Continue the White House transcript of the remarks by the President at a Facebook Town Hall!
We think we can do about another $400 billion.
So we’ve got to look at spending both on non-security issues as well as defense spending. And then what we’ve said is let’s take another trillion of that that we raise through a reform in the tax system that allows people like me -- and, frankly, you, Mark -- for paying a little more in taxes. (Laughter.)
MR. ZUCKERBERG: I’m cool with that.
THE PRESIDENT: I know you’re okay with that. (Laughter.) Keep in mind, what we’re talking about is going back to the rates that existed when Bill Clinton was President. Now, a lot of you were -- (laughter) -- I’m trying to say this delicately -- still in diapers at that time. (Laughter.) But for those of you who recall, the economy was booming, and wealthy people were getting wealthier. There wasn’t a problem at that time. If we go back to those rates alone, that by itself would do a lot in terms of us reducing our overall spending. And if we can get a trillion dollars on the revenue side, $2 trillion in cutting spending, we can still make investments in basic research.
We can still invest in something we call ARPA-E, which is like DARPA except just focused on energy, so that we can figure out what are the next breakthrough technologies that can help us reduce our reliance on fossil fuels.
We can still make investments in education, so we’ve already expanded the Pell Grant program so that more young people can go to college. We’re investing more in STEM education -- math and science and technology education. We can still make those investments. We can still rebuild our roads and our bridges, and invest in high-speed rail, and invest in the next generation of broadband and wireless, and make sure everybody has access to the Internet. We can do all those things while still bringing down the deficit medium term.
Now, there’s one last component of this -- and I know this is a long answer but I wanted to make sure everybody had the basic foundations for it. Even if we get this $4 trillion, we do still have a long-term problem with Medicare and Medicaid, because health care costs, the inflation goes up so much faster than wages and salaries. And this is where there’s another big philosophical debate with the Republicans, because what I’ve said is the best way for us to change it is to build on the health reform we had last year and start getting a better bang for our health care dollar.
We waste so much on health care. We spend about 20 percent more than any other country on Earth, and we have worse outcomes because we end up having multiple tests when we could just do one test and have it shared among physicians on Facebook, for example.
We could focus on the chronically ill; 20 percent of the patients account for 80 percent of the costs. So doing something simple like reimbursing hospitals and doctors for reducing their readmissions rate, and managing somebody with a chronic illness like diabetes so that they're taking their meds on a regular basis so that they don't come to the emergency room, that saves huge amounts of money.
So that's what health care reform was about last year or a year and a half ago, and what we want to do is build on that and continue to improve the system.
What the Republicans right now are saying is, number one, they can't agree to any increases in taxes, which means we’d have to cut out -- of that $4 trillion, all of it would come from education, transportation -- areas that I think are critical for our long-term future.
So, for example, they proposed 70 percent cuts in clean energy. Well, I don't know how we free ourselves from dependence on foreign oil -- and anybody who is paying gas prices knows that there’s an economic component to this as well as an environmental component to it -- if we’re not investing in the basic research and technology that allows solar, wind and others to thrive and develop.
At the same time, what they’ve said is let’s make Medicare into a voucher program, so that retirees, instead of knowing that they're always going to have health care, they're going to get a voucher that covers part of the cost, and whatever health care inflation comes up is all going to be on them. And if the health insurance companies don't sell you a policy that covers your illnesses, you’re out of luck.
I think it is very important for us to have a basic social safety net for families with kids with disabilities, for seniors, for folks who are in nursing homes, and I think it’s important for us to invest in our basic research. We can do all those things, but we’re only going to be able to do it by taking a balanced approach. And that's what this big debate is about -- all about right now. All right?
MR. ZUCKERBERG: All right, so -- sorry, don't mean to cut off the applause. (Applause.)
THE PRESIDENT: No, no, no, no, no.
MR. ZUCKERBERG: That was a very thorough answer.
THE PRESIDENT: No, they were -- they were stunned by the length of that answer. (Laughter.) But it’s complicated stuff.
MR. ZUCKERBERG: So the next question is from someone watching Facebook live. Jay Aptine (ph) from Williamsburg, Virginia writes in and asks: “The housing crisis will not go away. The mortgage financing for new homebuyers with low to moderate income is becoming very difficult. As President, what can you do to relax the policies that are disqualifying qualified homebuyers from owning their first home? How can you assure the low to moderate homebuyers that they will have the opportunity to own their first home?”
THE PRESIDENT: Well, it’s a good question. And I’ll be honest with you, this is probably the biggest drag on the economy right now that we have -- along with I know the frustrations people have about gas prices. What we’ve really seen is the housing market, which was a bubble, had greatly over-inflated in all regions of the country. And I know I probably don't get a lot of sympathy about that here because I can only imagine what rents and mortgages you guys are paying.
It is a real drag in all sorts of ways. People, first of all, they feel poorer even if they still have a home or they’ve already purchased a home, because for a lot of folks their mortgage is now what’s called underwater. The mortgage is more than the home is worth. And so if you feel like your most important asset is now worth less than your debt, that's going to constrain how you spend. People who want to move have a great deal of trouble selling, and people who want to buy, as you pointed out, are seeing terms a lot more restrictive.
So we've put in place a bunch of programs to try to see if we can speed along the process of reaching a new equilibrium. For example, what we did is we went to the mortgage lender and said, why don't you renegotiate with your mortgage -- with the person with the mortgage, renegotiate the terms of their mortgage so that their principal is a little bit lower, they can afford the payments, and that way homes don't get foreclosed on, there are fewer homes on the market, and that will raise prices and that will be good for everybody. And we've seen some significant progress on that front.
The challenge we still have, as your questioner properly points out, is that a lot of people who bought a first home when credit was easy now are finding that credit is tough. And we've got to strike a balance. Frankly, there’s some folks who are probably better off renting. And what we don't want to do is return to a situation where people are putting no money down and they’ve got very easy payment terms at the front end and then it turns out five years from now, because they’ve got an adjustable rate mortgage, that they couldn't afford it and they lose their home.
I think the regulators are trying to get that balance right. There are certain communities with high foreclosure rates where what we're trying to do is see if can we help state and local governments take over some of these homes and convert them and provide favorable terms to first-time home buyers. But, frankly, I think we've got to understand that the days where it was really easy to buy a house without any money down is probably over. And what we -- what I'm really concerned about is making sure that the housing market overall recovers enough that it’s not such a huge drag on the economy, because if it isn’t, then people will have more confidence, they’ll spend more, more people will get hired, and overall the economy will improve.
But I recognize for a lot of folks who want to be first-time homebuyers it’s still tough out there. It’s getting better in certain areas, but in some places, particularly where there was a big housing bubble, it’s not.
MR. ZUCKERBERG: So I think the next question is from a Facebook employee in the room today. So Lauren Hale has a question. Lauren, where are you from?
Q Hi -- over here.
THE PRESIDENT: Hey, Lauren.
Q Hi, Mr. President. Thank you so much for joining us today. I am originally from Detroit, Michigan, and now I'm out here working at Facebook. So my question for you kind of builds on some of the things we were just talking about. At the beginning of your term you spent a lot of time talking about job creation and the road to economic recovery,
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