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the president:good afternoon, everybody. i am eager to takeyour questions, so i'll try to bebrief at the top. this morning, i had a chanceto speak with speaker boehner, and i told him whati've been saying publicly, that i am happyto talk with him and other republicansabout anything -- not just issuesi think are important, but also issues thatthey think are important.

but i also told him thathaving such a conversation, talks, negotiations, shouldn't require hanging thethreats of a government shutdown or economic chaos over theheads of the american people. think about it this way. the american people donot get to demand a ransom for doing their jobs. you don't get a chanceto call your bank and say, "i'm not going to paymy mortgage this month

unless you throw ina new car and an xbox. if you're in negotiationsaround buying somebody's house, you don't get to say,"well, let's talk about the pricei'm going to pay, and if you don'tgive me the price then i'm going toburn down your house." that's not hownegotiations work. that's not how ithappens in business; it's not how it happensin private life.

in the same way,members of congress -- and the house republicans,in particular -- don't get to demand ransom inexchange for doing their jobs. and two of their very basic jobsare passing a budget and making sure that americais paying its bills. they don't also get to say, "unless you give me what the voters rejectedin the last election, i'm going to cause a recession."

that's not how it works. no american president would dealwith a foreign leader like this. most of you would notdeal with either coworkers or business associatesin this fashion, and we shouldn't be dealingthis way here in washington. and i've heard republicanssuggest that, well, no, this is reasonable,this is entirely appropriate. but as i've said before,imagine if a democratic congress threatened to crashthe global economy

unless a republican presidentagreed to gun background checks or immigration reform? i think it's fairto say that republicans would not thinkthat was appropriate. so let's lift these threats fromour families and our businesses, and let's get down to work. it's not like this is a newposition that i'm taking here. i had speaker boehner and theother leaders in just last week. either my chief of staff or ihave had serious conversations

on the budget with republicansmore than 20 times since march. so we've been talkingall kinds of business. what we haven't been ableto get are serious positions from the republicans that wouldallow us to actually resolve some core differences. and they have decidedto run out the clock until there'sa government shutdown or the possibility of default, thinking that it wouldgive them more leverage.

that's not my characterization;they've said it themselves. that was their strategyfrom the start. and that is not how ourgovernment is supposed to run. it's not just me, by the way,who has taken the position that we're willing to haveconversations about anything. senate democrats have asked tosit down with house republicans and hash out a budget,but have been rejected by the houserepublicans 19 times. at the beginning of thisyear, speaker boehner said,

what we want is regular orderand a serious budget process, so the senateshould pass a bill and the houseshould pass a bill. and then,a committee comes together and they hash outtheir differences, and they send a billto the president. well, that's exactlywhat democrats did. except somewhere along the way, house republicans decidedthey wouldn't appoint people

to the committeeto try to negotiate. and 19 times,they've rejected that. so even after all that,the democrats in the senate still passed a budget that effectivelyreflects republican priorities, at republican budget levels, just to keepthe government open. and the house republicanscouldn't do that either. the point is i thinknot only the white house,

but also democrats in the senateand democrats in the house have shown morethan ample willingness to talk about any issues that the republicansare concerned about. but we can't doit if the entire basis of the republican strategy is, we're going toshut down the government or cause economic chaos if we don't get100 percent of what we want.

so my suggestion to the speakerhas been and will continue to be let's stop the excuses. let's take a vote in the house. let's end thisshutdown right now. let's put people back to work. there are enough reasonablerepublicans and democrats in the house who are willingto vote yes on a budget that the senatehas already passed. that vote couldtake place today.

the shutdown would be over. then, seriousnegotiations could proceed around every item in the budget. now, as soon as congress votesto reopen the government, it's also got to vote to meetour country's commitments -- pay our bills;raise the debt ceiling. because as recklessas a government shutdown is, the economic shutdowncaused by america defaulting would be dramatically worse.

and i want to talkabout this for a minute, because even though peoplecan see and feel the effects of a government shutdown -- they're alreadyexperiencing it right now -- there are still somepeople out there who don't believe thatdefault is a real thing. and we've been hearing that fromsome republicans in congress that default wouldnot be a big deal. so let me explain this.

if congress refuses to raisewhat's called the debt ceiling, america would not be able to meet all of ourfinancial obligations for the first time in 225 years. and because it's called"raising the debt ceiling," i think a lot of americansthink it's raising our debt. it is not raising our debt. this does not adda dime to our debt. it simply says,you pay for what congress

has already authorizedamerica to purchase. whether that's the greatestmilitary in the world, or veterans benefits,or social security -- whatever it is that congresshas already authorized, what this does is make surethat we can pay those bills. now, the last time that thetea party republicans flirted with the idea of defaulttwo years ago, markets plunged, business and consumerconfidence plunged, america's credit rating wasdowngraded for the first time.

and a decision to actuallygo through with it, to actually permit default,according to many ceos and economists, would be --and i'm quoting here -- "insane,""catastrophic," "chaos." these are some ofthe more polite words. warren buffett likeneddefault to a nuclear bomb, a weapon too horrible to use. it would disrupt markets. it would undermine the world'sconfidence in america

as the bedrockof the global economy. and it might permanentlyincrease our borrowing costs -- which, of course,ironically would mean that it would bemore expensive for us to service what debt we do have, and it would add to our deficitsand our debt, not decrease them. there's nothing fiscallyresponsible about that. preventing thisshould be simple. as i said, "raising the debtceiling" is a lousy name,

which is why membersof congress in both parties don't like to vote on it, because it makes you vulnerablein political campaigns. but it does notincrease our debt. it does not grow our deficits. it does not allow for a singledime of increased spending. all it does is allowthe treasury department to pay for what congresshas already spent. but, as i said,it's always a tough vote.

people don't like doing it --although it has been done 45 times sinceronald reagan took office. nobody in the past has everseriously threatened to breach the debt ceilinguntil the last two years. and this is the creditworthinessof the united states that we're talking about. this is our word. this is our good name. this is real.

in a government shutdown,millions of americans face inconvenienceor outright hardship. in an economic shutdown, everyamerican could see their 401ks and home values fall; borrowing costs for mortgagesand student loans rise. and there would be a significantrisk of a very deep recession at a time when we'restill climbing our way out of the worst recessionin our lifetimes. the american people have alreadyfought too hard and too long

to come back fromone crisis only to see a handful of moreextreme republicans in the house of representativesprecipitate another one. now, the good news is, overthe past three and a half years, our businesses have created7.5 million new jobs. our housing market is healing. we've cut the deficit inhalf since i took office. the deficit is coming downfaster than any time in the last 50 years.

america is poised to become thenumber-one energy producer in the world this year. this year, for the firsttime in a very long time, we're producing more oilthan we're importing. so we've got a lot ofgood things going for us. but the uncertainty caused byjust one week of this nonsense so far has caused businesses toreconsider spending and hiring. you've seen consumerconfidence plunge to the lowest level since 2008.

you've seen mortgages held upby thousands of homebuyers who weren't sure about theeconomic situation out there. and all this addsto our deficits; it doesn't subtract from it. so we can't afford thesemanufactured crises every few months. and as i said, this oneisn't even about deficits or spending or budgets. our deficits are falling atthe fastest pace in 60 years.

the budget thatthe senate passed is at republicanspending levels. it's their budget that democratswere willing to put votes on just to make surethe government was open while negotiations tookplace for a longer-term budget. and what's happened --the way we got to this point was one thingand one thing only, and that wasrepublican obsession with dismantlingthe affordable care act

and denying health careto millions of americans. that law, ironically,is moving forward. so most americans --democrats and republicans -- agree that health careshould not have anything to do with keeping our government openor paying our bills on time -- which is why i will sitdown and work with anyone of any party not onlyto talk about the budget, i'll talk about ways toimprove the health care system. i'll talk about ways that we canshrink our long-term deficits.

i'll also want to talk about how we're going tohelp the middle class and strengthen earlychildhood education, and improve our infrastructure,and research and development. there are a whole bunch ofthings i want to talk about in terms of how we're goingto make sure that everybody is getting a fairshake in this society, and that our economyis growing in a broad-based way and building our middle class.

and, by the way, if anybodydoubts my sincerity about that, i've even put forward proposalsin my budget to reform entitlement programsfor the long haul, and reform our tax code in a waythat would close loopholes for the wealthiestand lower rates for corporations and help us invest in newjobs and reduce our deficits. and some of these wereoriginally republican proposals, because i don't believeany party has a monopoly on good ideas.

so i've shown myself willingto go more than halfway in these conversations. and if reasonablerepublicans want to talk aboutthese things again, i'm ready tohead up to the hill and try. i'll even springfor dinner again. but i'm not going to do it untilthe more extreme parts of the republican partystop forcing john boehner to issue threatsabout our economy.

we can't make extortion routineas part of our democracy. democracy doesn'tfunction this way. and this is not just for me. it's also for mysuccessors in office, whatever party they're from -- they shouldn't haveto pay ransom either for congress doingits basic job. we've got to put a stop to it. the last point i'll make --

already this week, i had tomiss critical meetings in asia to promote americanjobs and businesses. and although, as longas we get this fixed, that's not long-term damage,whenever we do these things, it hurts our credibilityaround the world. it makes it look like wedon't have our act together. and that's not somethingwe should welcome. the greatest nation on earthshouldn't have to get permission from a few irresponsiblemembers of congress

every couple of monthsjust to keep our government open or to prevent aneconomic catastrophe. so let's pass a budget. let's end thisgovernment shutdown. let's pay our bills. let's avert aneconomic shutdown. let's drop the gimmicks,put aside what's good for any particular party, and let's focus on what'sgood for the american people

because they know we'vegot a lot of work to do. all right? so with that, let me takea couple of questions, and i will startwith julie pace of ap. the press:thank you mr. president. obviously, if congressdoes pass a clean cr and a clean debt ceiling bill, those may just beshort-term measures. the president: yes.

the press:if that happens, does youroffer to negotiate with them on issues like health care andspending and deficit reduction still stand in theintervening weeks if they pass measuresthat are just perhaps six weeks or two months long? the president:absolutely. i mean, what i've said isthat i will talk about anything. what will happen is wewon't agree on everything. i mean, the truth is, is thatthe parties are pretty divided

on a whole bunch ofbig issues right now. everybody understands that. and by the way,voters are divided on a lot of those issues, too. and i recognize that thereare some house members, republican house members,where i got clobbered in the last election, and they don't getpolitically rewarded a lot for being seen asnegotiating with me.

and that makes it harderfor divided government to come together. but i am willing to workthrough all those issues. the only thing that ourdemocracy can't afford is a situation where one sidesays, unless i get my way, and only my way,unless i get concessions before we even start havinga serious give-and-take, i'll threaten toshut down the government or i will threaten tonot pay america's bills.

so i will not eliminateany topic of conversation. and i've shown myself willing toengage all the parties involved, every leader, on any issue. the press:and that applies no matterhow long the time frame is on the debt ceilingbill that they would pass? the president:the only thing thati will say is that we're not going to pay a ransom foramerica paying its bills. that's something thatshould be non-negotiable. and everybodyshould agree on that.

everybody should say one ofthe most valuable things we have is america's creditworthiness. this is not somethingwe should even come close to fooling around with. and so when i readpeople saying, oh, this wouldn't be a bigdeal, we should test it out; let's take default out for aspin and see how it rides -- and i say, imaginein your private life if you decided that,

i'm not going to pay mymortgage for a month or two. first of all,you're not saving money by not paying your mortgage; you're just a deadbeat. and you can anticipatethat will hurt your credit, which means that in additionto debt collectors calling, you're going to have troubleborrowing in the future. and if you are ableto borrow in the future, you're going to haveto borrow at a higher rate.

well, what's truefor individuals is also true for nations -- even the most powerfulnation on earth. and if we are creating anatmosphere in which people are not sure whether or notwe pay our bills on time, then that will havea severe long-term impact on our economy and onamerica's standard of living. and that's not something that we should even bein a conversation about.

that is not something thatwe should be using as leverage. okay. julianna goldman. you laid out the economicconsequences of default, but if we were toget to that point, would you prioritize and paybondholders first to maintain the semblance of credit or -- rather thansocial security recipients or militaryservicemen and women?

and how would you go aheadand make that determination? the president:i am going to continueto be very hopeful that congress does notput us in that position. and i think if people understandwhat the consequences are, they will set thatpotential scenario aside. i do know that there have beensome who have said that if we just pay bondholders, if wejust pay people who have bought treasury bills that we reallywon't be in default because those interestpayments will be made.

and to them, what i have toremind them is we've got a lot of other obligations, not justpeople who pay treasury bills. we've got senior citizens whoare counting on their social security check arriving on time. we have veteranswho are disabled who are countingon their benefits. we have companies who are doingbusiness for our government and for our military that havepayrolls that they have to meet, and if they do notget paid on time,

they may have tolay off workers. all those folksare potentially affected if we are not able to payall of our bills on time. what's also true isif the markets are seeing that we're not payingall our bills on time that will affectour creditworthiness even if some peopleare being paid on time. so, again, just to boilthis down to personal examples, if you've got a mortgage,a car note and a student loan

that you have to pay,and you say, well, i'm going to makesure i pay my mortgage, but i'm not going to paymy student loan or my car note, that's still going to havean impact on your credit. everybody is still going to lookat that and say, you know what, i'm not sure this personis that trustworthy. at a minimum, presumably,they're going to charge a higher interest rate. that's what would happen to youif you made those decisions.

well, the same is truefor the federal government. so we are exploringall contingencies. i know that secretary lew,the secretary of the treasury, will be appearing beforecongress on thursday, and he can address some of theadditional details about this. but let me be clear: no optionis good in that scenario. there's no silver bullet. there's no magic wand thatallows us to wish away the chaos that could result if, for thefirst time in our history,

we don't pay our bills on time. and when i hear peopletrying to downplay the consequences of that, i think that'sreally irresponsible. and i'm happy to talkto any of them individually and walk them throughexactly why it's irresponsible. and it's particularly funnycoming from republicans who claim to bechampions of business. there's nobusinessperson out here

who thinks thiswouldn't be a big deal. not one. you go to anywhere fromwall street to main street and you ask a ceo of a company,or ask a small businessperson whether it would be a big dealif the united states government isn't paying its bills on time, they'll tell youit's a big deal. it would hurt. and it's unnecessary.

that's the worst part of it. this is not a complicatedpiece of business. and there's no reasonwhy, if, in fact, republicans are seriousabout wanting to negotiate, wanting to havea conversation, wanting to talk, there's no reason whyyou have to have that threat looming over the conversations. i mean, think about it. the only reasonthat the republicans

have held out on negotiationsup until the last week or so is because they thoughtit was a big enough deal that they would forceunilateral concessions out of democratsand out of me. they said so. they basically said,you know what, the president is so responsiblethat if we just hold our breath and say we're goingto threaten default, then he'll give us what we want

and we won'thave to give anything in return. again, that's not myaccount of the situation. you can read statementsfrom republicans over the last several monthswho said this explicitly. and so, for themnow to say, well, it wouldn't be a bigdeal if it happens, that's not howthey've been acting over the last couple months. and if it's not a big deal,

then why would i give themconcessions now to avoid it? it is a big deal. and nobody should be gettingconcessions for making sure that the full faith and credit ofthe united states is retained. sam stein. with speaker boehnerso far unwilling to hold a vote on a clean cr, what assurances can yougive to those affected by a shutdown who are concernedabout an even longer impasse?

and how worriedare you, personally, that your preferred solutionto this is a clean cr at sequestrationlevels that may do harm to the nation's economyand your second term agenda? the president:well, i mean, sam, you're making animportant point, which is what we're asking ofthe republicans right now is to keep the government open atfunding levels that democrats think are very harmful tothe economy and inadequate

to make sure that theeconomy is growing faster, more people areput back to work, and the middle class is growing. we're willing to passat least a short-term budget that opens up the governmentat current funding levels. it doesn't even addressthe harm that's been done because of sequestration. now, the democratshave a budget thatwould eliminate sequestration --

this meat-cleaver approachto deficit reduction -- and make sure that we'readequately funding basic medical researchand head start programs and va programs, and a whole range of things that have been reallyhard hit this year. but we recognize that thereare going to have to be some compromises betweenthe democratic position and the republican position.

and in the meantime, weshouldn't hurt the economy even worse by shuttingdown the government. so let me just give youan example -- very specific. because of sequestration,because of the meat-cleaver cuts that have been taking placeover the course of this year, thousands of families havelost head start slots for their children. so you've had parentsall across the country who've been scramblingtrying to figure out

how can i find some decent,quality child care for my kids. now, the government shutdownmeans several thousand more are going to belosing their slots. if we vote today ortomorrow or the next day in the house of representatives to go ahead andreopen the government, at least those additionalseveral thousand people will be spared the difficultiesof trying to scramble and figure out whereyour kid is going to be

when you're tryingto go to work. but it doesn't solvethe broader problems. and if we were going tohave real negotiations, the democrats would say, let'ssolve the bigger problem -- what about all those thousandswho have been hurt by sequester? the democrats aren't makingthat demand right now. we understand there's going tohave to be some give-and-take. what we are saying is,don't hurt more people while we're trying to resolvethese differences;

let's just at least make surethat we keep the lights on while we're havingthese conversations. the press:do you support back-payfor furloughed workers? the president:excuse me? the press:do you support back-pay forfurloughed federal workers? i mean, that's howwe've always done it. roberta rampton. the press:thanks. you talked a bit about the hitto credibility around the world

that this impasse has caused. i'm wondering what you andyour administration are telling worried foreign creditors --china and japan -- who are calling and askingabout whether the united states is going to avoiddefaulting on its debt. the president:well, i won't discloseany specific conversations. but obviously my message tothe world is the united states always has paid its billsand it will do so again. but i think they're notjust looking at what i say,

they're looking atwhat congress does. and that ultimatelyis up to speaker boehner. this will not get resolved, we're not goingto calm creditors until they seespeaker boehner call up a bill that reopens thegovernment and authorizes the secretary of the treasuryto pay our bills on time. and until they see that,there's going to be a cloud over u.s. economic credibility.

but it is not one fromwhich we can't recover. i mean, we've beenthrough this before. every country -- every democracy,in particular -- has tussles over the budget, and i think most worldleaders understand it. they, themselves,have been through it if they're in a democracy. what you haven'tseen before, i think,

from the vantage point of a lotof world leaders is the notion that one party in congress mightblow the whole thing up if they don't get their way. they've never seen that before. and that does make them nervous, particularly givenwhat happened in 2011. i mean, keep in mind we'vebeen here before, right? we saw what happened in 2011. i think the assumptionwas that the americans

must have learned their lesson; that there wouldbe budget conflicts, but nobody again wouldthreaten the possibility that we would default. and when they hearmembers of the senate and members of congress saying, maybe defaultwouldn't be that bad, i'll bet thatmakes them nervous. it makes me nervous.

it should make theamerican people nervous -- because that's irresponsible. it is out of touch with reality. it is based on a flawed analysisof how our economy works. you cannot pay somebills and not others, and think somehow that the factthat you're paying some bills protects you from a lossof creditworthiness. that's not what happensin our own personal lives. i don't know why people thinkthat that's how it works

forthe united states government. the press:do you think you mighthave emergency powers that you could use afterany default situation? the president:we have used a lotof our emergency powers. jack lew has usedextraordinary measures to keep paying our billsover the last several months. but at a certain point,those emergency powers run out, and the clock is ticking. and i do worry that republicans,but also some democrats,

may think that we've got a bunchof other rabbits in our hat. there comes a point in which,if the treasury cannot hold auctions to sell treasury bills,we do not have enough money coming in to pay allour bills on time. it's very straightforward. and i know there's been somediscussion, for example, about my powers under the14th amendment to go ahead and ignore the debt ceiling law. setting aside the legalanalysis, what matters is,

is that if you starthaving a situation in which there'slegal controversy about the u.s. treasury'sauthority to issue debt, the damagewill have been done evenif that were constitutional, because peoplewouldn't be sure. it would be tied up inlitigation for a long time. that's going tomake people nervous. so a lot of the strategiesthat people have talked about --

well, the president canroll out a big coin, or he can resort to someother constitutional measure -- what people ignoreis that, ultimately, what matters iswhat do the people who are buyingtreasury bills think? and, again, i'll just boilit down in very personal terms. if you're buyinga house and you're not sure whether the sellerhas title to the house, you're going to bepretty nervous about buying it.

and at minimum,you'd want a much cheaper price to buy that housebecause you wouldn't be sure whether or not you'regoing to own it at the end. most of us would just walk away, because no matterhow much we like the house, we'd say to ourselves, the lastthing i want is to find out after i've bought itthat i don't actually own it. well, the same thing is trueif i'm buying treasury bills from the u.s. government.

and here i am sitting here -- what if there'sa supreme court case deciding thatthese aren't valid, that these aren'tvalid legal instruments obligating the u.s.government to pay me? i'm going to be stressed -- which means i maynot purchase them. and if i do purchase them, i'mgoing to ask for a big premium. so there areno magic bullets here.

there's one simpleway of doing it, and that is congressgoing ahead and voting. and the fact that right nowthere are votes, i believe, to go ahead and takethis drama off the table should at least be tested. speaker boehner keeps on saying he doesn't havethe votes for it, and what i've said is,put it on the floor, see what happens,and at minimum,

let every member ofcongress be on record. let them vote to keepthe government open or not, and they can determinewhere they stand, and defend that voteto their constituencies. and let them voteon whether or not america should pay its bills or not. and if, in fact, some ofthese folks really believe that it's not that big ofa deal, they can vote no, and that will be usefulinformation for voters to have.

and if it fails,and we do end up defaulting, i think voters shouldknow exactly who voted not to pay our billsso that they can be responsible for the consequencesthat come with it. ari shapiro. the press:thank you, mr. president. you mentioned the supreme court,and the term started today with the campaign financecase that sort of picks up where citizens united left off.

you've called citizens united "devastating tothe public interest," so i wonder if you couldweigh in on this latest case. the president:well, the latestcase would go even further than citizens united. i mean, essentially itwould say anything goes; there are no rules in termsof how to finance campaigns. there aren't a lot offunctioning democracies around the world that work this way,where you can basically have

millionaires and billionairesbankrolling whoever they want, however they want --in some cases undisclosed. and what it meansis ordinary americans are shut out of the process. and democrats aren't entirelyinnocent of this in the past. and i had to raise a lotof money for my campaign, so i -- there's nobodywho operates in politics that has perfectly cleanhands on this issue. but what is also true is thatall of us should bind ourselves

to some rules that say thepeople who vote for us should be more important than somebody who's spendinga million dollars, $10 million,or $100 million to help us get elected -- because we don't knowwhat their agendas are, we don't know whattheir interests are. and i continue to believe thatcitizens united contributed to some of the problems we'rehaving in washington right now.

you have someideological extremist who has a big bankroll and theycan entirely skew our politics. and there are a whole bunch ofmembers of congress right now who privately will tell you, i know our positionsare unreasonable, but we're scared thatif we don't go along with the tea party agenda or some particularlyextremist agenda that we'll be challengedfrom the right.

and the threatsare very explicit, and so they toe the line. and that's part of whywe've seen a breakdown of just normal, routinebusiness done here in washington on behalf ofthe american people. and all of you know it. i mean, i'm not telling youanything you don't know -- because it's very explicit. you report on it.

a big chunk of therepublican party right now are in gerrymandered districtswhere there's no competition, and those folksare much more worried about a tea party challenger than they are abouta general election where they've got to compete against a democrator go after independent votes. and in that environment, it's a lot harderfor them to compromise.

mark landler. this week, the presidentof china has visited several of the asian countriesthat you were going to visit and have had to skipbecause of the shutdown. the president: right. the press:he's also taken a big roleat the two regional summits, both of whichyour administration has made a prettybig priority of as part of thebroader asia pivot.

does china benefit fromthe chaos in washington? and then, more broadly,you've said in general that this hurts the reputationof the united states overseas. are there specific thingsthat you can point to where you alreadyhave seen some damage? and one that occursto me is the trade deal that you've tried to do in asia. the leaders today announced thatthey still want to wrap it up, but they no longer are able tosay they want to wrap it up

by the end of this year. had you been there, do youthink you could have gotten that additional push? the president:i think that's a great example, and we don't know, but itdidn't help that i wasn't there to make sure that we wentahead and closed a trade deal that would open upmarkets and create jobs for the united states, and make sure that countrieswere trading fairly with us

in the most dynamic,fastest-growing market in the world. i should have been there. but i can tell you -- because i had to apologizeto some of the host countries -- that they understoodthat the most important thing i can do for them andthe most important thing i can do for the bilateralrelationship and america's reputation is making sure thatwe reopen our government

and we don't default. so i don't think it'sgoing to do lasting damage. as i said, if we dealwith this the way we should, then folks around the worldwill attribute this to the usual messy processof american democracy, but it doesn'tdo lasting damage. in the short term,i would characterize it as missed opportunities. we continue to be theone indispensable nation.

there are countries acrossasia who have welcomed our pivot because they wantto do business with us. they admire our economy. they admire our entrepreneurs. they know that their growthis going to be contingent on working with us. they care aboutthe security environment that we've maintained -- helped maintain,and the freedom of navigation

and commerce that isso important to them. so it's not as if they'vegot other places to go. they want us to be thereand they want to work with us. but in each of these bigmeetings that we have around the world,a lot of business gets done. and in the same waythat a ceo of a company, if they want to close a deal,aren't going to do it by phone, they want to show up andlook at somebody eye-to-eye and tell them why it's importantand shake hands on a deal --

the same thing is truewith respect to world leaders. and the irony is ourteams probably do more to organize alot of these multilateral forums and set the agenda than anybody. i mean, we end up beingengaged much more than china, for example,in setting the agenda and moving this stuff forward. and so when -- it's almost like me notshowing up to my own party.

i think it createsa sense of concern on the part of other leaders. but as long as weget through this, they'll understand it andwe'll be able to, i believe, still get these deals done. the last point i'd make, though, is we can't do itevery three months. right? back in the '90s,we had a government shutdown.

that happened one time,and then after that, the republican partyand mr. gingrich realized this isn't a sensibleway to do business, that we shouldn't engagein brinksmanship like this, and then they started havinga serious conversation with president clintonabout a whole range of issues. and they got somethings that they wanted. they had to give the democrats some things thatthe democrats wanted.

but it took on a senseof normal democratic process. so here we already wentthrough this once back in 2011. and then, at the end of lastyear, right after my election, we went throughsomething similar with the so-called fiscal cliff, where republicans wouldn'tnegotiate about taxes, despite the fact that taxesactually went up anyway, even though theyrefused to negotiate. and they could actually havegotten some things from us

that they wanted ifthey had been willing to engage in normal negotiations. so we've got to stoprepeating this pattern. i know the americanpeople are tired of it. and to all the american people, i apologize that you haveto go through this stuff every three months,it seems like. and lord knows i'm tired of it. but at some point, we've gotto kind of break these habits,

and get back to the point whereeverybody understands that in negotiations thereis give and there is take, and you donot hold people hostage or engage in ransom-takingto get 100 percent of your way. and you don't suggest thatsomehow a health care bill that you don't agree withis destroying the republic, or is a grand socialist scheme. if you disagree withcertain aspects of it, tell us what you disagreewith and let's work on it.

if you're concernedabout long-term debt, that's a good thingto be concerned about, but don't pretend as ifamerica is going bankrupt at a time when the deficitshave been cut in half. that's what the americanpeople, i think, expect, is just civility, common sense,give-and-take, compromise. those aren't dirty words. there's nothing wrong with them. and i think the americanpeople understand i may --

not "i may" -- i have flaws. michelle will tell you. one of them is not thati'm unwilling to compromise. i've been willing to compromisemy entire political career. and i don't believe that i havethe answers to everything and it's my way or the highway. but i'm not going tobreach a basic principle that would weakenthe presidency, change our democracy,

and do great damageto ordinary people, just in order to go along withwhat the house republicans are talking about. the press:sir, just one follow-up -- i did ask specificallyabout china, and i'm wonderingwhether to what extent is our loss their gain. the president:i'm sure the chinese don't mindthat i'm not there right now in the sense that there areareas where we have differences

and they can presenttheir point of view and not get as much pushbackas if i were there -- although secretaryof state kerry is there, and i'm sure he'sdoing a great job. but i've also said thatour cooperation with china is not a zero-sum game. there are a lot of areaswhere the chinese and us agree. on trade, in particular, though, here is an area wherepart of what we're trying to do

is raise standardsfor, for example, intellectualproperty protection, which sometimes isa big problem in china. and if we can get a trade dealwith all the other countries in asia that says you've gotto protect people's intellectual property that will help us inour negotiations with china. richard mcgregor. the press:up here. the president:there you go, richard.

the press:could i go back to theissue of debt privatization? the press:what are your legalliabilities -- what is your legal advice? that foreign creditorsmust be paid first, particularly as it'sa sovereign credit issue -- the president: richard,you know what i'm going to do is i'm going to let jack lew, the secretaryof the treasury, make a formalpresentation on thursday

before the senate committee, because this is obviouslysensitive enough and i think people would be paying close enoughattention that details count. and i think prepared remarksfrom secretary lew on that topic would probably bemore appropriate. but as i indicated before,we plan for every contingency. so obviously,worst-case scenario, there are things thatwe will try to do.

but i will repeat: i don'tthink any option is good. steven dennis. the press:mr. president, i'm wonderingif you could talk a little bit about budget process. in the past, you've negotiatedalong with the debt ceiling with the blue dogs,for instance, in 2009, 2010 -- along with a debtceiling increase then. pay-as-you-go reform,you named a fiscal commission. the republicans today aretalking about maybe

another committee that wouldwork out our differences over the next few weeks. is that something that youcould talk about on the side, something that wouldn'tnecessarily be a concession, but something that would be aformat for getting a deal done? the president:here's the thing, steven. i know that speaker boehner hastalked about setting up some new process or some new supercommittee, or what have you. the leaders up in congress,

they can work throughwhatever processes they want. but the bottom line is eitheryou're having good-faith negotiations in which there'sgive-and-take, or you're not. now, there is alreadya process in place called the budget committees that could cometogether right now -- democrats have beenasking for 19 months to bring them together -- make a determination howmuch should the government

be spending next year. the appropriations committeescould go through the list, and here's how much we're goingto be spending for defense and here's how much we're goingto be spending for education. and that's a process that'sworked reasonably well for the last 50 years. i don't know that we needto set up a new committee for a process likethat to move forward. what has changed, or what seemsto be motivating the idea

we have to have a new processis speaker boehner, or at least some faction ofthe republicans in the house and maybe some in the senate, are holding out fora negotiation in theory, but in fact, basically,democrats give a lot of concessions to republicans,republicans don't give anything, and then that'sdubbed as compromise. and the reason that democratshave to give is because they're worried that the governmentis going to stay shut down

or the u.s. governmentis going to default. and again, you can dressit up any way you want. if that's thetheory that the republicans are going forward with,then it's not going to work. so let me just give youone specific example. i've heard at least --and i can't confirm this -- that one of the ideas of thisnew committee is you could talk about reductions indiscretionary spending; you could talk about entitlementreform and reductions

in mandatory spending;you could talk about how long you'd extend the debt ceiling; but you couldn'ttalk about closing corporate loopholes that aren'tbenefitting ordinary folks economically, and potentially,if you closed them, would allow us to pay for thingslike better education for kids. well, i don't know why democratsright now would agree to a format thattakes off the table all the things they care about,

and is confined to the thingsthat the republicans care about. so, again, i don'tknow that that's exactly what's being proposed. my simple point is this: i think democratsin the senate and the house are prepared totalk about anything. they can design whateverformats they want. what is not fair and will notresult in an actual deal is ransom-taking,or hostage-taking,

and the expectation thatdemocrats are paying ransom or providing concessionsfor the mere act of reopening the governmentor paying our bills. those are not thingsthat you do for me, and they're not thingsthat you do for the democrats. the press:but is there room here where it's notnecessarily a concession; where it is youwould negotiate what the negotiationsare going to look like?

you don't have to agreeto overturn obamacare, but you can actually negotiatewhat the talks are going to look like so everybodyis comfortable. and you know, you'vementioned yourself, this is a tough vote forall these house republicans. you're asking themto take a very tough vote for the debt ceiling. usually, people in both partieswant to have some cover, something that they canpoint to and say, hey,

i want some budgetprocess reform -- the president:which is fine -- the press:-- before i approve anothertrillion dollars in debt. the president:which is fine. and so if they want to dothat, reopen the government, extend the debt ceiling. if they can't doit for a long time, do it for the period of time in which these negotiationsare taking place.

why is it that we've gothundreds of thousands of people who aren't workingright now in order for what you justdescribed to occur? that doesn't make any sense. the small businessadministration gives out a billion dollars' worthof loans every month to small businessesall across the country. that's not happening right now. so there are smallbusinesses in every state

that are counting on a loanto get their business going, and you've got the partyof small business saying, the small businessadministration can't do it -- that's what theycall themselves. and yet, they're suffering. you've got farmers who arewaiting for loans right now. those loans cannot be processed. the republican partysays they're the party that looks out for farmers.

i happen to disagree; i thinkfarmers have done real good under my administration,but having said that, why would you keepthe government shut down and those farmers not gettingtheir loans while we're having the discussions thatyou just talked about? the republicans say they'revery concerned about drilling. they say, obama has beenrestricting oil production, despite the fact that oilproduction is at its highest levels that it's been in yearsand is continuing to zoom up.

but they say the democrats areholding back oil production in this country. well, one of the things thathappens when the government shut down is new drillingpermits aren't processed. so why would the republicans sayto the folks who are interested in drilling for oil, sorry,we can't let those things be processed until we have somenegotiations and we have some cover to do what we'resupposed to be doing anyway? that doesn't make sense.

if there's a way to solve this, it has to includereopening the government, and saying americais not going to default, it's going to pay our bills. they can attachsome process to that that gives themsome certainty that, in fact, the things they'reconcerned about will be topics of negotiation,if my word is not good enough -- but i've told themi'm happy to talk about it.

but if they want to specify allthe items that they think need to be a topic ofconversation, happy to do it. if they want to say part of thatprocess is we're going to go through line-by-line all theaspects of the president's health care plan that we don'tlike and we want the president to answer for those things,i'm happy to sit down with them for as many hours as they want. i won't let them gut a law thatis going to make sure tens of millions of peopleactually get health care,

but i'm happy to talk about it. the press:mr. president, can i askyou a question about -- the president:stephen collinson. the president:i'm just goingthrough my list, guys. talk to jay. [laughter] the press:the operations in africathis weekend suggest that the continent is now thecentral front in the campaign against terrorism,and if we're going to see

u.s. military operationsall around the continent, how does that square with yourcontention that american cannot be at war forever? the president:well, if you lookat the speech i gave at the national defense collegeseveral months ago, i outlined how i saw the shiftin terrorism around the world and what we have todo to respond to it. and part of what i said is, is that we haddecimated core al qaeda

that had been operatingprimarily between afghanistan and pakistan, but you now hadthese regional groups, some of which areexplicitly tied to al qaeda or that ideology, someof which are more localized. few of them have the abilityto project beyond their borders, but they can do a lot ofdamage inside their borders. and africa is one of the placeswhere, because, in some cases, a lack of capacity onthe part of the governments,

in some cases because it iseasier for folks to hide out in vast terrains that aresparsely populated, that you're seeing someof these groups gather. and we're going to have tocontinue to go after them. but there's a difference betweenus going after terrorists who are plotting directly todo damage to the united states, and us being involved in wars. the risks of terrorism andterrorist networks are going to continuefor some time to come.

we've got to havea long-term plan that is not just military-based; we've got to engage ina war of ideas in the region, and engage with muslimcountries and try to isolate radical elements that aredoing more damage to muslims than they're doingto anybody else. we've got to think abouteconomic development, because although there'snot a direct correlation between terrorismand the economy,

there's no doubt that ifyou've got a lot of unemployed, uneducated youngmen in societies that there's agreater likelihood that terroristrecruits are available. but where you've got activeplots and active networks, we're going to go after them. we prefer partnering withcountries where this is taking place wherever we can, and wewant to build up their capacity. but we're not goingto farm out our defense.

and i have to say, by the way,the operations that took place both in libya and somalia wereexamples of the extraordinary skill and dedication andtalent of our men and women in the armed forces. they do their jobs extremelywell, with great precision, at great risk to themselves. and i think they are pretty goodexamples for how those of us here in washingtonshould operate as well. the press:mr. president, did thecapture of mr. libi comply

with international law? the president:we know thatmr. al-libi planned and helped to execute plots thatkilled hundreds of people, a whole lot of americans. and we have strongevidence of that. and he will bebrought to justice. mark knoller. the press:mr. president, while you'rewaiting for the shutdown to end, why is it thatyou can't go along

with any of the billsthe house is passing funding the fda and fema -- where you were yesterday -- and veterans' benefitsand head start? you've got to be temptedto sign those bills and get funding tothose programs that you support. the president:of course, i'm tempted,because you'd like to think that you could solve atleast some of the problem if you couldn'tsolve all of it.

but here's the problem. what you've seen are billsthat come up where wherever republicans are feelingpolitical pressure they put a bill forward. and if there'sno political heat, if there's no television storyon it, then nothing happens. and if we do some sort ofshotgun approach like that, then you'll have some programsthat are highly visible get funded and reopened --

like national monuments -- but things that don'tget a lot of attention -- like those sba loans --not being funded. and we don't get to select whichprograms we implement or not. there are a wholebunch of things that the republicans have saidare law that we have to do. and i don't get a chance to goback and say, you know what, this cockamamie idea that thisrepublican congressman came up with i really don't like,so let's not implement that.

once you have a budgetand a government with a set of functions, you make sure thatit's all operating. we don't get to pick and choosebased on which party likes what. so that's where the budgetdiscussions take place. now, if there are some thingsthat the republicans don't like, they should argue foreliminating those programs in the budget, come up with anagreement with the democrats. maybe the democrats willagree and those things

won't be funded. but you don't do a piecemealapproach like that when you're dealing witha government shutdown. okay? the press:mr. president, wouldyou be willing -- the president:i'm going to takeone more question. and right here, you've been -- your hand persistencehas worked. the press:persistence pays off, yes.

mr. president, you've talkedabout the political dynamics that leave house republicansfeeling that they don't want to negotiate with you, theydon't want to come together. i wanted to ask youtwo things about that. looking back atthe 2011 default discussions and the budget drama,is there anything that you wish that you had donedifferently in 2011? and after this, what youcall this nonsense has ended, what do you expectthe political dynamics might --

how will they havechanged to move forward? the president:well, i think it'san interesting question. in 2011, i entered intogood-faith negotiations with john boehner. he had just won the speakership. it was at a time when, because we were stillresponding to the recession, deficits were high,people were concerned about it, and i thought it was myobligation to meet him halfway.

and so we had a wholeseries of talks. and at that point at least,nobody had any belief that people would come closeto potential default. i don't regret having enteredinto those negotiations, and we came fairly close. and whenever i see john boehnerto this day, i still say, you should have taken the dealthat i offered you back then, which would have dealt withour long-term deficit problems, would not have impededgrowth as much,

would have reallyboosted confidence. but at that time, i think houserepublicans had just taken over. they were feeling theiroats and thinking, we don't have to compromise. and we came prettyclose to default, and we saw the impact of that. i would have thought that theywould have learned the lesson from that, as i did, which iswe can't put the american people and our economy throughthat ringer again.

so that's the reasonwhy i've been very clear, we're not going to negotiatearound the debt ceiling. that has to be dealt within a reasonable fashion. and by the way, i oftenhear people say, well, in the past it has beendealt with all the time. the truth of the matter isif you look at the history, people posture about thedebt ceiling frequently, but the way the debt ceilingoften got passed was you'd stick the debt ceiling ontoa budget negotiation

once it was completed --because people figured, well, i don't want to take a bunch of tough votes tocut programs or raise taxes and then also haveto take a debt ceiling vote, let me do it all at once. but it wasn't asituation in which, what if i don'tget what i want, then i'm going tolet us default. that's what's changed.

and that's whatwe learned in 2011. and so, as a consequence, i said we're notgoing to do that again -- not just for me,but because future presidents, republican or democrat,should not be in a position where they have to choosebetween making sure the economy stays afloat andwe avoid worldwide catastrophe, or we provide concessions to one faction of oneparty in one house.

but let me tell youa lesson i did not learn. i did not learn a lessonthat we shouldn't compromise. i still think we should. i still think thereare all kinds of issues that we should be talking about, and i don't expect to get100 percent of my way. and i'm still very opento having conversations with not just the speakerbut any republican over there. go ahead.

the press:just to clarify this -- if you enter into a seriesof short-term funding bills or a debt ceiling bill, you will be back in the sameplace, presumably, with these, the same members of congress. so what has changedin the political dynamic if you do the short-term -- the president:well, i think whathas changed is they're aware of the fact that i'm notbudging when it comes

to the full faith and creditof the united states -- that that has to be dealt with; that you don't pay a ransom; you don't provide concessionsfor congress doing its job and america paying its bills. and i think mostpeople understand that. i was at a small businessthe other day and talking to a bunchof workers, and i said, when you're atthe plant and you're

in the middle of your job,do you ever say to your boss, you know what, unless i geta raise right now and more vacation pay, i'm goingto just shut down the plant -- i'm not justgoing to walk off the job, i'mgoing to break the equipment? i said, how do youthink that would go? they all thoughtthey'd be fired. and i think mostof us think that. there's nothing wrong withasking for a raise or asking

for more time off, but youcan't burn down the plant or your office if youdon't get your way. well, the samething is true here. and i think mostamericans understand that. thank you very much, everybody.