MR. STEPHANOPOULOS: And we begin with President Obama. We met in the Roosevelt Room, just off the Oval Office, for a spirited conversation on several topics, starting with the president's big push on health care.
Probably the most definitive promise you made in the campaign is that no one in the middle class would get a tax increase on your watch.
PRESIDENT OBAMA: Right.
MR. STEPHANOPOULOS: Yet this week, Senator Rockefeller and several other Democrats say that this bill by Senator Baucus is a big middle class tax increase.
Do you agree and does that mean you can't sign it?
PRESIDENT OBAMA: Well, I don't agree. I think that what they were referring to -- and I haven't looked at the quotes, but I think that they were concerned about whether or not this was actually affordable. If you're saying to people, you've got to get health insurance, but they can't actually afford it and they have to pay a penalty if they don't get it, then that's a pretty big burden on middle class families. That's a concern I share -- making sure that this is affordable.
But the first thing we've got to understand is you've got what is effectively a tax increase taking place on American families right now. The Kaiser Family Foundation report just came out last week. Health care premiums went up 5.5 percent last year at a time when the rest of the economy, inflation was actually negative. So that is a huge bite out of people's pockets.
And part of what I've been trying to say throughout this campaign --- this effort to get health care done is that if we don't do anything, guaranteed, Americans' costs are going to go up, more people are going to lose health care coverage, the insurance companies are going to continue to prevent people from getting it for pre-existing conditions. Those are all burdens on people who have health insurance right now. And --
MR. STEPHANOPOULOS: That is true, but --
PRESIDENT OBAMA: And so just to close the loop on this, the principles I've put forward very clearly when I spoke to the joint session of Congress, is that we're going to make sure that, number one, if you don't have health insurance, you're going to be able to get affordable health insurance.
Number two, if you have health insurance, we're going to have insurance reforms that give you more security. You know what you're going to get. You know that if you're paying your premiums, you're actually going to have coverage when you get sick.
Number three, it's going to be deficit neutral -- it's not going to add a dime to the deficit, now or in the future.
Number four, it's going to start driving down our costs over the long-term.
Now, 80 percent of what I'd like to see is actually already in all the various bills that are in Congress. That last 20 percent is tough because we've got to figure out -- making sure that we're paying for it properly, making sure that it really is relief to families who don't have health insurance, making sure that all the various details that are out there line up. And that's going to take some time.
But I think that the effort by the Senate Finance Committee is a serious, strong effort to move an agenda forward. We've seen some positive signs from people who might have been otherwise a little bit shaky on health care, including Republican Olympia Snowe, I think, had some nice things to --
MR. STEPHANOPOULOS: Hasn't signed on yet, though.
PRESIDENT OBAMA: Hasn't signed on, but has said that this is a legitimate effort to try to solve the problem. What I want to see is that we just keep on working on it over the next several weeks.
MR. STEPHANOPOULOS: How about a matter of first principles, though. You mentioned these premium increases.
PRESIDENT OBAMA: Yes.
MR. STEPHANOPOULOS: But they're not happening as a result of a decision by the government.
PRESIDENT OBAMA: Right.
MR. STEPHANOPOULOS: You were against the individual mandate --
PRESIDENT OBAMA: Yes.
MR. STEPHANOPOULOS: -- during the campaign. Under this mandate, the government is forcing people to spend money, fining you if you don't. How is that not a tax?
PRESIDENT OBAMA: Well, hold on a second, George. Here's what's happening. You and I are both paying $900, on average -- our families -- in higher premiums because of uncompensated care. Now, what I've said is that if you can't afford health insurance, you certainly shouldn't be punished for that. That's just piling on.
If, on the other hand, we're giving tax credits, we've set up an exchange, you are now part of a big pool, we've driven down the costs, we've done everything we can and you actually can afford health insurance, but you've just decided, you know what, I want to take my chances. And then you get hit by a bus and you and I have to pay for the emergency room care, that's --
MR. STEPHANOPOULOS: That may be, but it's still a tax increase.
PRESIDENT OBAMA: No. That's not true, George. The -- for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase. What it's saying is, is that we're not going to have other people carrying your burdens for you anymore than the fact that right now everybody in America , just about, has to get auto insurance. Nobody considers that a tax increase.
People say to themselves, that is a fair way to make sure that if you hit my car, that I'm not covering all the costs.
MR. STEPHANOPOULOS: But it may be fair. It may be good public policy --
PRESIDENT OBAMA: No, but, George, you can't just make up that language and decide that that's called a tax increase. If I say that right now your premiums are going to be going up by 5 or 8 or 10 percent next year and you say well, that's not a tax increase; but, on the other hand, if I say that I don't want to have to pay for you not carrying coverage even after I give you tax credits that make it affordable, then --
MR. STEPHANOPOULOS: I don't think I'm making it up. Merriam Webster's Dictionary: Tax -- "a charge, usually of money, imposed by authority on persons or property for public purposes."
PRESIDENT OBAMA: George, the fact that you looked up Merriam's Dictionary, the definition of tax increase, indicates to me that you're stretching a little bit right now. Otherwise, you wouldn't have gone to the dictionary to check on the definition. I mean what --
MR. STEPHANOPOULOS: Well, no, but --
PRESIDENT OBAMA: -- what you're saying is --
MR. STEPHANOPOULOS: I wanted to check for myself. But your critics say it is a tax increase.
PRESIDENT OBAMA: My critics say everything is a tax increase. My critics say that I'm taking over every sector of the economy. You know that. Look, we can have a legitimate debate about whether or not we're going to have an individual mandate or not, but --
MR. STEPHANOPOULOS: But you reject that it's a tax increase?
PRESIDENT OBAMA: I absolutely reject that notion.
MR. STEPHANOPOULOS: Let's go to Medicare then --
PRESIDENT OBAMA: Good.
MR. STEPHANOPOULOS: -- because you also said that no one will lose what they have. And Senator Bill Nelson, a Democrat, says that the cuts you're looking at in the Medicare Advantage program --
PRESIDENT OBAMA: Right.
MR. STEPHANOPOULOS: -- are going to force people to lose coverage they now have.
PRESIDENT OBAMA: No. Here -- here's what's going to happen. These are essentially private HMOs who are getting, on average -- and this is not my estimate, this is Democrats and Republicans, experts have said -- they're getting, on average, about 14 percent more over payments, basically subsidies from taxpayers for a program that ordinary Medicare does just as good, if not better, at keeping people healthy.
Now, they package these things in ways that in some cases may make it more convenient for some consumers, but they're overcharging massively for it. There's no competitive bidding under the process.
And so what we've said is instead of spending $17 billion, $18 billion a year, $177 billion over 10 years on that, why wouldn't we use that to close the doughnut hole so the people are actually getting better prescription drugs?
MR. STEPHANOPOULOS: But Senator Nelson says it's going to --
PRESIDENT OBAMA: Why don't we make sure that we're using some of that money to actually make people healthier?
MR. STEPHANOPOULOS: But he said it's going to cause beneficiaries right now to lose what they have.
PRESIDENT OBAMA: Look, I understand that change is hard. If what you're saying is that people who are currently signed up for Medicare advantage are going to have Medicare and the same level of benefits, but they may not be having their insurer get a 14 percent premium, that's absolutely true. And will the insurers squawk? You bet.
MR. STEPHANOPOULOS: They may drop the coverage.
PRESIDENT OBAMA: No, these folks are going to be able to get Medicare that is just as good, provides the same benefits, but we're not subsidizing them for $18 billion a year.
MR. STEPHANOPOULOS: So Senator Nelson, he wants to pass an amendment that shields anyone currently on Medicare advantage from any cuts. Do you support that?
PRESIDENT OBAMA: George, I'm not going to be negotiating a particular provision of the bill sitting down with you here right now. What I am going to say is this: the basic principle that is indisputable is that we are wasting hundreds of billions of dollars in Medicare that is not making people healthier. I want to make sure that we're using that money to actually make people healthier.
MR. STEPHANOPOULOS: But if people lose their Medicare advantage?
PRESIDENT OBAMA: What I have said is we're not going to take a dollar out of the Medicare trust fund. We're going to make sure that benefits are just as strong if not stronger. We're not going to subsidize insurance companies in ways that end up creating a situation that Medicare is actually weaker and has a less sound financial foundation because right now we've got eight years from now potentially Medicare going into the red.
MR. STEPHANOPOULOS: Let me ask you about the broader debate around this, and you've seen a lot of your allies look at this whole debate around health care and see the issue of race being injected after Joe Wilson's outburst. This week, President Carter -- I know you disagree with that -- that race is involved here. And, you know, we've talked about this in several interviews, about these kinds of issues. You always dismiss it. So I'm just wondering: Does it frustrate you when your own supporters see racism when you don't think it exists?
PRESIDENT OBAMA: Look, I think that race is such a volatile issue in this society -- always has been -- that it becomes hard for people to separate out race being sort of a part of the backdrop of American society versus race being a predominant factor in any given debate. And what I've said -- what we talked about during the campaign, are there some people who don't like me because of my race? I'm sure there are. Are there some people who vote for me only because of my race? There are probably some of those too. The overwhelming part of the American population I think is right now following this debate and trying to figure out is this going to help me? Is health care going to make me better off? Now, there're some who, setting aside the issue of race, actually I think are more passionate about the idea of whether government can do anything right. And I think that that's probably the biggest driver of some of the vitriol right now.
MR. STEPHANOPOULOS: Whether you're going to raise their taxes.
PRESIDENT OBAMA: Well, it goes beyond taxes. I mean, I think that what we're seeing right now is a part of a running debate that we saw during FDR, we saw during Ronald Reagan. Anytime there's a president who is proposing big changes that seem to implicate the size of government, that gets everybody's juices flowing and sometimes you get some pretty noisy debate.
MR. STEPHANOPOULOS: But you're in a different --
PRESIDENT OBAMA: But just to finish the thought, I think what I'm proposing is a very modest attempt to make sure that hard-working families out there are going to have the security of health insurance that they can count on. This isn't a radical plan. This isn't grafting a single payer model onto the United States . It's simply trying to deal with what everybody acknowledges is a big problem.
I think that there are some opponents who have used -- seized on this and tried to use this as a proxy for saying that somehow we are vastly expanding government and taking over every sector of the economy.
That's what a lot of this debate is about. I think they're wrong.
The one thing I hope is, is that we can have a civil argument about it and that we are able to acknowledge good motives on both sides. Everybody is a patriot. Each of us are Americans that care deeply about this country. And sometimes I think that, frankly, the media encourages some of the outliers in behavior because, let's face it, the easiest way to get on television right now is to be really rude. If you're just being sensible and giving people the benefit of the doubt and you're making your arguments, you don't get time on the nightly news.
MR. STEPHANOPOULOS: You might on Sunday morning, but --
PRESIDENT OBAMA: But if you say something outrageous, you're there in a hot second.
MR. STEPHANOPOULOS: But have your --- have some of your allies made it easier for -- handed your opponents some ammunition, like ACORN, for example --
PRESIDENT OBAMA: Well, look, the -- you know, I think that -- are there folks in the Democratic camp or on the left who haven't always operated ways that I'd appreciate? Absolutely.
MR. STEPHANOPOULOS: Congress has just cut off --
PRESIDENT OBAMA: Is -- is --
MR. STEPHANOPOULOS: -- all funding for ACORN.
PRESIDENT OBAMA: It's --
MR. STEPHANOPOULOS: Are you for that?
PRESIDENT OBAMA: Is that true on the other side, as well? Of course that's true.
MR. STEPHANOPOULOS: How about the funding for ACORN?
PRESIDENT OBAMA: You know, if -- frankly, it's not really something I've followed closely. I didn't even know that ACORN was getting a whole lot of federal money.
MR. STEPHANOPOULOS: Both the Senate and the House have voted to cut it off.
PRESIDENT OBAMA: You know, what I know is, is that what I saw on that video was certainly inappropriate and deserves to be investigated.
MR. STEPHANOPOULOS: So you're not committing to -- to cut off the federal funding?
PRESIDENT OBAMA: George, this is not the biggest issue facing the country. It's not something I'm paying a lot of attention to.
MR. STEPHANOPOULOS: Afghanistan is a big issue facing the country right now.
PRESIDENT OBAMA: That is a big issue. That's worth talking about.
MR. STEPHANOPOULOS: You were for a flexible time line in Iraq . Some people now are saying that's exactly what should happen in Afghanistan if the same conditions hold.
Do you agree with that?
PRESIDENT OBAMA: Here's what I think. When we came in, basically there had been drift in our Afghan strategy. Everybody acknowledges that. And I ordered a top to bottom review. The most important thing I wanted was us to refocus on why we're there. We're there because al Qaeda killed 3,000 Americans and we cannot allow extremists who want to do violence to the United States to be able to operate with impunity.
Now, I think we've lost -- we lost that focus for a while and you started seeing a classic case of mission creep where we're just there and we start taking on a whole bunch of different missions.
I wanted to narrow it. I did order 21,000 additional troops there to make sure that we could secure the election because I thought that was important. That was before the review was completed. I also said after the election I want to do another review. We've just gotten those 21,000 in. General McChrystal, who's only been there a few months, has done his own assessment.
I am now going to take all this information and we're going to test whatever resources we have against our strategy, which is if by sending young men and women into harm's way, we are defeating al Qaeda and -- and that can be shown to a skeptical audience, namely me -- somebody who is always asking hard questions about deploying troops, then we will do what's required to keep the American people safe.
MR. STEPHANOPOULOS: So no final decision. I just have one -- one last question --
PRESIDENT OBAMA: Now, the only thing I want to say, though, is that what we -- I just want to make sure that everybody understands that you don't make decisions about resources before you have the strategy right.
MR. STEPHANOPOULOS: I just have time for one final question. I'm sure you know the story about John Kennedy's first summit with Nikita Khrushchev back in his first year in office.
PRESIDENT OBAMA: Yes.
MR. STEPHANOPOULOS: He meets with Khrushchev. Khrushchev cleans his clock.
PRESIDENT OBAMA: Yes.
MR. STEPHANOPOULOS: Kennedy walks out and knows that's exactly what's happened. I know there are no perfect analogies, but what's the moment in the last eight months where you took a step back and said, 'Wow, I'm going to have to step up my game'?
PRESIDENT OBAMA: You know, it's an interesting question. I mean I don't mean to be immodest here, but I don't think I've had that moment with a -- with a world leader, where I said gee, you know, we've got to really tighten things up.
I think there have been times where I have said I've got to step up my game in terms of talking to the American people about issues like health care. I mean, I think during this whole health care debate I've -- there have been times where I've said --
MR. STEPHANOPOULOS: You lost control?
PRESIDENT OBAMA: Well, not so much lost control, but where I've said to myself, somehow I'm not breaking through. And it's not -- you know, I know my critics would just say well, it's because, you know, the plan is just, you know, the wrong one.
But it's -- that's not so much it. It's -- this has been a sufficiently tough, complicated issue with so many moving parts that, you know, no matter how much I've tried to keep it digestible, you know, it's very hard for people to get their whole arms around it. And that's been a case where I have been humbled and I just keep on trying harder, because I really think it's the right thing to do for the country.
MR. STEPHANOPOULOS: Thanks very much for sitting with us.
PRESIDENT OBAMA: Great to talk to you. Thank you.