the president:hello, everybody! hello! (applause) good to see you. everybody, please have a seat. have a seat. well, thank you so muchfor the warm welcome. to bob, thank you very muchfor the terrific introduction. i want to thank bryanmoorehead for the great tour,
and mitchell pulwer for tryingto explain to me what was going on here. (laughter) we've got governorbeverly perdue, who's doing just a great job onbehalf of all of north carolina. please give her a biground of applause. and i think it's important tonote that the state of north carolina has provided enormoussupport for expansion here at celgard as well. and i know that the combinationof both federal and state
support makes a big difference. so i didn't want toleave the state out. lieutenant governor walter dayton -- dalton is here. please stand up, walter. the hotshot young up-and-comingmayor of charlotte anthony foxx is in the house. give him a biground of applause. some outstanding members ofcongress: congressman mel watt. congressman larry kissell.
and even though he's from acrossthe border, we love him -- congressman john sprattof south carolina. so it is good tobe here at celgard, and it is good to beback in north carolina. it is good to be back. we just concluded our tour,where we saw some of the workings of this facility whereyou're manufacturing components for state-of-the-art batteries. you're building separators tomake sure diametrically opposed
forces can worksuccessfully together. and i couldn't help but think:we could use your help in congress. (laughter and applause) we could get one of those -- we could get one of those tri-part films and put it between the democrats and the republicans. and it would improveconductivity. right? did i get that right? okay.
now, the truth is, these havebeen a very tough two years for north carolina, and they've beena tough two years for the united states of america. we've been through the worstperiod of economic turmoil since the great depression. keep in mind, when i firsttook the oath of office, we were already moving towardswhat some thought was a great depression. we were losing about 700,000,800,000 jobs per month. and the economy was contractingat a pace that we hadn't seen in
generations -- about 6% contraction that first quarter when i first took office. and i've often had to report badnews during the course of this year as the recession wreckedhavoc on people's lives. but today is an encouraging day. we learned that the economyactually produced a substantial number of jobs instead of losinga substantial number of jobs. we are beginningto turn the corner. this month, more americanswoke up, got dressed,
and headed to work at an officeor factory or storefront. more folks are feeling the senseof pride and satisfaction that comes with a hard-earned andwell-deserved paycheck at the end of a long week of work. as i said, just one year ago, wewere losing an average of more than 700,000 jobs each month. but the tough measuresthat we took -- measures that were necessaryeven though sometimes they were unpopular -- have broken this slide and are helping us to
climb out of this recession. we've now added an average of more than 50,000 jobs each month over the firstquarter of this year. and this month's increase of 162,000 jobs was the best news we've seen on the job frontin more than two years. now, at the same time, it'simportant to emphasize: while we've come a long way, westill got a ways to go. we shouldn't underestimatethe difficulties we face as a country or the hardships thatconfront millions of our fellow
citizens -- some of your friends, some of your neighbors, some of your relatives you knoware still going through a tough time. eight million people have lostjobs over the past two years. that's a staggering sum. economic statistics don't dojustice to the pain and anxiety that results from unemployment. lasting unemploymenttakes a toll on families, takes a toll on marriages,takes a toll on children. it saps the vitalityof communities,
especially in places thathave seen factories and other anchoring businessesshut their doors. and being unable to find work -- being able to provide for your family -- that doesn't just affect your economic security, that affects yourheart and your soul. it beats you up. it's hard. so we have to be mindfulthat today's job numbers, while welcome, leaves uswith a lot more work to do.
it will take time to achieve thestrong and sustained job growth that we need. and long before this recession hit -- for a decade -- middle-class families hadalready been expensing -- experiencing a sense ofdeclining economic security. their paychecks were flat-liningeven though the cost of everything from groceries tocollege educations to health care were all going up. and this means that even aswe pull out of this immediate
crisis, we've got to tackle someof the long-term problems that have been a drag on our economy. and that's why we've beenworking so hard to turn this economy around. it's not quickand it's not easy. and the truth is, there are somelimits to what government can do. government can't reversethe toll of this recession overnight, and government on itsown can't replace the 8 million jobs that have been lost.
the true engine of job growth inthis country has always been the private sector,businesses like celgard. what government can do is createthe conditions for companies to succeed. it can't help to create theconditions for companies to hire again. what it can do is build theinfrastructure and create the incentives that will allow smallbusinesses to add workers; that will help entrepreneursto take a chance on an idea; that will lead manufacturersto set up shop in places like charlotte. and that's what we did lastyear through the recovery act,
also known as the stimulus bill. a lot of folkswere down on it -- well, we don'tknow what this did. a lot of folks got it mixed upwith the steps we had to take to avoid the bankingsystem melting down, and i know that wasn't popular. it wasn't popular with me. but here's what the recoveryact did: we cut taxes for small businesses and 95% of workingfamilies to promote spending and
hiring -- cut taxes. that's what therecovery act did, was cutting people'staxes across america. we're also making investmentsin our infrastructure, from interstate highwaysto broadband networks. that not only createsprivate sector jobs, but is also creates theplatform, a better environment, in which businesses can prosper. it's also what we did throughthe jobs bill that i signed into
law just recently, a bill thatcuts taxes for small businesses who hire unemployed workers; andthat allows companies to write off investments in equipment,like some of the equipment that we just saw here today; andthat encourages job creation by spurring investments in schoolrenovation and clean energy projects and roadconstruction -- all of which builds on theinvestments that we've put into place last year throughthe recovery act. so as a consequence ofall these investments,
we've promoted innovation inthe private sector not just to create jobs, but also to helpamerica lead in the growth industries of the 21st century. see, i want to improve theshort-term's jobs picture, but i also want to improve thelong-term prospects for our economy. and in no area is america moreprimed to lead them than in clean energy. and i don't have to tell thefolks here at celgard about that, because throughthe recovery act,
this company has received a $50million matching grant to expand the facility on this site, andto add another facility in concord, north carolina. and i also know this builds onthe work that governor perdue did to bring clean energyjobs to this state. so here's the bottom line: thisinvestment is expected to create nearly 300 jobsfor this company, more than a thousand jobs foryour contractors and suppliers -- and these are all jobs helping america build the
batteries that will power cleaner and more efficient cars and trucks. and through investments likethis one across the country, we're already seeing anincredible transformation. here's an interesting statistic:before the recovery act, before i took office, we had thecapacity to make less than 2% of the world's lithium ion batteries -- less than 2%. in the next five years, on thetrajectory that we're now on, we're going to be able to make40% of the advanced batteries right here in the unitedstates of america.
right here. so the next timesomebody asks you, when you're at thegrocery store, well, what did this recovery act do? you can tell them, one of thethings it helped do is to expand and catalyze anentire new industry, where the united states ofamerica can gain enormous market share across the globe. and that's the kindof strategy we need --
helping the private sectorthrive in entirely new industries, theindustries of the future. it's a strategy that will notonly create jobs in the near term, but also sustained growthand opportunity in the long run. now, this has been a harrowingtime for our country. and it's easy to grow cynicaland wonder if america's best days are behind us, especiallyafter such a terrible crisis. and we've seen folks inwashington trying to play the usual politics with the crisis.
and that's notsurprising, of course. that's how washington works. although i do think it'simportant for the american people to remember the failedeconomic policies that got us into this mess, just so we makesure we don't return to them. but what we can seehere, at this plant, is that the worst ofthe storm is over; that brighter daysare still ahead. in charlotte and allacross the country,
we can see the promise andpossibility that awaits us. if we tap our ingenuityand our inventiveness, our skill and our drive asa people; if we're smart, if we're willing todo what it takes, we can lead in new industriesand create new jobs and strengthen the middle class andachieve a shared and lasting prosperity. and we can turn this turmoilinto recovery and emerge stronger than before. i'm convinced that'swhat we're called to do;
i'm confident that thatis what we will do. and i want to say to all theemployees here at celgard, we are proud of you becauseyou're helping to point the way and helping to lead not justhere in north carolina but all across the country. so thank you verymuch, everybody. let me take somequestions from you. thank you. so, you know, when they let meout of my cage at the white
house i like to actually havea chance to talk to folks. and so we've got time for a fewquestions and we've got some young people here in theaudience with their microphones. this is not formal, even thoughi'm sure with some of the cameras a few of you may feelit's a little intimidating. all you got to dois raise your hand. we'll call on you. and it can be aquestion about anything. if you can introduce yourself,though, that's helpful,
so everybody knowswho's speaking. and we'll start with that younglady right there since you're right next to the mic. audience member:hi, my name is jenniferdakin [phonetic]. i'm here from charlotte. i'm part of thepolypore parent company. my question is regardingthe sarbanes-oxley act. and many people have commentedon the fact that it has come at a great cost to manypublic organizations,
the fact that we need to assessand report on our internal controls of ourfinancial reporting. it's also come, many say,without value in the recent financial crisis. what value do you think itmay have going forward on the upswing as theeconomy goes forward? the president:well, it's a great question. for those of you whoaren't aware of it, sarbanes-oxley was institutednot in response to this
financial crisis, but inresponse to the enron/worldcom nonsense that tookplace over a decade ago. and the concern there was thatthe accounting practices of companies had gotten so out ofwhack that you had a company like enron that was essentiallybooking all these profits, driving up theirstock really high; ceos were making thesegazillion-dollar bonuses. but it turned out when youactually got in there and started looking atwhat they were doing,
they were buildinga house of cards. it was manufacturingprofits out of thin air. and so the concern was, how dowe make sure that ceos and their boards of directors are moreaccountable to the reporting that they're doing, so thatinvestors, shareholders, the market, customers,suppliers, and employees, a lot of whom had gotten trickedinto putting all their savings into a company like enronand then it turned out that everything they thought they hadbeen saving just went up in a
cloud of smoke -- that allthose folks would be protected. so the intent aroundsarbanes-oxley was a good idea. it was the right thing to do. there have been, i think, somelegitimate criticisms about the fact that althoughsarbanes-oxley is a relatively modest cost for avery big company, it can be a very significantcost for a mid-sized or a small company. because if they have to abideby all the rules and all the regulations and all thedouble-checking and
triple-checking andquadruple-checking, and so they've got to hire awhole bunch of accountants, it's one thing if you're afortune 100 company that's got several billion dollars inrevenue to spend a couple million dollars on accountants. it's another thing if you area company that is making $100 million a year and you'respending a couple million dollars on accountants. that's suddenly -- that could be the difference in terms of your
profit margin. so what we're interested indoing is to work with companies to get advice: are there waysthat we can streamline and make this more effective? are there ways that we canlessen the burden on small and medium-sized companies, butstill retain the basic principle that accountingstandards have to be met, and they have to be clear, they have to be understandable -- you can't cook the books --and that ceos and boards of
directors have to be accountable for the accounting statements that they put out there? and they've got tosign a bottom line. and they're going to be directlyliable if, for some reason, it turns out that there weresome shenanigans going on there. so this raises a broaderquestion about regulation. we went through a period of timewhere i think the general theory was the lessregulation, the better. and if you talkto most companies,
they'd rather not have anyregulations whatsoever. there's nothing wrong with that. that's just the nature of it. you figure companies thinkthey're pretty smart, they know what they're doing. and i'm sure if italk to bob, he'd say, there are a whole bunch ofthings that i've got to do that i wish i didn't have to do. but it's like any other law.
you put the laws in place, eventhough you know most folks are following the rules andoperating decently and commonsense, to make sure thatthose folks who aren't operating that way can't wreckhavoc on the system. and so we're going to be havinga big debate when it comes to financial regulatory reform. you're seeing the samepattern come up right now. you essentially had a wholebunch of financial institutions -- investment bankslike lehman brothers --
who were taking one dollar andthey were able to leverage, essentially bet that -- usethat dollar to make a $60 bet on sub-prime loans inhousing and take huge, exorbitant risks that almost brought the entire system to heel. and all your friends andneighbors and communities are paying the price, because nobodywas minding the store and making sure that these banks and thesefinancial institutions were following basicrules of the road. so what we've now said is, look,we've got to have a financial
system that works. that's how credit flows. that's how businessesfinance themselves. but we've got to have some basicrules to make sure that we never find ourselves in a situationagain where we've got two choices -- either youbail out the banks, in which case you're thinking, why am i propping up these folks who caused the problemsin the first place; or you don't but then these banks start failing and the
whole system breaks down, creating what could have been a great depression. we can't allow ourselves to beput in that position again. so we've got to have some basicrules, some basic regulations, at the front endthat say to banks, we're not going to letyou get too big to fail. we're not going to put ourselvesin a position where somehow you're able to gamble with otherpeople's money in such a way that it can potentiallybring down the whole system.
getting the balanceright, how to do that, is something that you've gotto be very careful about. but i think nowthat we've got -- we're starting to see aframework emerge both in the house of representatives and inthe senate, where my hope is, is that we can actually get thisdone sometime in the next several weeks. thank you for thegreat question. this gentleman right here.
audience member:thank you, sir. my name is michaelshore [phonetic]. i'm here in charlotte. first, it's an honor tohave you here with us today. the president:thank you very much. audience member:i'm concerned that your decision to allow offshore drilling could have the effect of chillinginvestment into alternate sources of energy. and i'm interested in whatincentives you're going to be
proposing to establish theconditions and to stimulate research and development andexpansion of that critical sector. the president:well, i think that'sa great question. look, first of all, understandthat the recovery act, what we passed last year,represented the single largest investment in cleanenergy in history, by far. so we invested in wind;we invested in solar; we invested in biomass. we invested in researchand development;
we invested incommercialization. we invested inbattery technologies. we are interested in figuringout how we can improve efficiency across the system,both in buildings and in transportation sectorsand -- you name it, we're all about increasing energy efficiency and finding new renewable,clean sources of energy. it's one of myhighest priorities, and i think it's got to beone of our highest strategic
priorities as an economy. it has the potential of beingan enormous growth industry. here's the challengethat we have. we don't yet have thetechnological breakthroughs that can completelyreplace fossil fuels. so for the next 10years, next 20 years, we're still goingto be using oil; we're still goingto be using coal; we're still going tobe using natural gas --
we're still going to be usingthe traditional sources to fuel our cars, to heat our homes,to run our big power plants, et cetera. it's my hope that if we'reaggressive over the next several years, we can substantially cutour energy use in every sector while still maintaining ourhigh levels of economic growth. so, for example, at theannouncement where i talked about offshore drilling, idid so in front of an f-18, a fighter jet, that is actuallygoing to be run half on biomass.
so i was jokingwith the pilot -- i said, so this thingruns on vegetable oil. but they're going to break thesound barrier using biomass as fuel. so the pentagon is investinghuge amounts in energy efficiency. we are promoting weatherizationacross the country because this is a win-win situation; youput people to work putting in insulation, puttingin windows -- most of which, by the way,that insulation and windows is manufactured here inthe united states --
it saves on theindividual's energy bill, plus it means that that powerplant has to produce less energy to keep that home warm. so it's a win-winall across the board. that's our biggest priority -- energy efficiency and renewable, but because we're goingto have this transition -- unless somebody hereinvents something tomorrow, which would be very helpful,and if you have it let me know, we'll get it going right away -- but what's most likely is that
we're going to havethis transition. and so in the interim we'vegot to look at our traditional energy sources and figure outhow can we use those most effectively and in the mostenvironmentally sound way. that's why i announced that wewere going to start the first nuclear plant in 30 years. japan, france, other countrieshave a safe, secure, reliable andeffective nuclear -- civilian nuclear energy.
we essentiallystopped 30 years ago. for those of you who areconcerned about climate change, nuclear energy doesn'tproduce greenhouse gases. it's not a perfect energy sourcebecause it's got the problem with spent fuel and howthat is properly stored, but generally speaking, that'sgoing to have to be part of our energy mix. the decision arounddrilling -- same approach. what we did was we said we'renot going to have drilling a
mile off the north carolinacoast or two miles off. but 50 miles off, 100 miles off,where it is appropriate and environmentallysound and not risky, we should allow exploration tobegin taking place to see if there's certain reserves. there are some areas that wejust completely put off limits, like bristol bay in alaskawhere it's a huge fishery, environmentally very sensitive. there are some areas off thecoast in the gulf of mexico
which don't make sense forus to allow exploration, even though we know that thereare existing reserves there. but what we did was we tried tolook at the scientific evidence and figure out where are areaswhere low risk environmentally and a high potential upside. now, here's the last thing i'llsay about drilling, though, because what you have is, youhave some environmentalists who just said, don't drill anywhere;and then you've got some of my friends on the republicanside who were saying, well,
this is a nice first stepbut it's not enough -- you should open up everything. i don't agree with the notionthat we shouldn't do anything. it turns out, by the way, thatoil rigs today generally don't cause spills. they are technologicallyvery advanced. even during katrina, the spillsdidn't come from the oil rigs, they came from therefineries onshore. but the notion that we coulddrill our way out of the problem -- you'll start hearing about this because you know what
happens during the summer. as soon as gas pricesstart going up -- every summer it's thesame thing, right? and then politiciansstart standing up and -- "we're going to dosomething about it" -- and these days some of mycolleagues on the republican side, what they'll say is,you got to drill even more. just remember the statisticswhen you start hearing this. we account for 2% of the world'soil reserves but we use 20% of
the world's oil. we use 20%; we only got 2%. we can't drill our wayout of the problem. that's why we've got to getmoving on this clean energy sector, but we also have tomake sure that we've got enough supply that's regular in termsof these other energy -- traditional energy, sources, sothat by the time we get to the clean energy sector, we haven'thad to sacrifice economic growth along the way.
all right? all right. the gentleman righthere, white shirt. audience member:james hill fromgreenwood, south carolina. i work in the (inaudible) lab and i agree it's an honor for you to be here today. my question is, howlong do you think -- the kind of springboard fromwhich you were just saying, how long do you think it wouldtake for us to have more hybrid
vehicles on the roadthan gas vehicles, and what would it take? the president:well, we have already seen a huge spike in the purchase of hybrid vehicles. i mean, if you think about it,just two years ago if you found out somebody hada hybrid vehicle, that was a pretty big deal andyou wanted to go over and test it out and see how it worked. now, it's pretty common.
i mean, everybody here knowssomebody who's got a hybrid, and you've probably tried itout and it's kind of cool when you're backing upand it's all quiet. so i think thatthat's the future. and consumers are naturallygoing to start gravitating in that direction. because here's the fact -- we were just talking about oil -- not only do we produceonly 2% and use 20%, but countries around the world,everybody is starting to use more oil.
think about it. china, if they get even half ofthe number of cars per capita, per population, thatwe have right now -- there are a lotof folks in china. and there are a lotof folks in india. and their standards of livingare all starting to rise and they're all starting to beinterested in buying cars. and the fact of the matter is,is that if they even approach the amount of carownership that we have,
oil will run out veryquickly and on the way, prices will just spike upnaturally, no matter what we do. so it is a huge need for us toincrease our fuel efficiency on cars now. and that's why one of thethings that i did last year -- it's actually takingeffect this week -- is to raise a nationalfuel efficiency standard, first time we've doneit in a very long time. but, frankly, even with usraising those standards, i think consumers just in termsof their pocketbook interests
are going to be even moreinterested in buying hybrids and electric cars. two things that we can do thatwould make a big difference right now: number one, we've gotto make sure that those cars are made here in the unitedstates of america. and so part of the reason whyit's so important for us to develop the battery technologyhere is if we're developing battery technology that helps usleverage more auto production here in the united states.
and that has, just in the sameway that when bob was talking about what's happeninghere at celgard, the grant we gave creates300 jobs in the company, but potentially a thousandjobs in suppliers, the same is true withthe auto industry. some of you might have said,why are we helping out gm? well, let me tell you,gm might have employed -- along with its dealersand everybody -- a hundred thousand,several hundred thousand.
but when you looked at all thesuppliers involved and the economies, you could have seenanother couple million jobs lost. that would have had hugeimplications for the economy. now, gm is actually making aprofit and starting to buy -- or starting to hire people back. but one thing we need to do ismake sure that those cars are made here in the united states. the second thing we need to dois to create the electricity grid, what we're callingthe smart grid, which is --
think about it, part of thereason that we can drive our cars is because there's agas station every so often. there are roads. there are gas stations. we know how to fuelup our automobiles. now, if we want to haveeverybody getting maximum use out of an electriccar or a hybrid car, part of what we have to do is tocreate a similar distribution mechanism for electricity.
and one of the exciting thingsabout these hybrids is we want to get to the point where you'vegot what's called a plug-in hybrid, where you essentiallyhave a gas station at your house -- called your electric socket. and you're going to be ableto plug in your car at night. some of the energy that wasstored in the car can actually go back into the house, andthen when you're ready to go, you can get that energyand use it to drive. but to do all that you needa better electricity grid.
we've got kind of a creakyinfrastructure when it comes to electricity, and that's one ofthe major investments that we want to start making. and that, by the way, is aninvestment that only government, working with the privatesector, can help to make. you're hearing a lot of talkthese days about government, and government isterrible, and bureaucrats, and they're taking overand all this stuff. look, i don't want governmentany more than is necessary,
but there are some things thatbob or any ceo can't invest in. bob is not going to buildthe roads to get to celgard. no company is going to makeinvestments for a public good. none of you would expect aprivate company to fund our military or our firefighters. there are just some thingsthat you can't do on your own, and the private sectoris not going to do -- it's not profitable because ifbob was the guy who had to build the road, he'd have a wholebunch of other people driving on
that road thatweren't paying for it. so it's not a goodinvestment for him. that's wheregovernment comes in. the same is true when itcomes to something like the electricity grid. we're going to have to helpcreate that infrastructure, just like broadband lines, justlike a whole bunch of basic 21st century infrastructure, so we'vegot the platform in order to succeed and competeeconomically.
that's what thechinese are doing. that's what theindians are doing. that's what thegermans are doing. that's what the united statesis going to have to do. i've got time for acouple more questions. i can already see the --this is my guy, reggie love, from charlotte, northcarolina, by the way. audience member:reggie! reggie!
the president:yes. he already told me he's notgetting on the plane going back. he's spending the weekend here. all right, i think ishould -- let's see, i want to make sure that --i've got to get a woman in here, make sure that it's balanced. all right, this younglady right there. audience member:thank you, mr. president. we're honored tohave you here today.
i'm doris ravis [phonetic]from lake wylie, south carolina. i work at celgard. we have wonderful ceos thattake care of us and have really helped the company grow. my question is, though, in theeconomy times that we have now, is it a wise decision to addmore taxes to us with the health care? because it -- we areover-taxed as it is. the president:well, let's talk about that, because this is an area where there's been just a wholelot of misinformation,
and i'm going to have to workhard over the next several months to clean up a lot of themisapprehensions that people have. here's the bottom line: numberone is that we are the only -- we have been up until last weekthe only advanced country that allows 50 million of itscitizens to not have any health insurance, and the vastmajority of those folks work. it's just that they don't happento work for a company that is either big enough or generousenough to provide them any coverage. so that's point number one.
there is a moral imperativethat is important. number two, you don't know whomight end up being in that situation. see, those of us who have healthcare right now ask ourselves, well, is this something thatshould be a priority right now, but anybody here who lost theirjob and then cobra ran out, or cobra wasn't subsidized theway the recovery act made sure cobra paid 65% ofthe cost of cobra -- and if you had somebodyat home who was sick, or you had a child who got sick,you'd suddenly say to yourself,
well, now i see the need. and so part of what we have todo is always say to ourselves, there but for thegrace of god go i -- and have a basic safety net. so that's point number two. point number three is that theway insurance companies have been operating, even if you'vegot health insurance you don't always know what you got,because what has been increasingly the practice isthat if you're not lucky enough
to work for a big companythat is a big pool, that essentially isalmost a self-insurer, then what's happening is,is you're going out on the marketplace, you maybe buying insurance, you think you're covered, butthen when you get sick they decide to drop the insuranceright when you need it. or when you get sick they try tofind what they consider to be a preexisting condition that wouldjustify them canceling your policy. or there's some fine printin there where you've got a
lifetime limit, and it turns outyou thought you had coverage, but it turns out the coverageonly goes up to a certain point and then afterwards you haveto start paying out of pocket. and even after payingall those premiums, you're now in the holefor $100,000 or $200,000, and you're going bankrupt andyou're losing your house. and the final point is thatthe costs of health care -- setting aside anythingwe did in reform, i mean, if we just allowed the currenttrajectory to go on --
is out of control. i haven't talked to bob aboutwhat his costs are looking like for celgard employees, but i cantell you that health care costs have gone up, the price ofhealth care has gone up three times faster than wages. so either the company ishaving to swallow those costs, which means that's less moneythat they could use for hiring new workers or investing innew plants and equipment, or they're passing on thosecosts to their employees in the
form of higher premiums, higherdeductibles, higher co-payments. and what's happeningfederally is, because the costs areso out of control, all the programs thatwe already have -- medicare, medicaid, thechildren's health insurance program -- all those thingsare completely out of control. so if you're concernedabout the deficit, what you're really concernedabout is the cost of medicare, medicaid, and all the otherprograms that are already in place.
so here's what we did. what we said is, number one,we'll have the basic principle that everybody gets coverage. and the way we're going to dothat is to say that most people individually shouldn't buyhealth insurance on their own because they have no leverageand the insurance companies take advantage of it. instead what we're going to dois we're going to set up a big pool, a marketplace, that allowseverybody to buy into this pool
-- that members ofcongress, by the way, will be a part of so you knowit's going to be a good deal -- because members of congress,they've got to look out for their own families; theywouldn't vote for it if it wasn't going to be a good deal. and just like walmart is ableto leverage a really good price from its suppliers foreverything because they're such a big purchaser, well, this poolwill be a big purchaser and it will be able to get a betterdeal from insurance companies.
that will drive down the pricesfor people who are participating and it will allow everybody toget a decent deal on insurance. and what we do is we providetax credits to people who still can't afford it so thatthey can afford it. that's point number one. point number two is we've gotthe strongest insurance reforms in history. so all those thingsi told you about -- you not being able to getinsurance because of a
preexisting condition; youfinding yourself getting dropped even though you've been payingpremiums for 15 years and suddenly they justdecide, sorry, we don't want you becauseyou're getting sick -- those policies will be over. and so you will be protected asa consumer to make sure you've got security and protection ifyou've got insurance already. that's the second thing we do. the third thing we do is weactually put in place a whole
bunch of mechanisms to startreducing the actual cost of health care. so, for example, one of thethings that we do is to say we're going to start encouragingpaying doctors not based on how many tests they take, but basedon the quality of the outcome -- does somebody end up healthy. and it turns out that a lot oftimes if you go to the doctor you get one test. then you go -- referred to a specialist, you get another test. then maybe you go to athird person, the surgeon,
you get a third test -- it's all the same test but you're paying three times. so what we're trying to say is,we'll pay you for the first test and then e-mail thetest to everybody. or have all three doctors inthe room when the test is being taken. but that's an example of thekinds of things that save money and will start reducingcosts over the long term. so what we've done is we'veembedded in how medicare reimburses, howmedicaid reimburses, all these ideas to actuallyreduce the costs of care.
so our hope is that over time,over the next three, four, five, six years, becauseof all these changes, that we've actuallysaved money from this, even though morepeople are covered. and so now you'll hear thecritics and the republicans say, now, that justdefies common sense. if you're adding 30million more people, then it's got tocost more money. and you can't pretend likesomehow that's going to help us
on the deficit. i've heard this criticism,i understand it. but let me give you an example. if you've got a house and you'vegot a big hole in your roof, and it's raining and snowingthrough that roof and there are some people who are inside therooms where the roof is okay and they're nice and warm,and then you got a few -- your family members in that roomwhere there's a big hole in the roof and they're shivering,and they're cold --
if you repair the roof, that'sgoing to cost some money. but if all the water damage fromyour floors and all the heat that's going out of the roof,you count all those savings, over time it may turn out thatit actually is saving you money and, by the way, all thosefamily members now are warm, too. you're not the onlyone who's warm, right? that's essentially whatwe're trying to set up. now, last point i want to make. all those savings thatwe're anticipating,
we don't even count those whenit comes to making sure that this is deficit-neutral. here are the two ways that we'repaying for this thing: number one, we are eliminating awhole bunch of waste, fraud, and insurance subsidies thatwere being paid out under medicare that aren't makingour seniors any healthier. i mean, you've got a prettysweet deal for insurance companies right now in a programcalled medicare advantage where they get $18 billion a year paidto them to manage a medicare
program that about 80% ofseniors are getting directly from the government, andit's working just fine. it's just a subsidy to them thatdoesn't make anybody healthier. so what we're saying is, well,let's eliminate the subsidy. so that's about how we payfor half of this thing. the other half of it, it is truethat we have identified some additional taxes thatwe think are fair. and let me describe, justto give you an example -- i don't think this will affectyou, but i don't know --
i don't know yourfamily's circumstances. right now, if you're on salary,you get your salary from celgard or any of thecompanies around here, you're paying your medicaretax on all of that, right? you see it on your --it's part of your fica. but if you're warren buffett andyou get most of your money from dividends and capital gains, youdon't pay medicare tax on that. you're eligible for it. you're going to get the samemedicare benefits as anybody else.
but because your source ofincome is what's called unearned income -- capitalgains and dividends -- you don't have to pay this. well, i'm thinking to myselfhow is it that the guy who is cleaning up the office is payingthe medicare tax and the guy who is making capital gains isn't? so what we said was, look, ifyou make more than $200,000, $250,000 a year, then that moneythat you make over $200,000, $250,000 a yearthat's unearned --
that's from capitalgains and dividends -- you should have to pitch in tomedicare just like everybody else, because you're going to beusing it like everybody else. so it's a concept of fairness. now, what the congressionalbudget office has said -- i'm sorry, by the way, thesequestions sometimes are -- or these answers are long, buti want to make sure you guys -- that i'm reallyanswering your question. i hope you feel like i reallywant to respect the importance
of your question. what the congressional budgetoffice has said is that as a consequence of the savingsfrom the waste and fraud, combined with the new revenuesources i just mentioned, that this thing is going toactually reduce our deficit by over a trillion dollars-- over a trillion dollars. we're actually savingmoney for the government -- because we closed the roof, the house is now insulated, it's warm. and by the way, in the meantimewe've got a whole bunch of
people who were left out in thecold who are now being taken care of. that's the concept. but i know that fora lot of people, they've got a legitimateconcern about, gosh, it just seems like governmentspending is out of control. i understand that. i feel that. but understand whathappened: when i walked in, we already had a $1.3trillion deficit.
that's an annual deficitof $1.3 trillion. that's -- the day i got sworn in, before i did a thing, we had $8 trillion inaccumulated debt from the war in iraq -- not paid for; the prescription drug plan, medicare part d -- not paid for; bushtax cuts -- not paid for. so we already had all this debtthat had just been piled up, but nobody had noticed becausethings were going kind of good. just like a lot of folks didn'tnotice their credit card was going up or that their homeequity loans were going up
because when things are goinggood you tend not to notice. so all that debt hadalready accumulated. we then had to spend $787billion on the recovery act to do all the things -- unemployment insurance; cobra; what's called fmap, which is essentially helping states to keep their budgets afloat so that they didn't have to lay off teachers and copsand firefighters -- all of which if that hadhappened would have further depressed the economy and wewould have recovered a lot
later; the investments we'remaking in clean energy and things like celgard tohelp spur economic growth. so we had to spend that, butthat's only a fraction of what our debt was. and in addition what happens iswhen the economy goes south, there are fewer tax revenues. and so you're putting moremoney out to help people with unemployment insuranceand things like that, but you're getting less money inbecause folks are out of work
and businessesaren't making money. bottom line is, we now have asignificant debt that has to be paid down. that's why i'm freezinggovernment spending. that's why we reinstitutedwhat's called pay-as-you-go. you can't start a programwithout paying for it. our health careprogram is paid for. but the big thing, if you'rereally worried about leaving debt to the next generation,which i know you are, the most important thing we'regoing to have to tackle is our
health care costs, becausemedicare is by far -- medicare and medicaid are thebiggest things that are looming in the horizon in terms ofwhat our debt is going to be. nothing else comes close. if this health carebill never existed, if i didn't doanything about it, we'd actually be a trilliondollars worse off over the long term. but even with what -- the savings we're getting from health care, we're stillgoing to have to do more.
and if you don't believethat, go on our website -- www.whitehouse.gov and you can look at how the federal budget works. a lot of people think if youjust eliminated foreign aid we could balance the budget, or ifyou just eliminated earmarks you could balance the budget. earmarks -- pork projects,what everybody calls pork -- those account for about 1%of the budget, less than 1%. foreign aid accounts for about1.5 to 2% of the budget. most of the budget is medicare,social security, medicaid,
defense spending, and intereston the national debt. that accounts for about70% of the budget. and so all this other stuffthat sometimes we argue about, that's not the big stuff. we're going to have to tacklethe big stuff if we're going to get our budget under control. boy, that was a long answer. i'm sorry. but i hope everybody -- but i hope i answered your question.
all right, i'm going to --i've got to make this the last question. i'm going to ask thisyoung man right here. audience member:my name is matt litzler [phonetic] and i flew down from cleveland, ohio, this morning. we're a supplier here to celgardand about 75 of those 1,000 jobs are in northeast ohio. a real quick question: if reggieis not going to go on the plane, can i get a rideback to the airport? the president:you know, come on, let's go.
audience member:but secondly, the limousines that you drive -- electric with celgard membranesin them sometime soon? the president:you know, the answer -- i'm going to be honest with you. i'm going to be honest with him. when i first got secretservice protection, i asked, can we make these cars hybrids? and i apologize becausesecret service said no. now, the reason is not becausesecret service are bad guys. it's because the cars thati'm in are like tanks.
i mean, they -- as youmight imagine, they're -- a little bit ofextra stuff on there. they're a little reinforced. so they weigh twice or threetimes what an ordinary car weighs. so they just couldn'tget the performance, in terms of acceleration,using a hybrid engine. but here's the good news, isthat as part of our overall energy strategy, i have orderedus to triple the federal fleet that is hybrid.
and so government purchases anawful lot of cars for all kinds of things. i think we're the biggest -- i'm assuming we're the biggest car purchaser -- maybe hertzis bigger, i don't know -- but we're big and so we areusing our purchasing power to help encourage the clean carindustry and, hopefully, to get you more business. thank you very much, everybody. god bless you.
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