Press Briefing by Press Secretary Jay Carney and Secretary of Transportation Ray LaHood, 7/28/2011

James S. Brady Press Briefing Room

11:03 A.M. EDT

MR. CARNEY: Good morning, ladies and gentlemen. Thanks for being here for this early briefing today.

I will be here, obviously, to take your questions on all issues. I have with me today at the top of the briefing the Transportation Secretary, Ray LaHood, because while we’ve been paying attention, for obvious reasons, on one congressional stalemate, there is another one that also affects the economy and jobs, and that’s why Secretary LaHood is here to speak with you. He’ll take some questions afterwards, and then like I said, I will follow him.

And with that, I turn the podium over.

SECRETARY LaHOOD: Good morning. Since Congress failed to pass an FAA bill, nearly 4,000 FAA employees have been furloughed, and as many as 70,000 construction workers across America are out of work.

Important airport modernization projects have been shut down in every state in the country. And let me just say parenthetically, one of the highest unemployment segments in the country is in the construction area, in the building trades. And for all of my friends on Capitol Hill who give speeches every day about jobs, the importance of jobs, putting people to work, this is not the time to be laying off 70,000 construction workers. These are friends and neighbors to people who live in communities. These are people who work hard -- and we’re right smack dab in the middle of the construction season. This is not the time to be laying off 70,000 people.

I have been meeting with and talking to members of Congress from both sides of the aisle, asking them to pass another clean extension of the FAA bill, which they have done on 20 occasions. So they need to come back to the negotiating table; Congress needs to pass a clean bill so our 4,000 FAA employees -- who are without a paycheck since last Saturday -- can come back to work, these construction projects can start again, our friends and neighbors can go back to work.

I think -- if some of you have been paying attention, you know that I’ve said we have the safest and the best aviation system in the world. This is not the way to run it, to have 4,000 of our people that run the system not at their desks, not doing their work, and to have these construction projects suspended.

Transportation has always been bipartisan. I served on the House Transportation Committee for three terms. It was always bipartisan. It’s always been bipartisan. And I ask Congress in a bipartisan way to come back, pass a clean bill, finish the negotiations, and then get to a bigger FAA bill.
 
MR. CARNEY: With that, we’ll take questions.

Erica, start with you.

Q Mr. Secretary, do you have any advice to your former House GOP colleagues on dealing with the debt ceiling?

SECRETARY LaHOOD: Well, as some of you know, I’ve been in public service and politics 35 years -- 17 years as a staffer, 14 years as a member, and now two and a half years in this job.

During the time that I was a staffer, I was chief of staff for Bob Michel, who served during the time that Ronald Reagan was President and Tip O’Neill was the Speaker of the House. During the time that Tom Foley was Speaker, Bob Michel was also the Republican leader. And during the time that President Clinton was President, Bob Michel was Republican leader. That whole period of time was a very rich history and legacy of compromise.

That’s how Congress has always solved problems -- through compromise, through people working things out, through people putting aside their own agendas and their own egos, deciding what’s important for the American people.

This is a time that I think most of us that have watched politics have never seen before, because there are people in Congress who don’t like the word compromise, who don’t believe in it. That’s what we need today. We need for people to come together, set aside their own egos, a certain part of their own agenda for the American people -- to make sure we maintain the strongest economy in the world; to send a signal to the world that we can get big things done, Washington can still get big things done.

This is about continuing to have a strong economy and continuing to compromise -- and take maybe a couple chapters out of Tip O’Neill, Bob Michel, Ronald Reagan, President Clinton, people that have served in this town with distinction and gotten big things done through compromise.

MR. CARNEY: Jake.

Q Some House Republicans say that they’ve already compromised, and that’s what the Boehner bill is; it is a compromise.

SECRETARY LaHOOD: Well, I’m going to let Jay --

Q Come on. (Laughter.)

SECRETARY LaHOOD: I’m going to let Jay do his job here. I’m not here to take his job. I’m here to try and put forth a message that in one of the highest unemployment sectors in the country, where we have friends and neighbors all over the country that are out of work during the construction season -- they ought to go back to work. They shouldn’t be held hostage. These projects shouldn’t be held hostage. And we have 4,000 FAA employees -- hardworking people who come to work every day and do their jobs.

Q Can you explain what the bottleneck is on the FAA bill, from your perspective?

SECRETARY LaHOOD: Yes, certainly I can. It’s the idea that there’s a couple of provisions that could probably be worked out if they would pass a clean extension again, as they’ve done on 20 other occasions, as Congresses always have done, that could probably be worked out I think within the next 30 days.

In my discussions with people in leadership in both the Senate and House, they believe the labor issue and the Essential Air Service issue, those are probably the two big issues -- there are a few little ones -- probably could be worked out over the next 30 days. And that’s really what I’ve been saying to members of Congress: Don’t hold hostage common, ordinary citizens who want to work, who want to do construction jobs, who make their living doing that, and are FAA employees. It’s just -- it’s not the way -- it’s not really the way to run the best aviation system in the world.

Bill.

Q Mr. Secretary, without the FAA there, there’s nobody to collect the federal tax on airline tickets. So what’s happening to that money? Is it going back to customers and consumers?

SECRETARY LaHOOD: Well, I have talked to the largest aviation association here in Washington that represents all the airlines, and I have told them that I am not happy about the fact they continue to add to citizens’ ticket price -- now, these are people who are planning vacations, who are planning to fly, people who live on a budget. They’re collecting this money and it’s going to their bottom line, and I think that is not right. And I simply think it’s not fair for them to do that, and I’ve made that known to them.

I think the airlines should not be collecting this amount of money under the umbrella that it’s a tax. It’s not. They shouldn’t be collecting it, and they shouldn’t be adding it on to passengers’ price of a ticket.

Q It’s not their money. I mean, it’s theft, isn’t it? If they’re taking money that’s due the federal government and putting in their pocket?

SECRETARY LaHOOD: Well, look, Treasury is working on this and we’re working with Treasury on it. And the important point is here, passengers shouldn’t have to be paying this particular amount of money. They shouldn’t.

Dave.

Q Mr. Secretary, can you talk about the deal that’s going to be announced tomorrow between the auto companies and the administration to hike fuel-efficiency standards?

SECRETARY LaHOOD: Well, if I want to keep my job the last thing I’m going to do is talk about what the President is going to talk about tomorrow. (Laughter.)

Q Come on.

SECRETARY LaHOOD: You know, I know that maybe I don’t look very smart, but I have survived 35 years around here. Stay tuned, Dave.

Yes, sir.

Q Mr. Secretary, thank you. You are smart. You’re doing a good job.

SECRETARY LaHOOD: Oh, thank you.

Q My question is, Mr. Secretary: As far as the international partners are concerned, what are you hearing from them as far as security is concerned? And also, U.S. and India had some agreement on aviation and on obviously -- where we do stand?

SECRETARY LaHOOD: I’ll be happy to talk to you offline on this. I don’t know that there are very many other people in this room that care about India-U.S. relationships when it comes to aviation, which, by the way, is pretty good.

Anybody else on this subject?

Q Yes, on the aviation subject, sir. To what extent do you think it has been caught up in the tone and the rough and tumble of the overall debt ceiling hassle?

SECRETARY LaHOOD: You know, that’s a good question. I don’t happen to believe it has, because when I’ve talked to members of Congress, particularly those that are in leadership, this really is I think some people’s way of saying that these two issues that I mentioned, the EAS, the Essential Air Service, and the union provision, they want to get to those. They want to get them solved.

I think it can be done with a clean bill, another extension. I think it could be done very quickly with the discussions I’ve had with people in leadership in the House and Senate. And I hope that -- I really hope that will happen.

Q Given the current situation, is there any hope that your issue is going to be handled before they deal with the debt ceiling issue?

SECRETARY LaHOOD: Debt and deficit are center stage.

Q Mr. Secretary, one more on the aviation windfall. Which airlines have you talked to? And second, does -- do you or does the government have the power to order a refund?

SECRETARY LaHOOD: Under deregulation we can’t set ticket prices, okay? So we can’t do that. We’re talking with our friends and colleagues in Treasury about the way forward and how we figure out what happens with this money.

Q So there’s not a chance of a refund?

SECRETARY LaHOOD: I don’t know the answer to that. We’re trying to figure that out.

Q Okay. Which airlines did you talk to?

SECRETARY LaHOOD: Well, I’ve talked to a number of airlines, but more importantly, I’ve talked to the air transportation -- or the Aviation Transportation Association, which represents most of the airlines. But I’ve talked to some of the airlines personally about this.

Q And they have names?

SECRETARY LaHOOD: You know what their names are. (Laughter.)

Q If I could ask, as a former congressman, a Republican congressman, and before that in the Reagan era the chief of staff to the House Republican leader, could you comment on this debt limit impasse and whether you think your colleagues -- or successors in the House Republican caucus should have accepted the deal that was on the table with the President and Mr. Boehner?

SECRETARY LaHOOD: Look, I’m not going to get into that aspect of it. I’ve probably said pretty much what I want to say about this. I’m going to leave the details to Jay and others that work in government affairs to do that. I’m going to --

Q Mr. Secretary?

SECRETARY LaHOOD: Yes.

Q At what point does the FAA impasse become a public safety issue, or could it possibly?

SECRETARY LaHOOD: There is no public safety issue here. Flying is safe. Air-traffic controllers all over America went to work today. They’re guiding planes in and out of airports. Thousands of people will board planes all day today, fly all over America and all over the world. Safety is not compromised.

And, frankly, the flying public’s travel plans will not be compromised. The people that have been furloughed, the 4,000 people, are people who are working on next-generation technology research and things like that. So safety is not compromised.

Yes, ma’am.

Q Do you have an estimate on the revenue loss from this?

SECRETARY LaHOOD: In terms of the tax? Yes, it’s about -- it’s about $200 billion a month.

Q Two hundred billion dollars a month?

SECRETARY LaHOOD: Two hundred million dollars a month. All right. I’m going to restart. (Laughter.) Two hundred million dollars a week -- is that right? All right, blame Jill if I’m wrong. (Laughter.)

Let me go back to this gentleman.

Q Will that money have to be made up? Is that going to put a crimp in financing for future aviation projects? I mean, that’s a fair amount of money you’ll be losing.

SECRETARY LaHOOD: It’s -- you know what it is? It’s real money to the treasury. For all the talk around here and debt and deficit, that money is being lost to the treasury. And we’re trying to figure out if it can be made up or not. So for people who really care about debt and deficit, pass a clean bill, let’s get back on track, let’s get our workers back to work, let’s get construction projects going again, and let’s start collecting the tax that goes into the federal treasury.

That it, Jay? Look, I know you want me to stay up here a lot longer than -- (laughter.)

MR. CARNEY: I am so happy you’re here.

SECRETARY LaHOOD: Yes, I know. (Laughter.) There’s two reasons for me to be here -- so he can relax a little bit -- okay, you get the last question.

Q Thank you. I know you said you’re talking to Treasury. Is there any way to get -- retroactively get the money back?

SECRETARY LaHOOD: Well, that’s what we’re talking to Treasury about. We’re trying to figure this out.

This is complicated and we want to -- first of all, we want to do right by passengers. That’s number one. That’s why I’ve been talking to the airlines and to the ATA. And secondly, we want to make sure, legally, where this takes us, because a lot of money is being lost to the treasury.

Thank you all very much.

Q Thank you.

MR. CARNEY: Okay. Just want to be clear for Jackie that the Secretary did address your question, so you can look for that answer.

And with that, we’ll get back to other topics, I assume.

Erica.

Q Plouffe said today that “There’s an easy compromise here.” Can you describe what that looks like?

MR. CARNEY: The senator -- the bill that Senator Reid has put forward cuts spending significantly -- cuts spending significantly more than the measure that’s currently in the House. It also sets up a process, as the measure in the House does, to create a committee in Congress that would address the issues that would be lost in this if we can’t get a grand bargain at this moment, which are the tough issues of tax reform and entitlement reform, and it would create a mechanism by which that committee would produce a product that would have fast-track status and an up or down vote.

And it would be -- it is in the interest of all parties, and certainly this President, that Congress does take action. In fact, the committee, if it’s set up through this mechanism, could use, and should use, that as a starting point -- a product that will get them very far down the road if they’re looking to find a balanced approach towards further deficit reduction through looking at entitlement spending and spending in the tax code. And that’s the plan and the compromise that was close to fruition, that was being worked on for so long by the Speaker of the House, John Boehner, and the President of the United States -- the Obama-Boehner plan, if you will.

That is a product that provides a lot of guideposts to how you get to a bipartisan compromise on those tough issues.

So, really, if we can’t get that grand bargain -- let me start. We still believe that’s possible, that deal is on the table. If there is the political will to make it happen, it could happen before August 2nd. If that isn’t possible before August 2nd, there are certainly -- what a compromise looks like is pretty clear: significant deficit reduction, a mechanism by which Congress would take on the tough issues of tax reform and entitlement reform, and a lifting of the debt ceiling beyond -- into 2013, so that we do not have the cloud of uncertainty that is hanging over our economy right now and getting darker and stormier as every day passes for another three months, four months, five months, six months, 10 months.

We have to -- our primary objective here has to be to protect the economy and protect the American people from economic harm. So if everyone has that objective in mind as we move forward, compromise is pretty easy.

Q And could you clarify, yesterday you said that Treasury would detail prior to August 2nd who would get paid, who not, in event of a default.

MR. CARNEY: Well, let me -- I appreciate the question and I want to clarify what I said. I did -- I think Mark was sitting over there in the radio seat and he asked a lot of questions, and I said, “well said,” and I implied things -- levels of specifics that I did not mean to. What I can tell you is that as we get closer to that date the Treasury Department will explain how it will manage a situation that is essentially an impossible situation. I refer you to Treasury for how that will look, but I think they will explain that when that time comes. I don’t have any more specifics than that.

Caren.

Q Just to follow up on that, are you saying that you will prioritize the debt if you have to?

MR. CARNEY: Look, I am saying that -- two things: First, we continue to believe and remain optimistic that Congress will come to its senses, that cooler heads will prevail, and that a compromise will be achieved. As I just spelled out, it really isn’t that complicated at this point. What we need to do is get beyond voting on dead-on-arrival measures that aren’t going to become law when we have so few days left to reach a compromise. We need to get that kind of political theater out of our system and get to work on something that can actually pass both houses with bipartisan support and be signed by the President. We believe that’s going to happen.

It is a matter of due diligence and responsible governance that Treasury will -- if we approach that date, as we get closer to that date -- explain how it would manage a situation that would be created by the failure of Congress to act, and would create a situation where for the first time in our history we have lost our borrowing authority and risk default. I leave it to them to -- and to them, and at that time to give further details on that process.

Q You just said you think there will ultimately be a deal. You’ve been saying that all week. Do you think that -- are you equally as confident that a downgrade of the credit rating can be avoided?

MR. CARNEY: Well, here’s what I know, is that we control -- we in Washington -- and in particular in this case Congress -- controls our fate as regards whether or not we will lift the debt ceiling and allow the United States to continue to pay its bills and meet its obligations.

The rating agencies are obviously independent and it is up to them. What we can do is take actions that make clear that the United States is still the gold standard when it comes to investments; that it is the safest of safe harbors, as it has been for 100 years or more, and -- because Washington functions and can compromise and can do the right thing by the economy. We do that and we think that will help enormously in terms of how international investors look at the United States and our treasuries as a potential place to put their money.

Q What about staying in contact with the rating agencies? Is that something that you’re doing on a daily basis at this point?

MR. CARNEY: I don’t really have any information on that. I would refer you to Treasury Department for that. I think Treasury is the right place to answer that question. I don’t know of any contact that we have here.

Jake.

Q Republicans in the House say that they’re voting for a compromise; Speaker Boehner’s bill is a compromise.

MR. CARNEY: Then what is the compromise that is inside of it?

Q Well, I don’t speak for them --

MR. CARNEY: Right.

Q -- but I can tell you that they say that it doesn’t cut as much as they want, it raises the debt ceiling. It does a number of things that they’re not in favor of. They would like deeper cuts. And some members of Congress obviously don’t want to raise the debt ceiling at all.

So if that is their attitude, why are you confident that Speaker Boehner can compromise any more? The President has spoken extensively about the difficulty Boehner has with his caucus.

MR. CARNEY: We’re confident because, Jake, we believe that the American people have made clear that they want a compromise. They are so frustrated by what they see as dysfunction here, as unnecessary fighting over issues that could be and should be easily resolved. They want to see Washington work on the problems that affect them directly. They don’t want to see Washington, because of partisan and political posturing, do things that actually hurt them economically.

And there is no question that if Congress does not compromise and does not act, that allowing the United States to default for the first time in its history would have severe economic consequences and would -- everyone, every family that owns a home and has a mortgage would be affected. Every American who has a car and a car payment would be affected; a student loan, a credit card. And that’s just the beginning of the terrible consequences for individuals.

Q All of those facts have been true for months.

MR. CARNEY: That is -- well, and Congress has a way of waiting until the last minute to do the right thing. We remain confident that it will.

Now, look, I mean, they’ve said a lot of other things. If they think this is compromise, they’ve said, as we’ve heard today, “Let’s stick it to him,” or let’s -- the Speaker of the House said yesterday that his alleged bipartisan compromise bill is hated by the President, hated by the Minority Leader in the House and hated by the Majority Leader in the Senate. I think that demonstrates their view on whether or not this is a compromise. The truth of the matter is that it’s not. And they’ve been quite clear about it.

Look, politics is part of this town. We understand that. We participate in it. And some of these things happen because they have to happen, part of the political process. But we are now at a moment where those Americans who were elected to represent people in their home districts and states need to decide about what is the greater good here. Is it holding out to get exactly what you want -- holding out for a bill, by the way, that creates a mechanism that would force the adoption of draconian cuts more severe than are in the Ryan budget that was rejected already by Congress and overwhelmingly opposed by the American people, or is it a compromise where nobody gets everything they want, but the cloud of uncertainty on our economy is lifted and we make some significant cuts in our deficit and set up a mechanism to do even more. I think that is the compromise that people are looking for, and I believe, we believe, the President believes, that in the end, that’s the compromise we will get.

Q Isn’t the Boehner bill better than nothing?

MR. CARNEY: We don’t believe that nothing is -- that’s a false choice. Nothing is not what will be the alternative here. Compromise will be the alternative. Everyone in this town -- rather, everyone who was elected in this town is on the hook for the economy. Everyone will have to answer to his or her constituents about what they did. Where were they when decisions were made about whether or not to allow the United States to default, whether or not to allow everybody’s interest rates to go up, whether or not to allow a situation that would severely impact the ability of the economy to create jobs?

And I think, in the end, enough members of Congress of both parties will say, we have to do the right thing here even if it’s not the ideal thing, and they will get it done.

Q Is there any negotiation going on specifically between Vice President Biden and the Senate Republican leader about what happens when and if the Senate rejects the Boehner bill? What happens then?

MR. CARNEY: Well, the Senate will reject the Boehner bill, but the -- as has been made clear by not just Democrats but a number of Republicans who reject the Boehner bill in the Senate.

Q Because it’s too liberal.

MR. CARNEY: They reject it, okay? So there’s no question that this bill is a political act that has no life beyond its current existence in the House.

We are having conversations at every level. I’m not going to detail the individuals who are talking to members, but you can be sure that members of the President’s team are continuing the conversations that we have been having for weeks -- and months, even. And that goes on every day.

Q But there is a plan?

MR. CARNEY: Look, there are a variety of ways to achieve a compromise here. And we are obviously, as are members and leaders of Congress, engaged in discussions about what those plans look like and what the best way forward will be as the clock clicks down here -- ticks down. Sorry.

Yes, Dan.

Q Thank you. Plouffe this morning, and also Dan Pfeiffer tweeting, were talking about the Boehner bill and how it would mean dealing with the debt ceiling over the Christmas holiday season, which is an important time for the economy. Is this new narrative then suggesting that the administration would embrace some sort of two-stage plan if it’s past the holiday season?

MR. CARNEY: No. We have always said that we need to extend this into 2013. Now, there are mechanisms -- Mitch McConnell, speaking of the Republican Senate leader, had a proposal that would have created cycles of lifting the debt ceiling but it would have made clear -- the whole idea of his proposal was to ensure that the debt ceiling -- there would be no doubt that the debt ceiling would continue to be raised in order for the United States to pay its bills into 2013.

So there are different ways to do this. Our objection is to -- any proposal that puts us through this three-ring circus again in any short period of time -- because it’s already had significant negative impact on the economy -- it will only have even more and more severe negative impact on the economy. The reason why we talk about the holiday season is because, as constructed now, the measure that the Speaker of the House has put forward would almost certainly require this -- all of us to go through this again before the end of the year, in the most important economic season in the country and at a time when people don’t want to worry about whether or not their interest rates are going to go up, their mortgage payments and their car payments and their student loan bills and their credit card payments, especially as they’re buying gifts for the holidays.

If we care about the economy, how could that possibly be the answer? It’s not. So we are opposed to that, for economic reasons -- not political reasons, for economic reasons.

Because one thing that’s clear, Dan, is -- on the suggestion that this is about politics -- I don’t think anybody in this room who’s looked at a poll could argue with the idea that we’re winning this argument on the merits as a political matter. But you know what, the President is not here to win political arguments. He’s here to make sure that the economy is protected and the American people are protected. This is too serious a matter. We’ve got to get this done and do it in a way that does not further harm the economy.

Q So you’re admitting that you’re losing the argument?

MR. CARNEY: No, I just -- didn’t I just say we were winning it? That was the verb I used, yes.

Q Did you say -- okay, sorry. (Laughter.) Okay. When you talk about these conversations --

MR. CARNEY: I’m tired, but not that tired. (Laughter.)

Q When you talk about these conversations that are ongoing, are we talking about negotiations here, or just talks, just back-and-forth phone calls? Anything serious being negotiated behind the scenes?

MR. CARNEY: I think every conversation we have about this issue with every member of Congress and every key staffer in Congress is serious. And it’s about -- and when it’s about this issue it is obviously part of negotiations. But I don’t have any more to tell you about specific ideas being traded or plans or proposals, just that you can be sure that we continue to have conversations. Even as the House goes through this exercise that will not bring us any closer to compromise, because time is so tight we are obviously continuing to have conversations with folks on the Hill.

Norah.

Q Jay, will we hear from the President after the vote is taken in the House?

MR. CARNEY: I don’t have any scheduling announcements to make about the President. And as you know, in this process we have -- the President has come before you many times both to take your questions and to make statements, and on the occasion Monday night to speak to the nation directly during primetime. So anything is possible, but I don’t have any announcements to make.

Q Does the President still want to be part of the debate, or has he pretty much said now it’s Congress’s --

MR. CARNEY: No, I think that -- first of all, he has been very visible in this, calling meetings, coming out and talking to you. The fact that he’s not standing here in front of you I can assure you does not mean he’s not intensely engaged in this debate, because of his responsibilities, because of what he thinks is most important, which is that we ensure that we don’t do anything that hurts the economy, that affects growth and job creation. So he is absolutely engaged.

Q What does the President and officials here believe that they’ve achieved in this debt ceiling negotiations? The current bill that’s being considered in the House and may become the vehicle in the Senate does not include tax revenues, it does not include the size of cuts that he’d like, does not include the types of agreements on long-term entitlement changes. So what does the administration feel it’s achieved?

MR. CARNEY: Well, we certainly haven’t gotten an end result. The President’s primary goal here is that, at the very least -- and he said this several weeks ago -- we make sure that we lift the cloud that’s hanging over our economy and ensure that the United States does not default.

There was a real and serious opportunity to do something far more significant. And as most of you here know, there was an immense amount of detail attached to the proposals that the President and the Speaker were passing back and forth.

There really is an opportunity here -- if there is political will, there is a real opportunity here to do something significant -- politically hard, but significant -- and politically hard for Democrats and Republicans. And I know that’s what the American people want and expect.

So that -- however this short-term process ends, if you will, before August 2nd, whatever compromise we reach to life that cloud, to make sure that we’re locking in some significant deficit reduction, this conversation will continue, because what those -- in spite of the fact that the Speaker walked away from the negotiations twice, they did outline together real areas of potential compromise for doing something significant, for tackling our deficits and debt in a way that would strengthen our economy, put our fiscal house in order, strengthen our entitlement programs, simplify our tax code -- a lot of really hard, good things. And the President will keep fighting to do that.

Q You’ve used the metaphor before about trains heading into the station. It seems like the only train heading into the station right now is the Boehner bill.

MR. CARNEY: Well, that’s absolutely false, because there is a -- the Senate Majority Leader has a bill that significantly cuts deficits more, reduces spending more -- you’re right, it doesn’t include tax increases or any revenues in it up front. And if you were a Republican, you might say, well, gosh, that looks like a compromise to me in my direction. The size of the cuts, you might say, well, gosh, that’s a compromise. The Democrats have moved towards us on this.

And the fact that it allows for this dollar-for-dollar requirement that is completely confected, but has created a hostage situation in terms of our economy, it even does that. You might, if you were reasonable, say -- as a Republican say, you know what, I didn’t get everything I wanted out of this but I got a lot, and it’s the right thing to do for the economy.

Look, what I know about the Speaker’s proposal in the House right now is that there are already, I believe, 55, 56, 57, 58 senators -- Democrats and Republicans -- who oppose it. It ain’t going anywhere in the United States Senate. So we need to start doing things that actually can pass both houses and be signed into law.

Q So on that, is one of the trains heading into the station -- I just was surprised to hear you talk about the grand bargain again -- that that’s now back on the table?

MR. CARNEY: It’s never been off the table. Well, no, it’s a fair question. It’s never been off the table.

Q The President hasn’t spoken to the Speaker in several days.

MR. CARNEY: How do you know?

Q Has he?

MR. CARNEY: I’m not going to detail conversations or name individuals. All I’m saying is the President was at the table, the potential agreement was on the table, the grand bargain, and the Speaker walked away from the table over an issue that can be resolved quite easily.

If the political will is there, we can move back to those negotiations. If that isn’t possible in the next five days, then there are ways that we can resolve this issue in a fair compromise that does the keys things, which is lock in significant cuts and lift the cloud over our economy and ensure that we’re not playing in this three-ring circus for the next six months.

Q This will just be a stab and then I’ll let others have a chance. But are you just raising that just sort of as a Hail Mary pass, or -- that there’s -- could you give us any indication that that’s really any -- alive at all?

MR. CARNEY: Well, look, I think I’ve indicated, and I will say it explicitly, that the chances aren’t great that we end up between now and August 2nd with a sweeping grand compromise between the Republicans and Democrats that reduces the deficit $3 trillion to $4 trillion over 10 years, includes balance between entitlement reform and tax reform. That’s not likely, but it’s available if the political will is there.

In the short term, there are other options to do what we need to do at the bare minimum and then we can return in a serious way to tax reform and entitlement reform.

Mr. Henry.

Q Thank you, Jay. I want to follow on Jake, because when he asked you whether the Boehner bill is better than nothing you seemed to indicate it’s not better than nothing. So I want to know what is the President willing to put on the table in these final hours if we’re really in such a desperate situation --

MR. CARNEY: Well, I want to be --

Q -- will he give on spending cuts? Will he give on having a debt ceiling vote early next year? What is he willing to put on the table now?

MR. CARNEY: Well, I appreciate the question. Absent a willingness to do something big and historic on the part of the Speaker and other Republicans, our bill is -- we have indicated pretty strongly our support for Senator Reid’s bill. And what is he willing to do? He’s willing to take the cuts put forward in Senator -- Speaker Boehner’s bill and increase them dramatically, which is what is in the Speaker’s -- in the Senate Majority Leader’s bill.

He’s willing to allow for a mechanism, which he thinks is very important, that if we can’t get the grand bargain now, that would make it a time-specific period where this committee would consider these options. He will hand over the reams of paper to that committee that could form the basis of serious entitlement reform and tax reform in a bipartisan way, and certainly is willing to consider measures that are enforcement mechanisms to move that process forward.

What he is not willing to do is allow this obviously damaging situation -- damaging to our economy -- continue. People have asked -- and I can’t remember if it was you or others -- about a previous vote; the fact that under previous Presidents there have been numerous votes to raise the debt ceiling. And the fact is, while these votes were often unpleasant for Congress they were routine. And we never had a situation like this where -- there were sometimes confrontations over this, and I read from the letter from President Reagan -- but the overwhelming number of times is the -- Congress acted because this was not a question. There wasn’t this one-for-one thing. There wasn’t the question that I am going to blow up the economy, if you will, if you don’t do what I want. It’s just crazy.

Q But what I hear you saying is he’s still not happy with the Boehner bill, you want the Reid bill. But if the Reid bill is not able to get through the House and all you have to sign is some version of the Boehner bill, are you now saying that he’s still willing to --

MR. CARNEY: But the Boehner bill won’t --

Q -- hold on, but he’s still willing to veto it, and basically all these awful consequences you’ve laid out -- maybe a stock market crash, all these other things -- he’s willing to let all that happen --

MR. CARNEY: Well, I understand one of the things that’s come out of the House conference is this desire to stand firm and then stick the President with default, I think is one quote that came out of there, which is really incredibly juvenile, right? Is this the game that the idea here is who can be blamed for doing serious harm for our economy? Shouldn’t the idea be, what can we do to compromise to make sure that doesn’t happen?

First of all, the bill being considered in the House cannot be an option because it will not pass the Senate, so it’s dead on arrival.

Q But you won’t know that until it goes to the Senate floor.

MR. CARNEY: Well, and you don’t know that it can’t pass the House before Senator Reid’s measure is voted on. And you don’t know that, until the votes happen, that it won’t emerge as a viable option.

Q This weekend, Boehner may be the last thing standing.
 
MR. CARNEY: Well, a lot of things may happen.

Q So if it’s Boehner bill or default, you’ll go default.

MR. CARNEY: Look, we’ve made clear how we feel about the Boehner bill, the Speaker Boehner bill, because it is incredibly bad for the economy to have this kind of circus to go on in Washington with folks saying that we’re going to force default; we will not let the United States pay its bills unless you do what we want, unless you enact spending cuts that were rejected already that are more draconian than are in the Ryan bill that would do significant damage to Social Security and Medicare; force incredible cuts in education and clean energy programs -- all these sorts of things, all those things that nobody -- nothing close to a majority supported and certainly not in the country. Otherwise, we’ll just default. That’s not a mechanism that is good for us, good for the economy, good for the American people. So that’s what we oppose.

Beyond that, there are a lot of ways to get to compromise here and that is what the American people, I think, really want us to do is to compromise, not stick it to anybody, not score political victories and see who can be blamed for the economic damage that would be done by the fight here. People want these fights to result in -- they’re happy to have -- because they vote every two years, every four years for President and obviously people feel strongly that they send representatives to Congress with points of view and they want those points of view to be expressed and to guide votes. But in the end, they want the fights to result in good things, not bad things.

Q Last thing, in the 2008 campaign as a candidate, the President said if he’s elected, he’d put the health care negotiations on C-SPAN. Didn’t happen, but he got the health care reform through. And he later told “60 Minutes” that he regretted it. He said, “There’s a price to that. People then felt like what’s going on behind closed doors isn’t so good for us. I think it hurt us politically.”

The last couple of days you seem to be arguing that it’s better to do these things behind closed doors, because if it’s all public, interest groups are going to blow it up, right? So do you have any regrets now that we’re at this precipice that -- the President has put some details on the table, but if you had put more of the details on the table earlier, you might be further along in this process because it would have been more transparent?

MR. CARNEY: Well, I appreciate the question. And the answer is no, because if the President had gone into a room and said, here’s my bipartisan compromise, guess who would not have been in the room with him? A Republican leader, okay? And his interest in the end was to sit down with the Speaker of the House and other Republican leaders, Majority Leader Cantor as well, and try to work out a deal -- and understanding that this was politically hard and that the only kind of compromise you could achieve would be one that was reached between the leaders and then presented to members of Congress of both parties to evaluate. And then those who were the architects of the deal could say, here’s why we think it is not perfect, but on balance the right thing to do.

And you’re a veteran Washington reporter. There are a lot of you here. And I think we all understand how that works, that if you lay out a proposal that’s politically -- by yourself that’s extremely politically hard for your party, whether you’re Republican or Democrat, it’s like putting a clay pigeon in the air. It’s ensuring its defeat. And that’s -- and maybe that’s a sad statement, perhaps, about how Washington works, but it’s an incredibly realistic statement about how Washington works.

And the fact of the matter now, Ed -- and you and I have talked about this and others -- is there is no plan that has been offered, certainly in the last several months, about which more detail is known or has been specified than the Obama-Boehner plan, okay, in terms of the cuts in domestic spending, both defense and non-defense discretionary; the savings coming out of entitlements programs, including Medicare, Medicaid and Social Security; the kind of tax reform that was envisioned and the mechanisms by which tax revenue would be a hard thing for Republicans to accept but was part of the deal -- that would be $800 billion, that would be part of this proposal.

Everybody knows these details. There is -- and it’s not that people are hiding the details of the Boehner plan or the Reid plan, it’s just there’s a lot less to them than the plan that was worked on by the President and the Speaker of the House, and now, in the aftermath, the details of which are very well known by so many people.

Mike.

Q You say everybody is on the hook for how they behave in their votes on the economy and on this plan. Does default inevitably arise if the debt ceiling is not lifted?

MR. CARNEY: What happens if the debt ceiling is not lifted is that we lose our borrowing authority.

Q But that’s different from default.

MR. CARNEY: Correct. And we’ve been through this -- I will at some point refer you to the transcript yesterday. But what happens then is that we no longer have the ability to borrow money, but we have bills coming due and a limited amount of cash in our pockets. Even as money flows in -- there’s no question because revenue flows in -- it will not even come close to being enough to pay our bills. And that leads to a process of default. How quick that is depends on a lot of different factors, and I refer you to Treasury.

But this is not --the moment that we send the signal that the United States government has ceased -- no longer has the ability to borrow money but has bills that, for every dollar we have in a bill we only have 60 cents to pay, you’ve created essentially a crisis situation -- what we’ve described as an impossible situation -- that leads to horrendous choices about how we go about paying our bills and making choices about which bills to pay and which not.

Q I’m going to follow up -- in your answer to Erica, I thought it was interesting the way you phrased it. Last week or maybe in the week --

MR. CARNEY: If it was interesting it was probably unintentional. (Laughter.)

Q Last week or the week before you indicated that if they’re close to compromise, if it’s a matter of crossing the t’s, dotting the i’s, then the President would go along with a short-term extension and not let process get in the way of an agreement. And then you said that the basis of a compromise is already there. Are we at the point where the President would agree to a short-term extension beyond August 2nd? And what -- if not, what is the threshold?

MR. CARNEY: We are not at that point. We are not at that point. The fact is there is -- what a compromise would look like, if you’re lowering your sights and accepting that you can’t get a grand bargain, is clear, and it requires us to get through our system the votes on bills that can’t pass, and then look at what can pass in a bipartisan way through the House and the Senate on the pretty simple measures that are out there -- that would involve, basically, targets for -- real numbers, but targets, unspecified discretionary spending cuts, and mechanisms to create a committee to allow for, hopefully, further reductions through entitlement reform and tax reform.

And we remain confident that as these hours churn on and the days go by that we will get to that point and that compromise will be reached. But it is -- we are not the only actor in this play and we need to make sure that others understand the stakes and are willing to reach that compromise. We’re confident they will.

Q Okay. And finally, you say this is a matter of economics, not politics; you’re wanting to avoid another vote on raising the debt limit around Christmas or whenever it is that the Boehner plan would necessitate a vote. But one of the agreements that’s been on the table in virtually every compromise or every plan out there is for this super committee to come up with a way to handle entitlements and overhaul -- a comprehensive overhaul of the tax code by a date certain. That’s no garden party right there. I mean, that would be an intense debate around the same time that would speak to the government’s ability, much like the debate we’re having now, to handle debt and tell the world and the rating agencies and the markets and everybody else --

MR. CARNEY: No question. And we would hope that a bipartisan consensus and majority would be created out of that process to do something big and historic. It would be hard --

Q As wrenching as everything we’re going through now?

MR. CARNEY: No, no, no, not as wrenching as the potential for default for the first time in our history. And that is the key. We cannot link the successful passage of further spending reductions through that process to raising the debt ceiling again, precisely for the reason that you just enumerated -- the reasons you just enumerated. We cannot hold the American economy hostage to that process.

Members of Congress were sent here to make hard decisions and get things done, right? And they should be able to do that. And, look, we are open to, and have always been open to -- and this was also part of some of the discussions that the President had -- to mechanisms, enforcement mechanism, to force Congress, whether it’s through a committee or other means, to act on measures that would create more deficit reduction -- measures -- entitlement reform and tax reform being the toughest ones. We are very much in favor of that because we want the kind of Damocles sword hanging over Congress to force it to make a decision and act.

What that enforcement mechanism cannot and -- should not and cannot be is if you don’t do this we won’t extend the borrowing authority of the United States, again -- so we go through this whole process again with all the resulting damage done to the economy, the uncertainty it creates -- uncertainty, we’ve been told, and we agree, by so many people from so many political persuasions, is the number one thing that affects -- that dampens economic growth or decisions made by private businesses about how are they going to invest and the kind of -- how they’re going to hire.

There is nothing comparable to the kind of uncertainty that this has created. So let’s get rid of it and move on.

Q Can I just follow?

MR. CARNEY: Let me get around here.

Q Two quick ones.

MR. CARNEY: Yes.

Q On the prioritization, isn’t it too late to wait until Monday for people to understand really -- I mean, enough time for people who get Social Security checks and veteran checks to know --

MR. CARNEY: I don’t -- I have exhausted my ability to talk about that. I just refer you to Treasury.

Q I know you don’t have the answer about what is going to be prioritized. But isn’t just the fact that we may not know until Monday what’s going --

MR. CARNEY: Again, I’d just refer you to the Treasury Department for that.

Q Okay. And then on the grand bargain real quick, you had said that -- even today and also last week -- that this is easily solvable. Can you just tease out what you mean by the fact that it’s easily solvable?

MR. CARNEY: The differences that -- because of the serious and good-faith work that was done, the differences that remain on the table could be resolved. And what the President I believe said to you from here on Friday is that he never issued any ultimatums. If there was something on the table that was unlivable then we can work it out. And that was true -- that’s $400 billion that we’re talking about. And that was certainly true with the last-minute insertion in this process, going back to triggers, of, oh, let’s have a trigger of -- use the individual mandate as a trigger -- if Congress doesn’t do that, then we’ll just remove the individual mandate.

And the hypocrisy of that, besides being obviously political, is that that actually increases the deficit, right, because as CBO has scored, the individual mandate reduces spending, reduces the deficit.

But these were not -- these were things that we could talk about. Okay, you can’t live with this? We can’t live with this? Let’s -- we have done so much negotiating here and come so close, let’s get to the end here, and we can do that. And what happened is there was not a willingness to do that.

Q So you’re willing to take the $400 billion --

MR. CARNEY: I’m not here to negotiate the specifics here, but I think I’ve made pretty clear that we are willing to talk about that.

I’ve got about two more minutes because I’ve got to go see the boss.

Q Following up on a question you said you’d check into yesterday -- speaking of the boss. Has he consulted with other Presidents who have faced this same thing?

MR. CARNEY: You know, I apologize, I did not get an answer to that question. And I’ll see --

Q Can you post it?

MR. CARNEY: Yes.

Q Thanks.

Q A quick one. The President said the other night the whole world is watching. There are many concerns abroad, Jay. Why is the President not viewing this as a national security issue, basically take it into his own hands and stop the political wrangling once and for all?

MR. CARNEY: Because Congress has the authority to raise the debt ceiling.

Q But he has plenty of authority himself, does he not?

MR. CARNEY: Well, he certainly does. He’s President of the United States. But the fact is that the -- it is Congress that has to act to ensure that Congress pays its bills -- or that the bills that Congress ran up are paid. So that’s the process. That’s the country we live in.

This is my last one.

Q One quick one. Once the House votes, why doesn’t the President call everybody back here and get them back to the table?

MR. CARNEY: I don’t have any scheduling announcements to make, but thanks for asking. (Laughter.)

See you.

END
11:57 A.M. EDT