Aboard Air Force One
En Route Asheville, North Carolina
10:40 A.M. EST
MR. CARNEY: Welcome aboard Air Force One. It is fantastic to have you here. I know you all covered the President’s speech -- State of the Union Address last night. As I think you might expect, we believe the speech went off very well and has been received very well. And as is tradition, the President is traveling the day after the State of the Union to amplify some of the aspects of his agenda that he talked about last night.
Today, his focus will be on the need to continue the trend towards a reinvigorated manufacturing sector in this country, and the measures we can take to push that trend forward.
For that reason, I have with me today the Principal Deputy Director of the National Economic Council, your friend and mine, Jason Furman, who I will turn this over to, to discuss today’s business.
MR. FURMAN: Great. Thanks, Jay. So one of the important questions the President posed in the State of the Union is what are we going to do to make America a magnet for jobs. An important part of that answer is manufacturing in America, and that’s what the President will be highlighting today.
He’ll be going to Linamar Plant -- that’s a Canadian company that has four U.S. manufacturing facilities. They announced that this one was opening in 2011 to make parts for Caterpillar and other trucks. They employ 160 workers. They’re hiring another 40 at the end of the year.
And this is emblematic of the trend of insourcing that we’re seeing in the United States, in part due to the trained workers we have here in our country, the cost advantages we have in things like electricity because of our abundant natural gas, and our abilities as an exporter.
Because of all of that, we’ve seen 500,000 jobs added in manufacturing in the last three years. And the President wants to not just rest on that, but see what we can do to push it forward and accelerate the pace of job creation. And I think you have the fact sheet which goes through a whole range of them. Gene Sperling will be doing a detailed on-the-record briefing later. But I wanted highlight in particular three things that the President will be talking about today.
One is national manufacturing institutes. He announced one in Youngsville, Ohio last summer on -- Youngstown, Ohio -- thank you -- last summer, that focuses on 3-D printing. In the State of the Union last night he said that this year we’ll be setting up three more; that’s by pulling and using our existing resources. In addition, he would like Congress to pass another trillion -- a billion dollars to set up 15 more of those institutes around the country.
Second is corporate tax reform, which would lower tax rates overall, particularly lower them for manufacturing down to a tax rate of 25 percent. And that would be paid for by broadening the tax-based structural reforms and reducing the incentive to locate production and profits overseas.
And then finally, he’s going to be highlighting things that you can do for manufacturing communities in America, including a $113 million competition that he’ll be proposing for manufacturing communities, and on the SelectUSA initiative which helps people locate in America.
Just very briefly, on paying for all of this -- because I think this is an example of how everything within the speech was paid for as part of a plan that not only pays for them but would also reduce the deficit. Some of it is existing money, like the three manufacturing institutes. Some of it is discretionary proposals, like the manufacturing communities that would be paid for within the overall caps in the Budget Control Act. So in our budget you will see a bunch of things go down and some things go up, and it adds up to the caps.
And then the $1 billion from manufacturing institutes is what is called a mandatory initiative. And just to put context on that, the last budget the President put forward had over $1.5 trillion in revenue and mandatory savings. Our next budget will have additional mandatory savings -- additional savings initiatives on top of those that will more than pay for the much smaller cost of initiatives like this and the other ones he talked about in the State of the Union.
MR. CARNEY: So with that, questions for Jason or me.
Q On the spending that you hope Congress will buy into from the manufacturing institutes particularly, and the infrastructure program -- it seems like the President may have proposed elements of this before, and Congress didn’t agree to fund it. What is your strategy this time for sort of getting Congress's approval on this strategy?
MR. FURMAN: I can start, and if Jay wants to add. I mean, the President is not new to the topics of manufacturing, infrastructure, energy; he's been pushing them for four years. He's accomplished things in all of those areas, and some of these proposals are new and re-tooled proposals -- things like infrastructure, an emphasis on “Fix-It-First”, which is very consistent with what experts across the political spectrum think is how we should be spending our money.
Part of what he was doing was going out last night and arguing his case for all of this. And these are really areas where we have seen, again, outside of the Congress and to some degree inside of Congress, Democrats and Republicans support these types of ideas.
Q But the fact remains that these ideas didn’t pass the last time. What's changed to make them pass this time?
MR. CARNEY: Let me try this. Look, if you have the right proposal that has broad-based support, that is proven to be effective, you have to keep pushing it and fighting for it. As Jason just noted, there is considerable support in the business community and in the public at large for these kinds of measures to improve the manufacturing sector's prospects. It makes a great deal of sense to do what the President is proposing -- not just because of the immediate effect on our growth and job creation, but because of the long-term need to build a powerful foundation for our economy in the 21st century.
If this President or any leader approached these challenges with an attitude of, well, this is going to be hard so I won't try, we wouldn’t get anything done in Washington. And as you've seen from President Obama over these past four years, he never takes that approach.
And the fact is everything he proposed last night has had at different times and with different configurations significant bipartisan support, and we expect where Congress has a role to play, Congress will act on this agenda.
Q Would this region or this company benefit from any of the proposals the President talked about last night? What’s the reason for this particular locale?
MR. FURMAN: Obviously, this is a company that came here because of a lot of the advantages the United States already has, and that's why we’re creating jobs. But certainly something like corporate tax reform that cuts tax rates for companies that are producing things here in America would benefit a company like this.
I don't know what the next set of manufacturing institutes will focus on. That will depend on the applications we get and what ways a company like this would benefit from their technologies. But certainly things like 3-D printing are widely used in manufacturing.
And generally, if you look at things like the President’s energy agenda, for example, something like natural gas, that's helped bring the price of electricity down -- to bring it down further -- and that matters a lot to the manufacturing sector.
Q Do we have a thought on the Hagel nomination -- where we are with it? Do you still feel confident it’s going to go through?
MR. CARNEY: We do. We’re pleased to see that the committee voted the nomination out. We hope and expect the full Senate to take action expeditiously to confirm Senator Hagel as the next Secretary of Defense and to fill this vital post in our national security apparatus.
We know with 100 percent confidence that there is majority support for Senator Hagel’s nomination -- majority and then some. So we ask Congress, the Senate to move quickly to confirm him as Secretary of Defense.
Q Can you map out the travel for the rest of the week? Today is manufacturing. When he’s in Georgia and Chicago later this week, what the focus is going to be?
MR. CARNEY: The whole issue is not to drive too fast by today’s important visit and the policy focus that comes with it. The travel tomorrow, travel Friday will highlight other elements of the President’s economic agenda. And then, moving forward, we have a lot of business to conduct. And you heard the President’s ambitious agenda last night, and he looks forward to working with Congress and talking to the American people about every aspect of it.
Q Jay, the President in 2008 proposed raising the minimum wage to $9.50. Last night he proposed $9.00. So are Americans able to get by on less now than they would be four years ago?
MR. FURMAN: An important factor in how the minimum wage proposal was designed was exactly what the President said last night, which is that no one working full-time at the minimum wage should have to raise their children in poverty. And the President takes a comprehensive approach to that. Part of that depends on how much they're paid, and part of it depends on things like the tax credits they’ve gotten. And the President was able to secure in 2009 and extend most recently in the tax agreement at the beginning of January refundable tax credits for families with children that are worth 75 cents an hour if you work full-time and have two children.
So if you think of that extra money, together with the extra money from this minimum wage increase, the two of those together would first of all exceed the minimum wage number he had called for on the campaign, but more importantly at a fundamental level, take you from below the poverty line to above the poverty line for someone working full-time with children.
I’d also add that $9.00 an hour is a robust increase in the minimum wage and would put it at a higher level adjusted for inflation than any time since 1981.
MR. CARNEY: And I would just make the point -- because this goes to the question about enacting this agenda and potential obstacles that the President may face -- in 1996, when Newt Gingrich was Speaker of the House, Congress passed an increase in the minimum wage. When George Bush -- George W. Bush was President, he supported an increase in the minimum wage. It is a bipartisan American principle, the President believes, that no one in the United States should work full-time and live in poverty. The benefits of the hike that the President is proposing are manifold -- economic and social. And he hopes that action will be taken in the bipartisan spirit that action has been taken in the past.
Q Do you know whether the President watched or read the text of Rubio's speech last night and had any reaction?
MR. CARNEY: I don't know whether he had a chance. He certainly didn't watch it. He was on Capitol Hill past the time that Senator Rubio spoke. I haven't spoken to him this morning about it.
I would say one thing, which is that while the messenger may have changed, the message we heard last night from the Republican Speaker was entirely consistent with the policy ideas that Mitt Romney campaigned on last year that the American people did not support. This was not a focus of his address last night, but I know -- and the President is aware of the fact that Senator Rubio wants to play and is playing an important role in an effort to achieve bipartisan, comprehensive immigration reform.
But aside from that, if you look at the remarks by Senator Rubio last night, they could have been delivered by Governor Romney in their policy essence. And I think what the President was saying last night is we need to move forward on an agenda that builds the middle class; that produces not a bigger government but a smarter government; and that grows the economy while reducing our deficit in a way that's fair, that doesn't ask senior citizens or middle-class families sending their kids to college, or parents with disabled children to bear the burden solely of reducing our deficit.
That's an approach that doesn't just have the President's support or the Democratic Party's support, or even support of independents, which it does. It has support among Republicans out in the real world, and it has support of numerous Republican former elected officials who have led or served on bipartisan commissions who have looked at deficit reduction.
Q Jay, the President warned last night of the economic consequences of the sequester. Is he -- obviously, he's talking manufacturing today, other elements in the State of the Union tomorrow and Friday. But what else is he doing kind of behind the scenes? Is he reaching out to lawmakers? Is he engaging in any conversations to still try and head off the sequester?
MR. CARNEY: We at the White House, led by the President, are working with Congress to try to urge them to take action to avert the sequester, the implementation of which would be wholly unnecessary and an arbitrary wound inflicted on our economy at a time when we're recovering. And we should be and are poised to be creating jobs and growing further.
The Senate is working on a proposal that would buy down the sequester for a relatively short period of time to give Congress the time and space necessary to do what it is setting itself up to do, which is work through in regular order a budget process that hopefully will produce the kind of middle-of-the-road, common sense, balanced deficit reduction that the President seeks and which has the support of the American people. So the answer is yes.
Unfortunately, we've heard -- I think I just saw a commentary from Senator McConnell flatly predicting that the sequester will take effect.
I know that Speaker Boehner has in the past -- and not-so-distant past -- posted to the Wall Street Journal about the support he has among Republicans in the House to allow the sequester to take effect and the political leverage that will give him -- leverage to achieve political goals. Unfortunately, what “leverage” means in this case is jobs. It's people. It's tens of thousands, hundreds of thousands of people who suffer or would suffer the consequences of that kind of political gambit.
Q And also, Jack Lew’s confirmation hearings are today. He's going to face some questions about his time at Citi, and also an offshore account. Does the White House see any conflict in that, that the President spent the campaign sort of rallying against offshore tax havens? And are there any concerns about his confirmation?
MR. CARNEY: We have no concerns about Jack Lew's confirmation. He is extraordinarily qualified to be the next Treasury Secretary. And on the matter you raised, I would say two things. One, Jack Lew has been confirmed by the Senate to previous posts, and is fully -- all this information about his background was available on those occasions.
Two, the President campaigned on reforming our tax code so that it rewards companies that invest here, that closes loopholes that are available to the few and not the many. And in that effort, he was aided ably by his Chief of Staff at a policy level, and that was Jack Lew.
The debate last year wasn't about individuals, it was about what policy do you support when it comes to our tax code. The policies the President supports and urges Congress to implement and did again last night are the policies that Jack Lew supports. And they're quite different from the policies that, unfortunately, Republicans supported last year and apparently this year as well.
Q On tax reform -- I read this morning an analysis, I think from Brookings, that the statements last night were a rejection of the idea of a territorial tax system. Is that an analysis that you would agree with? Is that really what's being said here?
MR. FURMAN: Sorry, I didn’t see that analysis. But just in terms of restating --
MR. CARNEY: I applaud Roberta for in the morning reading think-tank analysis before everyone else. (Laughter.)
MR. FURMAN: But I certainly will make up for that deficiency on my part.
But I'll just restate where the President is on this, which is the President has rejected a pure territorial system; doesn’t want a system in which you face a much lower tax rate on an investment that takes place overseas, rather than an investment that takes place here. But he does recognize that we currently do have a hybrid tax system; that the global competitiveness of our companies is important. They are going to operate all around the world and succeed and compete all around the world, and so wants a hybrid system that would encourage that, but would really toughen up the ways in which right now you, for example, shift profits overseas, avoid paying taxes here. And that leads not just to jobs overseas, but also higher tax rates on our companies here in America.
Q Any chance in the ideas about a tax reform for a repatriation holiday of some type? Maybe tied to job creation?
MR. FURMAN: The administration has really rejected a temporary repatriation holiday. The last time we tried it, it wasn’t successful in creating jobs. It cost us a substantial amount of money, and it rewards companies that have put a lot of money in low-tax jurisdictions.
What we would be willing to work together on is a permanent reform of the tax system that makes it smarter so our companies can be more competitive globally, have less incentive -- more incentive to undertake production here in the United States. But it’s that type of longer-term tax reform that we’re focused on, not these types of one-off repatriation holidays.
Q You call this trip the traditional day-after-the-State of the Union trip. That actually has not been this President’s tradition. So he has not always gone out the day after the State of the Union to sell the message. So why now? Is it something where he feels he has more he has to sell now? Or does he feel like he has more of an opportunity to get something done now?
MR. CARNEY: Well, I believe we traveled last year. I’ll have to look at my travel logs. I think having covered the President’s two predecessors, it is more or less a tradition to travel in the wake of the State of the Union. Whether it’s tradition or not, it’s a good idea.
The President doesn’t believe -- as unique and humbling an opportunity it is for a President to be able to speak to Congress, a joint session, and to the nation, as the President did last night, you don’t just do that and stop the conversation. You continue to take your arguments and your case to the people. That’s what the President is doing today, tomorrow and Friday, and that’s what he will do throughout his second term.
As we’ve discussed in the briefing room, this is an approach the President believes is the right approach, because the American people have a stake in everything Washington will or won’t do this year. And they have a deep stake in it, and they care about and expect to be engaged in the conversations about what we should do moving forward.
As I’ve said before, the President believes that making that case to the American people helps the system and it helps get things done. It is not to the exclusion of working directly with members of Congress. We obviously do that all the time. But it’s a two-pronged strategy, if you will.
Q And how can the President do something like expanding preschool to every student in the United States without expecting that that’s going to somehow add to the deficit? And are there specific things he’s saying will be reduced to offset those costs?
MR. FURMAN: So as I said in my opening, the last budget had over $1.5 trillion of mandatory and revenue savings -- things like reductions in entitlements, closing loopholes. The initiatives he talked about yesterday were at a substantially smaller scale in terms of dollars than that. And, in addition, you’ll see in our budget that we’re going to have new savings above and beyond what we proposed before, just like we’re going to have some new initiatives above and beyond what we proposed before. So you’ll see all the gory details in our budget.
And part of why you can rest assured on this question is the President’s record on the topic, which is since he’s been in office he’s restored a principle we hadn’t had in the previous eight years, which is all of the new long-term initiatives that he’s done -- whether they were small things like healthy foods, or large things like the Affordable Care Act -- have been paid for. And that’s something he’ll continue to do and more than pay for them while reducing the deficit. And you’ll see more details of that coming up.
MR. CARNEY: Let’s just be clear -- that PAYGO principle was abandoned under the previous administration; has been restored under this.
Q Last night it seemed like the President’s tone as he addressed Congress was sometimes needling them, sometimes chiding them for going to the ribbon-cuttings. Why does the President think that that tone is the helpful tone to strike when addressing Congress?
MR. CARNEY: I think the last example you used -- I was on the floor, and it was greeted with chuckling, as appropriate. The President is a former member of the Senate. He understands how the Congress works. I think his tone last night was one where he, sure, was cajoling and urging Congress to act, but it was one that is entirely consistent with -- thematically with almost every major speech he’s given on domestic and economic policy, dating back to his keynote convention address in 2004 in Boston when he was a mere state senator.
He called on Republicans and Democrats to come together, because fundamentally we are Americans first before we’re Democrats or Republicans or independents. And as he said in Boston, we may hail from red states or blue states, but we all live in the United States.
And reflecting the themes he set out in the inaugural address, he talked about the fact that obviously we’re not going to resolve all our differences. We’re going to continue to disagree on a number of issues, and those disagreements can be based on both sides in principle. But we were sent here -- again, the President saying this -- elected officials were sent to Washington to get the business of the public done. And there are too many urgent challenges not to do that work on behalf of the American people. And that was the tone the President brought last night that it was -- he was obviously urging Congress to act, but it was one where he was asking to act in concert with Congress on behalf of the people.
Q When’s the budget coming out?
MR. CARNEY: I think we’ve noted that it will be sometime in March, but we haven’t got a specific date for you.
Q Jay, when the President talked about strengthening checks and balances on our counterterrorism operations, was he expressing an openness for the ideas that have been floated on Capitol Hill about having some type of a FISA-like drone court?
MR. CARNEY: He was not specific about any particular idea. What he was committing himself to is the principle that he has
demonstrated throughout this process, which was his desire to ensure that we build the legal architecture behind our counterterrorism efforts so that those efforts reflect not just our national security interests but our values and our legal system, and that we do that in consultation with Congress; that we continue that consultation with Congress and deepen it; and that we make every effort within the restraints of our national security imperatives to be public with the American people about the rationale behind our counterterrorism strategies and the legal justification behind them.
You’ve seen that in the actions taken on behalf of the President by senior administration officials in the last several years -- major speeches by John Brennan, by the Attorney General, by others where they have talked quite openly, again, within the parameters allowed by our national security, imperative about our counterterrorism efforts and the legal justification behind them.
Great to see you all.
11:09 A.M. EST