
Q: McAllen versus El Paso.
DIRECTOR ORSZAG: In McAllen versus El Paso -- you were paying close attention. The timing on the piece of legislation I'm going to leave to others to discuss, but I think the core thing is the principle is exactly the same, which is in health care we are saying the proposal must be deficit-neutral, and that will occur in hard, scorable savings in terms of -- in CBO scoring. And I would just note I know there has been some discussion about those offsets, but CBO -- which I used to run -- is appropriately skeptical of many types of health care interventions. The package will be deficit-neutral based on that CBO scoring.
And then, again, I want to just emphasize if that's all we did we would be perpetuating lots of parts of the health care system that could be made more efficient, and so we need to go beyond that and adopt some of the things that may not score but that are crucial to a health care system that embodies best practices universally.
Q: Will the administration come up with the other offsets to get to the portion that is currently not covered by your set-aside in the budget you are --
DIRECTOR ORSZAG: Down payment.
Q: Down payment.
DIRECTOR ORSZAG: The President, in a letter that was released last week, indicated that there will $200 billion to $300 billion more in savings that we will be putting out in the near future. And if you put that together with the down payment you're in the range of the packages that are under discussion on Capitol Hill. We will work with the Congress to make sure that any remaining pieces are fully financed.
Q: Peter, are there any exceptions to PAYGO?
DIRECTOR ORSZAG: There are four, although you could collapse them into three exceptions that reflect I think -- there's an ongoing debate about current policy versus current law. The thrust of current policy embodies, for example, an assumption that we're not going to allow the Alternative Minimum Tax to take over the tax code. It embodies an assumption that at least a significant part of the 2001 and 2003 tax cuts will be extended past their scheduled expiration in 2010; and it embodies an assumption that we're not going to reduce physician payments by 20 percent arbitrarily in the near future.
So in those three areas, what we have done is we've said, as long as legislation embodies sort of the thrust of current policy, it will neither count as a cost, nor as an offset in the PAYGO system.
And I think that's just, frankly, a reflection. One of the problems that we have is we've built so many sunsets into the tax code and into the -- so-called the sustainable growth rate formula under Medicare that there's this awkwardness between the technical law, which is implausible -- all of the tax cuts disappear, the physician payments are reduced by 20 percent, and what is commonly understood as policy as it currently stands. Our legislation says let's take policy as it currently stands, and make sure that you have "pay as you go" off of that.
Q: Are emergency supplementals covered by PAYGO?
DIRECTOR ORSZAG: PAYGO only applies to the mandatory side of the budget and to revenue, so a different set of issues surrounds discretionary spending, which is where the supplemental comes up in the budget.
Q: Peter, why apply it over a decade instead of year by year, as the President's budget proposal has proposed?
DIRECTOR ORSZAG: Well, I think the reason is that when you apply it in some periods, you can easily get timing shifts and gaining that occurs, so we have not only an over 10-year period, but also a rule against shifting from the 11th year in and out of the 10th year. So this is intended to make sure that timing shifts are not allowing the letter of the law to be met but the spirit being violated.
Q: Isn't that in contradiction to what the President originally proposed?
DIRECTOR ORSZAG: There are a variety of different "pay as you go" proposals that have been put forward. There are existing Senate and House rules also. And again, what we're trying to accomplish with that is an improvement that will avoid timing shifts being gained.
Q: So the original proposal just wasn't the best one to make?
DIRECTOR ORSZAG: No, we didn't actually have a fully specific statutory PAYGO proposal that was fully laid out. There are different ways of doing PAYGO, and we think this is an improvement on some previous versions.
Q: But following up on that, if you do it over 10 years, doesn't that allow you not to pay as you go for the early years in that 10-year period?
DIRECTOR ORSZAG: You have to pay on average over the 10-year window.
Q: Okay, but during those early years, for example, when we're paying for health care reform, you don't have to pay as you go?
DIRECTOR ORSZAG: There are -- well, again, in addition to the statutory PAYGO, there are existing House and Senate rules that would require matching upfront costs and upfront offsets. But again, I think one of the things that's happened in the past -- and you even saw this with regard to the 2001 and 2003 tax legislation when it was adopted -- is that you create gains by shifting costs in offsets across years. And what we're trying to do is say, no more gamesmanship like that.
Q: Peter, are you concerned about the fact that the House committees of jurisdiction on health care have put forward their ideas of how to spend the money but they still haven't said how they're going to pay for any of it? And obviously just putting those important decisions off just leaves less time for conversation about this very matter.
DIRECTOR ORSZAG: Well, I think if you saw the Finance Committees white paper, they have put forward ideas about how they could pay for it. I think many of the details will be forthcoming over the next -- in the coming weeks. But I also think there is widespread agreement and recognition that the package will have to be deficit-neutral in order to be enacted.
Q: Right, but I'm talking about specifically the House side at the moment. Wouldn't it have been more responsible to come and up say, if you're going to talk about spending money, talk about how you're going to pay for it?
DIRECTOR ORSZAG: Again, I think there's recognition that in the legislation as it emerges from the committees -- and you, again, have committee jurisdictional issues with different committees being responsible for different parts of the overall legislation, it will come together with both the coverage aspect and the offsets aspect being joined. And then, again, I want to emphasize we not only have to make sure that we are expanding coverage in a fiscally responsible way, but if that's all we did, we would be perpetuating a system that has some issues with it where we could be doing a lot better.
Q: Peter, can you say just roughly -- I know you can't get real granular on this, but just roughly, what percentage of the federal budget will be subject to PAYGO rules? Because when it comes to mandatory, the three big entitlement programs really don't fall under this; they can't be restrained under PAYGO rules. Discretionary is another big chunk. So it seems like at least, I don't know, 60, 70 percent of the federal budget isn't under PAYGO rules at all.
DIRECTOR ORSZAG: No, let me -- that is wrong. So the only part that's not covered by PAYGO is the discretionary part of the budget, which is a little under 40 percent of the total. So 60 percent is conceptually subject to PAYGO. I guess you'd have to take out the interest payments, which are not.
But the exemptions that you may be hearing about have to do more with how the sequestration part of statutory PAYGO would work, in particular if, for example, the Congress adopted policies that cost more than the savings were, there would be an automatic sequestration that would apply to some programs, not all. And that's where you would hear about the exemptions for Social Security, for Medicaid -- actually, Medicare is included there.
The sequestration rules are there. They don't typically get triggered, because everyone knows that that would be a very bad outcome. And so the very threat of that occurring means that it's not necessary to implement them.
Q: But, I mean, those entitlements are going to continue to grow.
DIRECTOR ORSZAG: Okay, so that's a separate question. What this is doing is saying we can't dig the hole any deeper. But as is well-recognized, all this does is prevent the hole from getting deeper, which, by the way, would be a significant accomplishment. If you look back over the past eight years, what has happened is through the Medicare prescription drug benefit and other steps that we did not pay for we did make the hole deeper.
Q: And that would have been an example of something --
DIRECTOR ORSZAG: That would have been an example of something that would have been subject to "pay as you go."
Q: Medicare Part D would have been under PAYGO?
DIRECTOR ORSZAG: Yes.
Q: Peter, can you just elaborate a little on the sequestration? It's my understanding that in the 1990s, those -- that provision was waived. In other words, at the end of the year, CBO would score and Congress would just simply waive it. So what does your proposal do to prevent that from happening in the future? Is that how you're addressing it, with the 10 years, or what?
DIRECTOR ORSZAG: There were some questions that arose at the very end of the decade with regard to how the rules operate in an era of surpluses. So I guess all I would say is let's hope that we quickly return to having that kind of problem. In an era of deficits --
Q: Were they never waived in an era of deficits?
DIRECTOR ORSZAG: There were very few exceptions. And again, waiving statutory PAYGO has a different set of rules associated with it than waiving the House and Senate rules that can be waived by a vote.
Q: Senator Conrad says that PAYGO can only do so much and that one of the problems that you have is you have to address the existing deficits and the rising debt. And I'm just wondering what your reaction and what your response to that is?
DIRECTOR ORSZAG: Well, I agree with that. "Pay as you go" embodies the common-sense principle that you shouldn't dig the hole deeper. It doesn't deal with the underlying hole, and that underlying hole, if you look out over the long term, is being driven mostly by rising Medicare and Medicaid costs. It's one of the reasons why we want to act so aggressively to address the variation between McAllen versus El Paso and make the health care system more efficient -- because if we don't we are on an utterly unsustainable fiscal course.
That's why we're trying to get health care done this year in a way that not only is deficit-neutral over the next five or 10 years, but also puts in place a lot of the structural changes that will lead to a more efficient health care system over time.
Q: Some of the critics, though, say that the stimulus package and other measures show that you're not serious about really containing the deficit.
DIRECTOR ORSZAG: Well, look, we have two deficits that we are grappling with. One is the deficit in GDP, the gap between how much the economy could produce and how much it is producing, which estimates suggest amounted to roughly a trillion dollars a year when we came into office. The very first priority was to try to start to address that, mitigate the sense of freefall in the economy, and start to boost economic growth again back up to what the potential of the economy is. That's one issue, and that's something that is very paramount for the next year or two.
A separate issue is the budget deficits that then go out over time, not only in the next five or 10 years, but over the very long term. And again at the heart of all that is health care.
Q: Would the stimulus have fallen under PAYGO?
DIRECTOR ORSZAG: No, the stimulus is in the discretionary part of the budget.
Q: All part of the discretionary?
DIRECTOR ORSZAG: Yes.
Q: You seemed to suggest in the beginning that the surpluses of the 1990s were the result of PAYGO. Do you really believe that PAYGO created -- I mean, wasn't that just the result of revenue coming in as a result of a strong economy?
DIRECTOR ORSZAG: I think there were a variety of forces that came together to create surpluses during the 1990s. One of them was economic growth. Another was a set of fiscal discipline tools that contributed to overall fiscal improvement. So there were -- and frankly, then, there were a variety of other things, too, including the ending of the Cold War and a whole variety of other stuff.
Q: So PAYGO would be miniscule --
DIRECTOR ORSZAG: No, I think -- here's the thing. I think -- I do strongly believe in the broken glass -- broken window theory of budgeting, which is, if you don't have any -- just like broken windows have been shown to increase crime and harm outcomes, if you don't have important constraints, including a basic principle that if you've already got a hole you don't dig it deeper, which is what PAYGO embodies -- I think it leads to a sense that anything is possible in a fiscally irresponsible way, and undermines a lot of what we're trying to do.
So was it the only thing that led to surpluses during the 1990s? No. Did it contribute to a sense of fiscal discipline that helped to generate the surpluses? Yes.
Q: So how do you reply to those who say, well, you just dug the hole really deep, and now you're announcing that we want to stop digging?
DIRECTOR ORSZAG: Well, let's look at what that hole was. We came into office, we faced this massive GDP gap, a deficit that was already projected to be in excess of a trillion dollars, and the need to address a crisis in the financial system and a deep economic hole. All of the deficit this year relates to the severity of the economic recession and to the steps that were deemed necessary to address it.
Now, let's look out over time. And again, we are applying this "pay as you go" principle not only to health care reform but to other things that we are doing. So it's not only that we haven't made anything worse on that long-term and medium-term deficit, but to the extent that we succeed in wringing more efficiencies out of the health care system, I think we will have taken the single most important step we could to address the core driver of our long-term deficits.
Q: On a political level, how will this make it easier for you or for the Congress to come to an agreement about how to pay for health care? In other words, how does this contribute to the end goal of figuring that out?
DIRECTOR ORSZAG: I think let's separate the statutory PAYGO from the PAYGO principle applied to health care. I think that's the key point.
The PAYGO principle applied to health care is not only something the President believes in strongly, but it's also embodied in the rules that already apply in the Senate and the House. And so I don't -- I think it's worth distinguishing between those two --
Q: -- under reconciliation --
DIRECTOR ORSZAG: Either way. So either -- even not under reconciliation, you have PAYGO rules that apply in the House and Senate. But it is worth noting that under reconciliation, health care reform not only has to be deficit-neutral, it actually has to be slightly deficit-increasing in order to be consistent with reconciliation.
DIRECTOR ORSZAG: Decreasing.
Q: But, wait, you're saying that even without this, health care would have to be deficit-neutral because of the rules; it doesn't need anything statutory to make that happen?
DIRECTOR ORSZAG: Unless the existing House and Senate rules were waived --
Q: Well, I'm just -- I'm wondering if politically you think this is the kind of gesture that will make it -- that will help in any way to get the kind of agreement you need on the pay-for side of health care, since you guys haven't been able to do that yet.
DIRECTOR ORSZAG: Well, I think the legislative -- (laughter) -- no wonder you have so much fun every day. (Laughter.)
MR. GIBBS: Oh, yeah. (Laughter.) It's ridiculous. (Laughter.)
Q: You had a lot of Blue Dogs here -- I mean, does this contribute in any way to --
DIRECTOR ORSZAG: The legislative process is unfolding --
Q: Changing the tone, are you --
DIRECTOR ORSZAG: Well, I think it is worth remarking upon how much agreement there is and recognition that there is that this effort must be deficit-neutral. We will get there. The legislative process is unfolding, so you will see it playing out over the coming weeks. And I think we should let that process unfold.
Q: Before you go, you mentioned a moment ago the additional proposing of $200 billion to $300 billion in additional cost savings. Does that mean the administration does not foresee the need for either it to propose or Congress to enact tax increases beyond the down payment outlined in the budget submission?
DIRECTOR ORSZAG: No, what we've said is that we will be coming forward with additional Medicare and Medicaid savings. There may well be additional revenue that's necessary; we'll have to see how the revenue -- how the process plays out.
Q: How the scoring goes.
DIRECTOR ORSZAG: How the scoring goes. There are a lot --
Q: -- and political reaction.
DIRECTOR ORSZAG: There are lots of moving pieces. So I think the point is, if you put together our down payment and what was in the President's letter, on which there will be more details forthcoming in the near future, you are getting in the range. There may be additional Medicare and Medicaid savings that are necessary; there may be some additional revenue that's necessary. It will depend on what the scoring is like and how the final package congeals.
Q: Peter, just one last question. If this is just stopping the hole from getting any bigger, when are you guys going to take on the serious program of entitlement reform so that you're no longer digging a hole at all? When is that going to happen?
DIRECTOR ORSZAG: Well, what I'm trying to say is --
Q: -- and health care is part of that.
DIRECTOR ORSZAG: No -- and actually, just pause for a second, because I think it's easy -- I've come from a world where Social Security reform was the sort of test of manhood, in terms of entitlement reform.
Q: That's what I'm saying.
DIRECTOR ORSZAG: Yes, I know that. (Laughter.) Let's just focus --
MR. GIBBS: Despite the fact that you're outlining hundreds of billions of dollars in Medicare --
DIRECTOR ORSZAG: Exactly.
MR. GIBBS: -- Jake would like to fast-forward from that to some other programs. (Laughter.)
Q: But he's the one that said the hole is still there.
DIRECTOR ORSZAG: But let me just highlight --
MR. GIBBS: Right, and made bigger by the fact we added a prescription drug benefit to Medicare that he just said would be covered --
DIRECTOR ORSZAG: But let me make --
Q: So take it away.
DIRECTOR ORSZAG: Jake, let me make the point this way.
MR. GIBBS: Are you proposing that as a --
Q: I'm not the one that has legislative power.
DIRECTOR ORSZAG: This is fun. (Laughter.)
Q: You're saying Medicare Part B is a major deficit problem. Where's the proposal to take it away?
DIRECTOR ORSZAG: Can I make this point --
MR. GIBBS: Peter outlines that.
DIRECTOR ORSZAG: Over the next two months, two to three months, we will be in the midst of a legislative process on the core fiscal problem facing the United States. If we succeed -- I mean, for example, here's a calculation for you: If we succeed in reducing the growth rate of health care spending by 15 basis points, 0.15 percent points per year, that has a larger impact on the nation's fiscal imbalance than eliminating the Social Security deficit.
And so what I'm trying to say is we need to be focusing on whether we are doing as much as we can to get that number down 15 basis points, 30 basis points, 100 basis points, 150 basis points. And then in addition, as the President has said, once we get -- once we address the biggest problem that we face over the long term, we do need to turn to other parts of our long-term fiscal imbalance, including Social Security. But it strikes me as making sense to focus on the thing that is the core driver first, and we're going to have plenty of discussion over the next two months about ways of trying to obtain a more efficient health care system.
Q: So health care first, then entitlement reform?
DIRECTOR ORSZAG: Well, health care --
Q: Health care includes some entitlement reform.
DIRECTOR ORSZAG: It includes a lot. I mean, again -- look, if health care costs grow at the same rate over the next four decades as they did over the past four decades, Medicare and Medicaid go from 5 percent of the economy today to 20 percent of the economy by 2050. That is the core driver of our entitlement problem. If we succeed in bending that curve we will have done more to improve the long-term fiscal health of the nation than any other single thing we could do -- which is not to say other things aren't important, but what I'm saying is over the next two months we have an opportunity, our best shot at addressing that problem and that's what we want to do.
Q: Peter, on that point, how could the stimulus not apply? How could PAYGO not apply to stimulus? Even if you save hundreds of billions of dollars in Medicare, then you turn around and spend $787 billion on the stimulus, doesn't that wipe out a lot of our savings?
DIRECTOR ORSZAG: No. Again, the present value of the Medicare and Medicaid imbalance is many, many orders of magnitude larger. But remember what the Recovery Act was intended to do. As I said before, we have these two deficits. We needed to address the GDP gap -- the gap between how much we could produce and how much we are producing -- and there is widespread agreement that the key driver of that is that there is not adequate demand for how much firms could produce with their existing plants and equipment. What we're trying to do through the Recovery Act is get the economy back on its feet.
PAYGO does not apply to that part of the budget which is the discretionary part of the budget. And furthermore, even if it did, it would be viewed as the kind of short-term economic situation in which the rules would typically be waived. But I think the more important thing is there is widespread mainstream economic agreement that in the midst of a severe economic downturn, temporarily running larger budget deficits is not only something that you should accept, it is actually desirable because it helps to get the economy back on its feet.
As the economy recovers, deficits become a problem. And that is why we are trying to act to address -- coming back to Jake's question -- what we see as the key driver of our long-term deficits even while we're fighting the short-term economic problem in which temporarily elevated deficits are unfortunately necessary.
Q: Since we're educating the public here on PAYGO, why shouldn't discretionary spending be under PAYGO rules?
DIRECTOR ORSZAG: There's a wonky reason, which is that discretionary spending is just addressed year by year by the Congress, and so the rules are different. What happened in the 1990s was a separate set of constraints were applied to discretionary spending called discretionary caps. They just -- I guess the short answer is it just -- the legislative process is different for mandatory spending and revenue than it is the appropriation bills.
Q: Why shouldn't the cynical watcher out here sit there and say, okay, it's "pay as you go," unless it's not? You know, it's like you have this discretionary pot here; well, we don't have to follow budgetary "pay as you go" rules, but over here we do. You see what I'm saying? How do you reconcile --
DIRECTOR ORSZAG: Well, let's come back to things like the prescription drug benefit. That is a mandatory program. You can't decide upon that year by year. And "pay as you go" would have applied to it.
Q: So year-by-year pay-as-you-go budgeting?
DIRECTOR ORSZAG: I'm sorry?
Q: So year-by-year pay-as-you-go budgeting just doesn't --
DIRECTOR ORSZAG: The appropriations process goes through the discretionary part of the budget each year. And it's just a different system than is used for Medicare, Social Security, Medicaid, and revenue.
MR. GIBBS: And what's set up this time is very analogous to what was set up in the 1990s --
DIRECTOR ORSZAG: Correct.
MR. GIBBS: -- where, as Peter has talked about, we went from earlier in that time period much larger deficits to --
Q: If you were doing Medicare entitlement reform on its own, not as part of expanding access, but you were just doing Medicare entitlement reform, you would be surely looking at a lot of things you're looking at now -- all of these scorable savings in addition to these long-term changes to the system. And in this case, you're doing it as part of comprehensive health care reform, so all the savings that you're getting you're immediately spending on new subsidies.
So isn't it, in terms of looking at it from a point of view how big the hole is -- obviously, the hope is that long term you're going to change the system to slow the spending, but you're getting lots of savings that are immediately being re-spent. So how would you just address that from the point of view of a pure budget?
DIRECTOR ORSZAG: Well, what I would say is that we're doing two things. One, is we are addressing the moral imperative of addressing the ranks of the uninsured, and we are making sure we are doing so in a fiscally responsible way by fully off-setting that cost.
And then, in addition to that, we are not just doing that, but moving beyond that to put in place health information technology, comparative effectiveness research, changes in financial incentives, the MedPAC proposal that we are open to in terms of changing the way Medicare policy is set that will lead to a more efficient health care system over time and that offer the best hope and the most auspicious approach to reducing the growth rate over time.
And I've said before, I'll say it again here, I've attended innumerable Institute of Medicine meetings, Congressional Budget Office meetings, Brookings Institution forums, what have you; I think we've put together the most aggressive set of proposals in that latter category to lead to best practices in health care and produce a more efficient health care system. But we are open to other ideas. We are trying to dial that up as much as possible.
Q: Just one more thing, and just to follow up on Laura's question.
MR. GIBBS: This is the last one.
DIRECTOR ORSZAG: We're having so much fun.
Q: When does the curve get bent in the -- in other words, after you finish paying -- after you finish taking the savings and paying for the expansion of coverage, when do you get a net savings -- a net reduction in health care costs? In like 10 years from now?
DIRECTOR ORSZAG: We are going to be deficit-neutral even over five or 10 years. And to the extent -- the difficulty about the game changers, the things that are intended to transform the way -- to lead to a more efficient health care system, -- is it's very difficult to quantify -- even though they're the most auspicious list of changes, it's difficult to quantify exactly how they will evolve over time, almost by design.
We have never changed our health care system towards a best practices one. So quantifying exactly what their impact is, is very difficult. But what I want to be very clear about is at worst this will be deficit-neutral. And then to the extent that these changes succeed in altering the practice of medicine in a way that experts have long believed that they will, the result will be much better than that.
Q: Peter, you talked about another $200 billion to $300 billion. Will the President be talking to the House Ways and Means Democrats about details of that today?
DIRECTOR ORSZAG: Yes, in fact, I believe that I was here instead of attending that meeting right now.
Q: You're welcome. (Laughter.)
DIRECTOR ORSZAG: Not so sure about that. Thank you.
Q: He will be talking to them about that today?
DIRECTOR ORSZAG: Yes.
MR. GIBBS: But you can't -- Peter won't leak it because he was in here.
Q: Thanks, Peter.
Q: Thank you.
Q: This is turning into a health care --
Q: How come you never bring Larry Summers out?
MR. GIBBS: You never know? I mean, what is it -- Tuesday? Two guests? You never know who the special guest for Wednesday will be.
Q: Thank you. Can you talk about the President's personal reaction to the setting of the hearing date for Judge Sotomayor? And is this -- does this track with his timing of where he wants this to be and her getting confirmed by October?
MR. GIBBS: Well, obviously the President is pleased that the Senate has set a hearing date of July 13th. We have talked in this room before about the time period that normally happens as you go from nomination to hearing and then ultimately what we hope to be confirmation. From nomination to hearing will be about 48 days, which is consistent with the range of 51 days that I had mentioned in here a few days ago, that the past nine nominees -- the average for the past nine nominees.
We sent the questionnaire to the Senate in record time and believe that this continues on a track that would have Judge Sotomayor confirmed and in place for the very important work that happens in the month before the term opens in September where the Court decides the cases that it's going to take, which, as you know, is a very important period of time. So the President is pleased with the developments today in the Senate.
Q: Secretary Geithner said today that the President will be making an announcement next week on financial regulation. I'm just wondering if you can talk about how sweeping that announcement is going to be, and how involved is he going to be in the debate over what shape this plan should take, or is he going to mostly let Congress take the lead on that?
MR. GIBBS: No, I think he'll -- without getting into the specifics, the President and his economic team will outline a series of specific proposals as it relates to ensuring that we put in place a system of regulation that makes sure what happened previously to lead to this economic downturn doesn't happen again. That's been a priority that the President has talked about for a long time, many months before he got here, and something that he and the economic team are very focused on.
Q: Some of the ideas that are being talked about within the administration, such as combining agencies like the SEC and the FTC, are controversial on Congress. Is he willing to --
MR. GIBBS: Well, let me -- I'm not going to get into commenting on what is or is not accurate in the media about a proposal that will be made next week. I think it is safe to say that there will be some streamlining and some reorganization. But I hesitate to get involved in leaks tit-for-tat.
Q: What day?
MR. GIBBS: I believe that is Wednesday of next week, if I'm not mistaken.
Q: Two questions about developments today, one regarding Ghailani's trial, him being flown to the United States. If any of the detainees who are brought to trial through the U.S. criminal courts, or even through military commissions, if any of them are found not guilty, will the administration let them free?
MR. GIBBS: Well, I'm not going to get into hypotheticals about --
Q: Well, forget the military commissions --
MR. GIBBS: I'm not going to get into hypotheticals about the court cases, either.
Q: Well, this is an important part of the -- you're talking about a credible justice system, bringing these people to justice. You've spoken at great length about this, the President has. If they are found not guilty, will they be found --
MR. GIBBS: Well, let's discuss that if it ever comes to fruition.
Q: But isn't that what is underlying a credible justice system, the idea that if you're found not guilty you'll be free?
MR. GIBBS: Sure.
Q: So --
MR. GIBBS: But I'm not going to get into hypotheticals about how certain cases may or may not play out.
Q: So you're not willing to commit to freeing people if they're found not guilty?
MR. GIBBS: I'm not willing to get into playing hypothetical games.
Q: It's not a game, Robert. It's a question about the credibility of the justice system.
Q: It's the principle of it --
MR. GIBBS: No, it's -- I'm not debating legal principles. I'm just not getting into the hypothetical back-and-forth of what happens on a case.
Q: Okay. So the Obama administration is refusing to say that if somebody is found not guilty they will be set free?
MR. GIBBS: Jake, I'm not going to get into hypotheticals about specific outcomes of cases.
Q: I'm not asking you to talk about a specific case. I'm talking about in general --
Q: And for all the detainees brought into this system of justice, which the administration said can and has in the past handled adequately -- more than adequately, according to your talking points this morning -- the terrorism cases brought before it in whatever venue -- if that justice system, which the administration says should be trusted, renders a verdict of not guilty, is that person released?
MR. GIBBS: We will talk about what happens about a verdict when a verdict comes.
Q: Well, then how is the world supposed to have any confidence that this new system of justice that you guys are ensuring is going to be the case with the detainees is actually credible?
MR. GIBBS: We think the Southern District of New York has a very good record as it relates to trying and convicting terror suspects.
Q: I believe what you're -- the fact sheet said this morning was that it has a 90-percent success rate.
MR. GIBBS: I think 90 is pretty good.
Q: I'm not questioning whether 90 is pretty good; I'm asking about the 10 percent.
MR. GIBBS: And I'm, in this specific case, not going to get into those hypotheticals.
Q: The other question I have has to do with the $68 billion that's going to be paid back in TARP money. Herb Allison, your nominee to be Assistant Secretary for Financial Stability, told the Senate Banking Committee that that money might be used to provide more assistance to troubled firms. Is that right?
MR. GIBBS: Well, the money goes back into general revenue. I think the way the statute for TARP is written is that the amount obligated can't exceed the amount of $700 billion. But again, this money goes back into general revenue. It's our obvious hope that additional money is not going to have to be used to stabilize banks. I think the result in the past several weeks at the conclusion of the most recent round of stress tests denoted that banks have been very capable at raising private capital in order to ensure that they meet regulator requirements for capital cushions.
Q: But it could be used?
MR. GIBBS: Well, I certainly wouldn't rule it out, but I also wouldn't rule it in.
Q: In terms of Afghanistan and Iraq, can you cite the difference between your administration and the Bush administration's foreign policy?
MR. GIBBS: On Iraq and Afghanistan? Yes, there are approximately 21,000 additional troops in Afghanistan and a plan to remove all combat brigades from Iraq, unlike the previous administration.
Q: That's the difference?
MR. GIBBS: I would say that's two of the bigger differences, yes.
Q: The Bush administration never planned to increase the troops in Afghanistan?
MR. GIBBS: I think the request for additional troops had been sitting on the desk of somebody either in this building or in a certain five-sided building for quite some time without additional -- without that additional request being met.
Q: And you're bragging about that? The President bragged about not -- (laughter) --
MR. GIBBS: Now, come on, Helen, you asked me what the difference was. I said more troops, and then you said, well, so you -- my answer means I'm bragging. (Laughter.) I mean, you asked me to outline the factual differences between --
Q: The President bragged about being against Iraq.
MR. GIBBS: Pardon me?
Q: The President bragged about being against Iraq -- about the invasion.
MR. GIBBS: The President denoted that he spoke out in opposition to that war. We're not bragging --
Q: Well, why --
MR. GIBBS: Let me finish my answer, Helen. We're not bragging -- I'm not bragging -- I don't know why we would brag that we've put 21,000 people -- I think what the President did, and he said throughout the campaign and he's done as Commander-in-Chief in the four or so months that we've been here is resource the war in Afghanistan in a way that meets the seriousness of that effort, that for quite some time we saw --
Q: Do you think people were not serious?
MR. GIBBS: We think that additional troops were required in order to stabilize a security situation that was deteriorating greatly. I think that has been largely proven by the fact that everybody on the ground said that situation was deteriorating. The President said he would meet that deteriorating situation with a greater commitment of resources -- not just military but also -- as well and through the use of civil society in ensuring that we're doing stuff to stabilize and increase and grow the economy there; and that we're undertaking significant gestures of aid to ensure stabilization there as well as in Pakistan.
Q: Many people are dying and many people are being killed, and we're killing people there. And you haven't explained why.
MR. GIBBS: I think we've discussed the severe tragedy involved in civilian casualties. I think you've seen some remarkable gestures recently in our new ambassador there accompanying the leadership of Afghanistan to the site of some of those horrible and tragic mistakes -- none of which anybody wants to see. But, Helen, there are people in Afghanistan and in the border region that are planning to do this country harm, just as they planned to do this country harm in the lead-up to September 11. The President said --
Q: What proof do you have of that?
MR. GIBBS: Helen, you and I should just go in the Situation Room and we can have somebody explain it to you.
Q: Can we go, too? (Laughter.)
MR. GIBBS: No. (Laughter.) One-person invitation. I'm sorry, Mark -- she'll pool it for you.
Q: On Chrysler, the Supreme Court review, any concern here that maybe the President overstepped his authority, didn't hear out the bondholders? What's your response to this review?
MR. GIBBS: No, because I -- one of the interesting things is some of the bondholders involved in the very case were some of the bondholders that accepted the offer just a few weeks ago.
Look, we understand this is part of the process. People are entitled to press their case. But I think it's important -- we're certainly hopeful that the outcome will be handed down fairly quickly. Obviously I think there is a sense of urgency here. I understand that our options outside of what we've proposed are extremely limited. The actions that this administration has taken now have kept plants opened, have saved jobs in those communities, and has kept the vast majority of dealerships open. We believe that the best chance for these jobs to be maintained and for this company to survive is through the restructuring process that the Auto Task Force has admirably done.
We've talked about in here concern that people have had about dealerships, decisions that were made by Chrysler. The decision made by Chrysler maintains 75 percent in the sheer number of dealerships, representing 87 percent of the cars that are sold by Chrysler. Understand -- and I think it's important for people to understand -- that's 75 percent more than would be operating if a sale were to fall through and liquidation was to happen; that the effects of liquidation would be severe and profound.
We believe, as I said, that the structure that we have put Chrysler on when it comes out of the sale represents the best chance to ensure viability for Chrysler, to see the investment that has previously been made by taxpayers to have a chance to recoup some of that money. That's the best opportunity going forward. And understand that delay in this situation means that it already costs the taxpayers additional financing during this time.
Q: A quick follow on something else, the CIA interrogation tapes. Why is the administration trying to block the release of the Bush-era documents on the CIA interrogation tapes, when previously you released Bush-era memos and said you didn't really have a national security concern about it because these methods were already out there, the media had reported on it?
MR. GIBBS: Well, but understand -- I think if you look at particularly at some of the memos that were released, you see that there was some redaction taken to ensure highly sensitive information. Obviously a great amount of the information contained in those memos were known by your network and others, and have been for quite some time. They've been in the media, they've been in books; the people in the previous administration have written communications back and forth involved in some of these cables. You can't redact that information. That's what it is. The President believes, the administration believes that that material is highly sensitive.
Q: But the CIA is saying that this could be a recruiting tool for al Qaeda. Haven't you said previously the President has been removing recruiting tools by ending torture to begin with?
MR. GIBBS: Yes, and that was one of the reasons that the larger framework of those memos -- again, those tactics were -- I've used this example with you before -- the graphic that you all had about waterboarding wasn't a graphic that was created after the release and the reading of these memos. It's been something that's been discussed, my guess is, for many, many hours on your network.
Q: Thank you, Robert. Following up on Jennifer's question, you're already getting pushback or you or Pat Leahy is already getting pushback on that July 13th date. Jon Kyl said that she has 10 times as many cases as Roberts had. Now there's a statement from the Republicans in the Senate saying that it would take 76 -- you'd have to read 76 cases per day of her record, compared to six cases per day of the Roberts record. They're also noting that Alito took 70 days, Robert then but 48 days. So they're just pulling out everything they can here, it looks like, to make the argument that this date is not going to work. What can the President do to keep this on track? Is he going to get involved or is this just up to Pat Leahy?
MR. GIBBS: Well, the date -- the hearing date has been set.
Q: Yes, but they can drag their feet. There are plenty of things Republicans can do.
MR. GIBBS: Well, look, I don't think -- I honestly don't think that's the course that many would want to go down. She seems to -- my hunch is that the average isn't actually 76, because it appears, based on some of the questions from in here, some people in the Republican Party have read some of those cases. That might decrease the average by a few.
There were suggestions that this hearing should take place after Labor Day. I'll pull out another statistic to go -- you can e-mail them then. The statistic -- if we wait until after Labor Day to have a hearing, that would actually be the longest amount of time ever for a Supreme Court nominee, from the announcement of the nomination to the beginning of the hearing. I don't think anybody thinks that's a good idea. The information that -- the cases that she's been involved with, the opinions that she's written are publicly available. She's been confirmed by the Senate on two occasions, most recently in 1998.
So my sense is there are a number of people on that committee and a number of people that continue to serve in the Senate that have a pretty firm understanding and relationship with a lot that she's written in the past. We think this is eminently doable, though we appreciate the notion that she represents a justice that has experience unlike anybody that's been nominated in a hundred years.
Q: But since this time schedule is so important to the President, is it in his interest to reach out to these Republicans and talk to them personally about why --
MR. GIBBS: I think that members of the Senate have talked to -- Democratic members have talked to Republican members. Our belief is that this hearing can be done in this time frame. We talked about the very important work that happens in September as the Court decides the exact nature of the cases that it's going to take up in the coming term, how important that work is. We think that whether it's 48 or 51, it's certainly eminently doable in that time frame, and the President looks forward to that hearing.
Q: Do you guys have any additional information on the bombing in Pakistan?
MR. GIBBS: Not that I -- I saw it before I came out there, but I don't have anything from NSC.
Q: Second, let's go to our friend Joe in Kansas City; reconcile --
MR. GIBBS: Will you bring Joe? (Laughter.)
Q: -- reconcile yesterday and the $800 billion you guys were talking about ramping up spending in the deficit, and today "pay as you go." I mean, how do you close that gap? This is a similar question to what I asked Peter, and he was technical. But how do you --
MR. GIBBS: The $800 billion, are you referring to the stimulus?
Q: Yes. How do you keep your credibility on spending money, and spending a lot of money, between bailouts, GM, bank bailouts --
MR. GIBBS: Who does Joe work for?
Q: What's that?
MR. GIBBS: Who does Joe work for?
Q: He works for the American people, apparently. I don't know who Joe works for. He's employed.
MR. GIBBS: I'm asking what Joe might do.
Q: Plumber. (Laughter.)
Q: Mark is on a roll. (Laughter.)
MR. GIBBS: Mark, you tried to help him out and it took him for God knows how long to finally --
Q: He's a manager of a good steak restaurant.
MR. GIBBS: I assume you've eaten there. (Laughter.)
Q: Reconcile today, the "pay as you go," but then there's all these exceptions about where "pay as you go" doesn't affect, and then you're talking about spending all this money on the side. I mean, why -- how is it that the public should have -- should feel like you guys are credibly trying to control spending?
MR. GIBBS: Several different things. One, and I think we did talk about this yesterday -- I don't know if Joe was watching -- but in order to get this economy moving again, exactly what Peter talked about, the decrease in demand of what this economy could be producing. If Joe works at a -- if Joe is the manager at a good steak restaurant, my sense is that people are eating out fewer days in the week, because this economy has slowed down. Increasing the demand for this economy, putting money back into people's pockets through a tax cut that 95 percent of working families are going to do, my sense is they may just spend it at some of that at Joe's steakhouse. But in order to get this economy moving again, we're going to have to spur that demand. I think --
Q: So yesterday it was about deficits; today it's not. I mean, I'm just saying, how is it --
MR. GIBBS: I'm sorry, today is not about deficits?
Q: Today is not about -- today is about how you're not going to have deficits, you're going to pay as you go. And yesterday was about how --
MR. GIBBS: I don't know if Joe is confused, but I think I am.
Q: Well, that's the -- how do you deal with that confusion of, yesterday you're talking about how much money you're going to spend and all of this deficit spending that you're forced to do, and Peter just described it as a second deficit, which --
MR. GIBBS: Well, again, let's get -- I mean, again, let's use the example of somebody that works in Kansas City at a restaurant, or owns a restaurant or manages a restaurant. Again, likely that they've seen fewer and fewer people decide they want to eat out because the economy is bad, right? So we want to increase demand. We want to spur the economy.
Just like Joe probably -- let's say Joe is going to send a kid to college. Joe is going to make an investment in the long-term future through the education of Joe Jr. So we're making investments that will create a foundation for long-term economic growth so that the economy improves, that people have more money to spend and go to Joe's restaurant.
Q: So you feel like you're not going to lose any credibility -- with the fact that -- everything goes under "pay as you go"?
MR. GIBBS: No, but, again, I think the examples that Peter used about "pay as you go" in the '90s -- I think the example that Peter used -- we had economics representing conservative and liberal viewpoints that understood that we needed an economic recovery plan to get this economy moving. I think Joe probably understands that better than anybody because he's likely felt the downturn in that economy. Is that good enough for Joe?
Q: Well --
MR. GIBBS: Call him and see.
Q: Why are a majority of people disapproving of the fact of your handling of the spending?
MR. GIBBS: You can ask Joe. But I think the President has decided that there are things that have to be done to get this economy moving again; that we have to address the long-term costs of health care, making it affordable for small businesses and for families, laying the predicate for and the foundation for long-term economic growth. Those are the things that have to be done.
Again, a recovery plan is a temporary stimulus plan to increase the demand in our economy.
Q: Two questions. The first is, following up on our conversation with Peter, could you address the central question that kept coming back, which is that all the exceptions that are involved with PAYGO, including for discretionary spending, there aren't the same caps that existed in the '90s, and there are a lot of exceptions to things that would apply, and there is already a lot of criticism of that -- so could you just sort of address how this is to be taken as a truly serious proposal?
MR. GIBBS: Well, I don't think -- I think I'd leave most of that to what Peter said. It's a serious proposal because we don't have it now; we're digging that -- we've dug that hole deeper. We need to take steps to put ourselves back on a path toward fiscal responsibility. The President has a budget that cuts the deficit in half in four years, and, as Peter tried in his answers to discuss, quite clearly what needs to be done in order to ensure that our long-term and medium-term Medicare costs don't swamp the economy, and that we do something about families that are facing the rising costs of health care each day.
Q: Did I hear him right, that the President will be outlining the $200 billion to $300 billion in additional Medicare savings in this meeting?
MR. GIBBS: I think he's going to discuss it. I think larger and more detail will come in, as he said, in the near future.
Q: And is he discussing the general idea of it or is he giving specifics of --
MR. GIBBS: Well, I think when we're ready to give the full detail we'll do it as part of an event, rather than through some group. We'll do it just --
Q: That's what I'm trying to clarify, whether you're --
MR. GIBBS: Whether you need to follow the Ways and Means members when you get out of here or whether you can just go write your story?
Q: Might it be Thursday in Green Bay?
MR. GIBBS: I don't believe it will be, no.
Q: The answer to that is that he's not detailing it or he may be --
MR. GIBBS: They're going to discuss some of it, but full details will be done, as Peter said, in the near future.
Q: Robert, in answer to Jake you said the $68 billion in payback might be used again. The President made it sound like it's coming off the national debt and it's not going to be used again -- at least that's how it sounds to me.
MR. GIBBS: Again, I think this goes into general -- this goes back into a general revenue fund.
Q: Well, then it doesn't come off the debt.
MR. GIBBS: Let me double-check with the Treasury guys on this.
Q: Just to clarify that. It goes into general revenue -- by general revenue, that's more general than the TARP. So basically if it were to be used for TARP again it has to be reallocated or reappropriated.
MR. GIBBS: Let me check. I think the notion that there's a separate TARP account -- I know there's certainly an authorization and an appropriation, but I think it's not necessarily like a savings account-type thing.
Q: Treasury officials have said that it could be used again for another bank that needed help. And you're going to check on that?
MR. GIBBS: Yes, sir.
Q: Related to that, would the administration, since it's in a position the previous administration was not, where some of this money is coming back, be open to -- I don't want to get into all the budget terminology of the 1990s -- but a lockbox or something that would be transparent -- (laughter) -- and visible to taxpayers --
MR. GIBBS: They groaned, not me, Major. I just -- let the transcript reflect --
Q: I prefaced it by saying I didn't want to revisit all the budget talks of the '90s.
MR. GIBBS: -- want to play now? (Laughter)
Q: That was your shot. (Laughter.)
MR. BURTON: I'm emailing him now.
MR. GIBBS: He probably saw it. (Laughter.)
Q: Would the White House be open to that, doing something legislatively now where the public could see where repayments have gone, and --
MR. GIBBS: I can certainly check on this. I think --
Q: -- where it wouldn't automatically go back to general revenue, but it would be appraised -- as the President said, there would --
MR. GIBBS: I think -- let me get a -- I think there is a far more technical answer regarding --
Q: I'm sure there is.
MR. GIBBS: -- and I heard parts of this about score ability, and it's innumerably more complicated than that. I do think what's important -- let me tell you this, Major, I do think what's important and in part of this is that this money -- one, I think it's important that people understand and -- just understand the concept -- Washington tends to want to know what you're going to do with the money next. I think -- I do think it's important to underscore for people that the program has been run in a way that the money has been paid back. The money has been paid back with some interest. And I think that is something that the American people can be happy about.
Q: Do you have any reaction to the congressional assessment the stress tests were too light?
MR. GIBBS: That didn't seem to be the prevailing opinion in the months leading up to it. Again, I think the regulators set out a series of tests that they believed adequately outlined the possible deteriorating conditions in the economy, and I think there's a certain amount of confidence that can be gained in the notion that -- or by the concept that these banks raised that money in a private way in order to make up the cushions that regulators believed they needed.
Q: Right, but the conditions outlined are in some cases worse now than they were asked to apply themselves to --
MR. GIBBS: I think certainly -- I think the administration is confident in the tests that were conducted.
Q: Just to follow up on Chip's question, we talked yesterday about Judge Sotomayor's repeated use of this term "better" and you said, well, you really need to evaluate the entire judicial record to understand the context and the way she would approach cases. Taking your comments yesterday, that would include, I would imagine, all 13,000 opinions, would it not?
MR. GIBBS: Yes.
Q: And the White House believes that the time allotted between now and July 13th gives all interested parties adequate time at whatever rate -- 76, 70, 50 cases a day -- to review that record, and there's nothing inconsistent with asking them to evaluate the whole record, not her speeches, and doing all that by July 13th?
MR. GIBBS: Well, I don't think it's inconsistent. In fact, in the questionnaire that was sent to the Senate in 1997, upon her nomination for the judgeship that she has now contains one of the speeches that you all in this room have alluded to. That nomination sat -- that questionnaire was sent up in 1997. And as you all know in your reporting of it, that nomination sat in the Senate for a year. And do you know how many questions were asked about that?
Q: I don't remember any -- having been at the Senate around that time, I don't remember any.
MR. GIBBS: Rhymes with "none."
Q: Yes, but my question wasn't about that.
MR. GIBBS: No, I understand. I was walking you through a totally different point. (Laughter.)
Q: Why don't you answer my question instead of answering the one you've been paid to answer?
MR. GIBBS: It's called "comment as you go."
Q: Why don't you answer my question --
MR. GIBBS: Well, I did in saying I think that -- I think that, again, I think there are many members that have been there -- were there for her most recent confirmation in 1998. I think she -- as I said, she's been confirmed twice by the Senate. And we believe that adequate time -- there is adequate time between her nomination and the beginning of her hearing to go through her legal opinions, her statements. And that's why the questionnaire was sent to the Senate in a record time.
Q: Robert, how much did the government make on this $68 billion --
MR. GIBBS: I believe it's -- it's either $1.8 billion or $1.9 billion.
Q: That was profit?
MR. GIBBS: Yes. I mean, obviously money is loaned at an interest rate and paid back with that accrued interest.
Q: In regards to Ghailani, some critics have said that the administration is essentially bypassing Congress by approving this transfer because of the theory about having people come from Guantanamo. What's your response to that?
MR. GIBBS: Look, the President outlined in January, in signing the executive order, that he would seek swift and certain justice for those at Guantanamo Bay that we could try either in military commissions, through Article III or federal courts, and outlined this specific example in the speech that he gave a couple weeks ago at the Archives relating to our policy in closing Guantanamo Bay.
This is somebody, to keep in mind, who's been indicted with 286 separate counts relating to the death of 224 people, 12 Americans, in a crime that was committed 11 years ago.
I think that the victims -- the families of the victims that were involved have waited far too long for justice to be served. The President outlined a plan to bring justice, and that's what he is doing in this case.
And I saw somebody say -- I saw somebody say this was a hasty decision. This crime occurred in 1998, not during the last administration but the administration before that. I think the notion of getting on with this case is far from hasty.
Q: Robert, just a follow-up on Chuck's question. The President has very high approval ratings, but the only two areas where he doesn't have a majority are the areas of the spending and the deficit. Do you think an event like the one he did today can change that perception?
MR. GIBBS: I think the President is going to make decisions about the course of our economy and fiscal responsibility not based on the number in some public poll, but instead by what he thinks is important to get our economy moving again, to lay that foundation for long term economic growth and to ensure that we're taking the steps that are necessary to put ourselves back on a path toward fiscal responsibility. Today's event was not about some number that popped up in some poll.
Q: I'm not saying that was the purpose of it; I'm just saying people seem to not agree that he is being fiscally responsible, and wondering if this kind of thing that you did today could correct their misimpression, if you think --
MR. GIBBS: I think the President again, is going to make decisions based on what's best for the economy. We'll let polls say what polls say.
Q: Thank you, Robert.
MR. GIBBS: Thanks, guys.
END 3:34 P.M. EDT