Interview with Steve Liesman of CNBC's "Fast Money"

Liesman: Mr. President, thank you for joining us.

The President: Great to be with you.

Liesman: Let me dive right in and talk about this issue of tax inversion, this issue of American companies going overseas to reduce their U.S. tax bill or get rid of it. I take it you're not calling it illegal. Are you saying it's unpatriotic or un-American?

The President: What I'm saying is that companies thrive in the United States in part because they benefit from the best university system in the world, the best infrastructure -- although I'd like to see us do a little better on infrastructure. You know, there are a whole range of benefits that have helped to build companies, create value, create profits.

For you to continue to benefit from that entire architecture that helps you thrive, but move your technical address simply to avoid paying taxes, is neither fair nor is it something that's going to be good for the country over the long term. And this is basically taking advantage of tax provisions that are technically legal, but I think most people would say if you're doing business here, if you're basically still an American company, but you're simply changing your mailing address in order to avoid paying taxes, then you're really not doing right by the country and by the American people.

Liesman: Some people would respond that, you know what, these guys are hired to maximize profit. And they're doing basically what they were hired to do. And in fact, it's plenty American for them to try to make as much profit as they can, hire as many people as they can as a result.

The President: Well, keep in mind that what we're trying to do is to say that if you simply acquire a small company in Ireland or some other country to take advantage of the low tax rate, you start saying we're now magically an Irish company, despite the fact that you may only have a hundred employees there And you've got 10,000 employees in the United States. You're just gaming the system. You are an American company. You continue to benefit in all kinds a ways from being an American company.

It is true that, you know, there are a lot of things that may be legal that probably aren't the right thing to do by the country. People are paid to maximize profits. But people are also paid to be good corporate citizens. They're also paid to make sure that they're thinking about, in addition to shareholder value, how do you grow a company over the long term? And this kind of strategy, I think, undermines people's confidence in how companies are thinking about their responsibilities to the country as a whole.

Liesman: Mr. President, this is your sixth year in office here.

The President: Yeah.

Liesman: Democrats seem to support corporate tax reform and Republicans seem to support it. Why isn't there corporate tax reform? Your critics suggest that you have not put the presidential muscle behind this issue, certainly the way you did health care or the way you did stimulus early on in your presidency.

The President: Well, we reached out repeatedly to both Democrats and Republicans. And our argument is simple. If we lower corporate tax rates and close loopholes, there's going to be more certainty in terms of what corporations pay. They will benefit from a lower but more certain tax rate. It also allows us then to close some of the loopholes that permit companies to artificially shift profits overseas so they're avoiding tax compliance. It would allow us potentially to have companies who have profits overseas to start bringing some of those profits back and reinvesting in the United States. So there's a whole bunch of good reasons why we should do it.

I'll be honest with you Steve. The reason it's not getting done right now is that Congress, as you may have noticed, is just not real productive. And they have trouble getting stuff done right now even when they say they want to do something. And we will continue to push. And I've said to the speaker, I've said to Majority Leader Reid, that we are prepared and we have put forward very specific proposals in terms of how we can get this done. So we're eager to make it happen.

Invariably, it takes some time to work through a big tax reform piece of legislation. When Ronald Reagan last did it back in '86, '87, it was about a year-and-a-half-long process. So now's the time for us to get started. And I think that the people should expect that this administration will be foursquare behind it as long as the goal of tax reform is to simplify the system, make it fair, as opposed to simply slashing corporate rates while maintaining a bunch of loopholes that aren't productive and aren't creating jobs and value here in America.

Liesman: Well, let's move from talking about the guys in the C suites to average Americans here. What will you tell average American viewer about the outlook for the economy? Your former economic advisor, Larry Summers says we may be in for a period here in America of lower growth for a protracted period of time. Do you believe in that forecast? And are you concerned that that means we're not going to be able to meet the entitlement promises that we've made without cutting those entitlements and/or raising taxes?

The President: You know, I am always bullish about America over the long term. And if you think about where we were, Steve, when I came into office and where we are now, it's pretty hard to find an economic measure where we're not significantly better off.

I don't have to tell you about the stock market and where that's gone; corporate profits, record highs; but also unemployment now lower than it was pre-Lehman. We've seen the housing market recover, although not as fast as we'd like; the auto industry recovering. We remain the most dynamic, innovative economy in the world. We have this huge comparative advantage when it comes to energy. We're now producing more oil than we import, first time in a couple of decades, even as we're massively increasing clean energy. And when it comes to deficits, we've cut them by more than half. And when it comes to health care, we're slowing the growth of health care inflation to the lowest levels in 50 years.

So there are a lot of things there that I'll - that give me confidence we're poised to take off. But there are some things that are holding us back. The main thing that's holding us back is inaction by our federal government on things like infrastructure, on raising the minimum wage, on doing some things that would help middle-class families feel a little bit of relief. If we do those things, then we're going to be in pretty good shape.

It is true, coming out of a financial crisis - historically, when you look at worldwide trends, it's hard when you have a big financial crisis that precipitates a recession. The good news is, because of the resilience of the American people, but also in part because of some good policies and quick action on our part, we've recovered faster and stronger than most counterparts around the world.

Liesman: Sorry, Mr. President.

The President: Sure.

Liesman: I can confirm most of your data as the economics reporter for CNBC. But median family incomes, that's one that is not doing better.

The President: Well, yeah you're absolutely right. And I think you've heard me on the stump talk about this is the source of anxiety for the American people. Now these are 20-, 30-year trends that we've been seeing, a larger and larger portion of increased productivity and increased profits accruing to the very top of the economic pyramid, and the vast majority of middle class folks and folks who are trying to work in the middle class, not seeing higher incomes, higher wages.

There are policies we can put in place that can help that. Some of it has to do with globalization. Some of it has to do with technology. Some of it has to do with what some have called a shift to a more winner-take-all economy, because capital's mobile and workers are not and they have less leverage.

But we know that if we raise the minimum wage, that's 28 million people who get helped. We know that if we invest in the $2 trillion of deferred maintenance that we have on infrastructure, that you've got a whole bunch of guys and gals in hard hats who can start going to work. That gives them additional income. That in turn means more customers for businesses. Historically, when the middle class is doing well and people are rising in the middle class, lo and behold, business does well also.

Liesman: You talked about the stock market earlier. It's now at near-record levels almost every day. Are you concerned there's a bubble out there like we had in '01 and '08?

The President: Well, you know, I try to avoid commenting on the day-to-day trends in the stock market. I think what is true is that the Federal Reserve has properly focused on the need for us to bring unemployment down. The cost of unemployment, particularly long-term unemployment, as well as unemployment for young people just getting started in their careers, that's something that has devastating effects on the economy for generations, or for decades to come.

So I think Janet Yellen has said this is a focus of ours right now. Inflation remains relatively low. What that does mean is when you've got low interest rates that there's a lot of money looking for returns. And that's probably boosted the stock market significantly. My estimation is that, you know, you've got a lot of savvy investors out there. You've got people who recognize that what goes up can come down as well. I'll leave it up to them to make determinations about whether valuations and stock prices are too high. I'm more concerned about the day-to-day fundamentals. And if we get those fundamentals right, then I'm pretty confident that we can do very well in the next decade.

Liesman: You've said a bunch of times that getting the wealthy to pay a little bit more.

The President: Yeah.

Liesman: And you've succeeded in raising that top tax rate to 39 percent, or rolling back the tax cuts.

The President: Yeah.

Liesman: Is there a limit there? Is there a limit to how much you believe the government should take from an individual in terms of a top tax rate?

The President: You know, I don't have a particular number in mind, but if you look at our history, we are still well below what, you know, the marginal tax rates were under Dwight Eisenhower or, you know, all the way up even through Ronald Reagan. Tax rates are still lower on average for most folks. And what that means is that we probably can make some more headway in closing loopholes that folks take advantage of, as opposed to necessarily raising marginal rates.

Now, you know, an obvious example is carried interest. I've talked about this before. You know, I've got friends of mine who are hedge-fund managers, and they don't always like to hear it, but some, I think, will readily acknowledge if you are making a billion dollars a year and you're paying 15 percent on that billion dollars when your secretary's paying 20 percent, 23 percent, you know, that's not fair. And if we close some of those loopholes, not just carried interest but a range that we know are not economically productive, then sure, some folks don't get to take advantage of stuff they should've been taking advantage of anyway. But that also means we can finance government, keep our deficits under control, and invest in the things that we need to grow over the long term.

There's no doubt that the economies of Russia and Europe have intertwined, primarily around the energy sector. And it makes some Europeans more concerned about a robust response to the violations of sovereignty and territorial integrity that Russia's been conducting when it comes to Ukraine. The good news is that, despite some of those commercial concerns, we've seen Europe move with us - not always as fast as we'd like, but they get there.

And sadly, tragically, the shooting down of this Malaysian Airlines airliner and the recognition that it is likely it was shot down and it is also likely that it was conducted by non-state actors that were provided incredibly powerful weapons by the Russian government - all that, I think, may stiffen the spine of my European partners moving forward.

Liesman: I want to ask you about Israel. What do you make of these - the FAA banning these flights and then lifting it? Do you think it's safe for Americans to fly to Israel?

The President: Well, this is just a purely technical question. You know, we have not made decisions when it comes to airline safety based on not just politics, but even our strong alliance with Israel. We have to just look at the facts. The initial ban that was imposed by the FAA was based on Israel needing to show us that, in fact, it was safe for commercial airlines to fly in.

They worked through a checklist of concerns and mitigation measures that needed to be taken. Having completed those, and convinced the FAA, we moved forward. And, by the way, the European governments, in terms of regulating their airlines, did the exact same thing. So I think what happened here was, in light of some scary moments a couple of days ago, the FAA took some prudent action. But it also engaged with Israel, and Israel was able to answer those questions.

Liesman: Mr. President, thank you for joining us -

The President: Enjoyed it. Thank you.

Liesman: - very much.

The President: Appreciate it.