1:38 P.M. EDT

MR. GIBBS:  Good afternoon, guys.  As we get started here today we want to make a quick announcement here on a comprehensive global health strategy.

President Obama believes that it is in keeping with America's values and our history of compassion to lead an effort to solve some of the most serious problems facing the world's poorest people.  Already, American leadership, sparked in large part by President George W. Bush and a bipartisan majority in Congress, has helped to save millions of lives from HIV/AIDS, malaria and tuberculosis.

Yet even with that monumental progress, 26,000 children around the world die every day from extreme poverty and preventable diseases.  In response, the President's 2010 budget begins to focus attention on broader global health changes, including child and maternal health, family planning, and neglected tropical diseases, with cost-effective intervention.  It also provides robust funding for HIV/AIDS.  The initiative adopts a more integrative approach to fighting diseases, improving health and strengthening health systems.

And joining us today to make this announcement is Jack Lew, the Deputy Secretary of State, and I'll turn it over to him.

DEPUTY SECRETARY LEW:  Thank you, Robert.  The President's global health initiative is a critical component of our foreign policy, and it's a key element of what we mean when we talk about smart power.

As the United States continues to lead on global health -- global HIV/AIDS, on tuberculosis, on malaria -- we now have the opportunity to take an extraordinary step to save the lives of more women, children and families in the developing world.  We have the opportunity to cost-effectively contribute to political stability in a way that enhances our national security, while advancing our core humanitarian values.

At a time when few believed that large-scale AIDS treatment could be brought to the developing world, something was done.  A bold approach under President Bush, PEPFAR -- the President's Emergency Plan for AIDS Relief -- now provides lifesaving treatment for over 2 million people.  That's up from just 50,000 six years ago.  Dramatic gains have also been achieved under the Malaria Initiative, which in its third year alone has already reached more than 32 million people in 15 African countries with highly effective malaria interventions.  We are here today to build on these bipartisan accomplishments over the past few years. 

The administration will release its budget this week, and in the area of global health we're going to be investing $63 billion in an integrated approach over six years to address some of the biggest global health challenges.  In addition to continuing the fight against HIV/AIDS, malaria and tuberculosis, our budget will increase resources for maternal and child health, family planning, and neglected tropical diseases.  This is an example of what we can do when we invest in smart power through development and diplomacy.

Some of the health issues that have had the most negative impact on quality and length of life are those which we already have the knowledge and tools to eliminate.  Research shows that a handful of neglected diseases could be eliminated with relatively modest resources and a sustained commitment.  Basic obstetric care can exponentially reduce the number of mothers and children who die in child birth.  The most basic health interventions for things like anti-diarrheal disease can dramatically decrease the mortality of children under five.

We need to harness the energy and focus that has made such a difference in addressing HIV/AIDS, malaria and TB to tackle this broader range of health care challenges.  In many parts of the world the United States has responded, often at high cost, to situations of conflict that result from the cycle of poverty and disease.  As Secretary Clinton has often said, disease and poor health are both a cause and consequence of poverty.  Our investment today in building partnerships to share our knowledge and expertise in scaling up the simple solutions that can save many millions of lives, and in laying the foundations of basic and preventing health care are all ways in which we seek to address problems today, to avert costly crises tomorrow.

Our announcement today exemplifies a strategy we're bringing to bear across our foreign aid programs.  Even as we address crises in regions with conflict, we need to make the investments necessary to prevent such crises from occurring in the future.  We are ramping up efforts to fight poverty, food insecurity, and disease, with solutions that will leave behind the tools to sustain long-term progress.  The State Department looks forward to leading an effort, working closely with other agencies and with our partners in and outside of government and with other nations, working closely with other agencies like USAID, PEPFAR, and the Millennium Challenge Corporation, to develop a coordinated approach so this global health initiative can be implemented upon enactment of the 2010 budget. 

Thank you. 

MR. GIBBS:  Questions for Jack on the global --

Q    The President, at the closing press conference after the Summit of the Americas, talked about being taken aback by all of the comments that other leaders made to him about what Cuba had done to sort of export health care in Latin America.  And I know this is directed more about -- having to do with combating these diseases, but is this going to at all touch on that sort of diplomatic issue where -- it sounded like the President was admitting Cuba had outmaneuvered us on the diplomatic front in Latin America and that's what they had so much support.

DEPUTY SECRETARY LEW:  I think more broadly, when we talk about development and diplomacy, we mean the United States needs to be affirmatively active dealing with some of the root causes of instability in so many poor countries.

If people can't provide for the basic needs of their family, it's a basic -- it's a dangerous situation.  This is an area where we know we can do more, we know we can do better, we know we need to coordinate within the government of the United States. There are many big players out there in the not-for-profit world that badly want to coordinate with the government of the United States and we have many allies around the world whose development programs are aimed in this direction and want to work with us.  It's part of working with the world community on a public and private basis to address a problem that we could never address all by ourselves, that we need to work with our partners on.

Q    Is this something you've seen where Cuba seems to have sort of a little better --

DEPUTY SECRETARY LEW:  I can't speak with specificity to Cuba, but there are examples of countries that have had effective programs.  We've had effective programs.  What we need to do is build on models that, frankly, are not that complicated; we know how to make a lot of these things work.

Q    Sixty-three billion [dollars] is a lot of money.  Where are the countries on the top list and what are the diseases that you most want to deal with out the shoot?

DEPUTY SECRETARY LEW:  I think it's premature to put out a list of countries, but obviously when you talk about a problem like this there are a lot of countries in Africa that have the need for this kind of assistance.  In terms of the types if diseases, there's a range of tropical diseases, the names of which I can hardly pronounce but I'd be happy to try.

Frankly, what we need to do as we go through the strategic review is determine which of the diseases we can eliminate, which -- do we have the tools at our disposal to really make significant progress.  And we will, working across the agencies, be spending the next several weeks honing the details of that so that when the 2010 budget is in place we're in a position to go.

Q    How much of a problem is it that in some of those countries you could have real security and governmental cooperation problems?

DEPUTY SECRETARY LEW:  Well, there are certainly challenges in some countries.  We've seen through PEPFAR that we can get into an awful lot of places and provide effective health care services.  The challenge that we have now is to take the things that we've learned dealing with three diseases and build on it to have an effective program that deals with some of the basic health care needs which are, frankly, less costly on a per case, per patient to deal with.

We have a lot of the infrastructure out there already and we're not looking to reinvent the wheel.  We're looking to bring together the different efforts of the U.S. government along with other programs that are out there so that we can do this as effectively and as efficiently as possible.

Q    Jack, can you give us a little more detail on the numbers?  Sixty-three billion [dollars] over six, is that roughly $10 billion a year?  Does it escalate?  Does it go down?  And how is it broken out between medicines and doctors on the ground and things like that?

DEPUTY SECRETARY LEW:  When the budget comes out on Thursday we'll have the projections on a year-to-year basis.  But it ramps up in a -- kind of a normal way.  So it follows a pattern that I think would be considered to be a year-to-year growth pattern. 

Q    Can you give us the '10 year, or 2010 number?

DEPUTY SECRETARY LEW:  I can.  The 2010 number for PEPFAR and malaria is $7.4 billion, and for other global health priorities is $1.3 billion.  The total is $8.6 billion.

Q    Have we lifted all the bars, Republican bars against family planning on these global issues?

DEPUTY SECRETARY LEW:  Well, I would defer to Mr. Gibbs on some of these questions.  But I think the President has made clear that he wants us to proceed in the area of providing family planning assistance, and that's what we're doing.

Q    So this includes the AIDS funding, plus this extra stuff for family planning?

DEPUTY SECRETARY LEW:  Correct.  Correct.

Q    Well, can you just say what's the add-on, as opposed to what we were spending last year, and the last couple of years?

DEPUTY SECRETARY LEW:  Last year, for the total of global health, it was just under $8.2 billion.  So it's an increase of $459 million.

Q    Say that again?

DEPUTY SECRETARY LEW:  It was $8.16 billion -- $8 billion, $186 million in this year, 2009.  It's $8 billion, $645 million in 2010.  So that's an increase of $459 million.

Q    And do you know where that extra money, that extra money is going now and what you'll be doing with that money that you hadn't done last year?

DEPUTY SECRETARY LEW:  Some of the increase goes to PEPFAR. We are increasing PEPFAR to treat the three diseases:  HIV/AIDS, malaria, and tuberculosis.  And some of the money is going to expand programs in the areas that I've just been discussing.

Q    Family planning?  Is that the biggest part?

DEPUTY SECRETARY LEW:  I wouldn't say it's the biggest part.  I mean, we're trying to have a balanced program here.  As we develop the program going forward, the numbers will get larger in the out-years.  So the change will become much more apparent as we do the multiyear program.

Q    What would have been, say, the five- or six-year figure last year so that --

DEPUTY SECRETARY LEW:  I don't have that number.

Q    The $400 million or $500 million doesn't make it sound like a very dramatic increase --

DEPUTY SECRETARY LEW:  Right, but if you think of $450 million that grows year to year over six years, it adds up.  It's about doubling the amount that we're spending on this --

MR. GIBBS:  -- 4.59 times $100 million, you guys didn't think was big last week?  (Laughter.) 

DEPUTY SECRETARY LEW:  I still think that billions of dollars are a lot of money --

MR. GIBBS:  These guys are a little -- (Laughter.) 

Q    Are you saying -- Jack, are you saying it's a doubling, roughly, over six years of what it would have been under the Bush administration?

DEPUTY SECRETARY LEW:  Well, I can't say what the Bush administration would have done.  We're dealing with a baseline that we started with.  So I don't want to characterize how it compares to what would have happened.  But there is a substantial increase over the six-year period.

Q    Jack, I hate to ask this, but with the family planning thing, are there any restrictions -- language on abortion, any kind of link on that?

DEPUTY SECRETARY LEW:  Well, I'd say that at this point, what we've been thinking through is the health needs that are out there.  I would defer to later discussion of issues like that.  I'm not aware of any, but that's not to say that there aren't.

Q    Is this stuff that Congress --

Q    Would money go to abortion?

DEPUTY SECRETARY LEW:  That's not what this funding is about.  This funding is about dealing with prenatal care, postnatal care, tropical diseases, children who die from diarrhea.  You're asking me a question that I honestly can't answer.

Q    Is this stuff Congress would -- is Congress the one that would be dealing with the specific issues --

DEPUTY SECRETARY LEW:  Well, it is an appropriation, so Congress will have to deal with it.

Q    So this is where -- that's what I mean.  So this --

MR. GIBBS:  This is our budget proposal for --

Q    And they would decide what the family planning aspect is?

MR. GIBBS:  Right.

Q    And if Congress didn't want any of this money to go to abortion, would the administration object?

MR. GIBBS:  I think we'll have more details on that in the budget on Thursday.

Anything else for Jack?  Thank you, sir.

DEPUTY SECRETARY LEW:  Thank you. 

MR. GIBBS:  Give me one minute to get organized.

Q    I like when you bring guests around.

MR. GIBBS:  You like that?  I figured I'd bring the President on Friday, then step it up and bring Jack here on Tuesday.  (Laughter.)

Q    Do you expect us to stand up?

MR. GIBBS:  Since you say that looking quite comfortable with your arms crossed, I'm going to presume the answer you're looking for me is no.

I don't seem to have any announcements.  I do have a readout on the President's meeting today with Democrats serving on the House Energy and Commerce Committee.  They discussed two key pieces of legislation which the committee is currently considering:  comprehensive energy legislation and health care reform.

The President said the transitioning -- to include energy economy -- would create clean-energy jobs and provide America with a major growth driver for the years to come, helping to move us from a bubble-and-bust economy.  The President outlined core principles that he believed should guide the energy legislation as the committee finalizes it.  The President believes that consumers and communities should be compensated if during the transition period there are any additional costs associated with reducing carbon emissions.  He believes there should be predictability and certainty in the market so that entrepreneurs can make major private sector investments in clean-energy innovation.

He also believes regional impact should be taken into account and addressed and that our trade-sensitive industries need to be protected.

Chairman Waxman announced that the committee had found common ground on a proposal entitled "cash for clunkers," and the President commended the members for moving forward a plan that will help the American auto industry and provide Americans with cleaner automobiles.

The President also made clear that we have been discussing health care reform for decades and he hears from Americans every day that now is the moment for action.  With millions of Americans out of work we cannot afford for any American to be denied health care coverage because of a preexisting condition.

Q    A couple of Supreme Court questions.  Senator Orrin Hatch yesterday, after speaking with the President, said he got the distinct impression that the President wanted to make an announced nominee by the end of this week.  Did Senator Hatch misunderstand?

MR. GIBBS:  Well, I didn't hear the conversation.  I can allay your fears that it's not going to happen this week -- or maybe disappoint you, but not this week.

Q    This month?

MR. GIBBS:  I think the President is, as I've said the last few times I've been out here, working with the team to get a look at the people that he thinks are best qualified for this position; and that obviously we want to move this process along in a timely fashion so that the next Justice can take over the work the next time the Court begins to hear cases in October.

Q    One more.  Senator Harry Reid is the latest among several senators who've suggested that the President look outside of what they call the sort of normal federal court tradition of a nominee and pick perhaps a senator/governor, former senator/governor.  Is that something that appeals to President Obama?

MR. GIBBS:  Well, as I've said, I think the President will look at a diversity of experience and background.  I think he said on a number of occasions that having somebody that has -- obviously has an excellence in the law, but also understands and has worked outside with varying and different experiences is something he'd like to see.

Yes, sir.

Q    Robert, a follow-up on the climate change meeting, or that aspect of the President's meeting with lawmakers today.  How optimistic is President Obama after this meeting that a bill on climate change will be passed in time for the global warming talks in December in Copenhagen?  And just added on to that, how much political capital is the President willing to use to push that bill along?

MR. GIBBS:  Well, Jeff, obviously you heard the President on a number of occasions mention that his three most important priorities are health care, energy independence and education; that those three present an important foundation for creating long-term economic growth.  So I think clearly it’s a major priority of the President's.  And I think he believes that the meeting was productive, that progress was made, and that discussions continue in Congress on moving this bill forward.

We're hopeful to get something done this year.  Obviously, as I said, it is a strong priority of the President's.

Q    How active will he be, Robert, in making sure that a bill comes through Congress this year?

MR. GIBBS:  Well, I think you can be -- I think the meeting today denotes both his interest and his activity level on this in trying to move a solution forward.

Ed.

Q    Thanks, Robert.  Why is the President considering use of the Bush military tribunal system to try terror suspects?  I thought he suspended that the first week --

MR. GIBBS:  That was suspended pending, as you know, a review of the process, a review of our policy relating to detainees.  That review is ongoing and I don't have any announcements about that today.

Q    Would you close the door on using the tribunal system?

MR. GIBBS:  I think it would not be wise for me to prejudge the review the President laid out.

Q    A quick follow on something else.  There was a report this morning suggesting that the White House doesn’t want to release the photos from the Air Force jet fly -- over Manhattan.  Why wouldn’t you release those photos?  And what's the status of the President's review of what went wrong here at the White House?

MR. GIBBS:  We anticipate the review will be done this week. I've watched CNN -- I didn’t notice a lack of archival material from that flight.  I can --

Q    No, from inside the plane, from -- the photos they took, we haven't seen those.

MR. GIBBS:  I don't know where those are.

Q    A follow-up on a couple of issues, one regarding the Pennsylvania primary.  President Obama has said he will commit to Senator Arlen Specter.  Today, Congressman Sestak of Pennsylvania said he is inclined to challenge Specter in the primary.  Given the fact that Specter's very first vote as a Democrat was against the President's budget, is there anything that Specter could do that would -- in terms of voting against the President -- that would change the President campaigning for him against a Democrat who is more in line with the President's priorities?

MR. GIBBS:  I think the President was pretty clear on this. Senator Specter has his full support, and he'll do what's necessary to see him reelected.  I think Senator Specter said it the day he made his announcement that he's going to make decisions on individual bills.  But I think that him switching to the Democratic Party was a belief that that's the party that could best serve his constituents.  We don't get a hundred -- we don't generally get a hundred percent of any party voting for us, but we'll continue to try.

Q    Okay.  And then, following up on the President's announcement yesterday about tax havens, the President's Trade Representative, Ron Kirk, has said that the administration is pushing for a trade agreement with Panama.  Panama is one of the tax havens that's been cited by various organizations that look at countries that have these tax havens.  And it's part of the trade agreement, according to Public Citizen, it would be a lift on the amount of money that can be wired from the U.S. to Panama. Is the Obama administration going to be pushing for the elimination of Panama as a tax haven as part of this anti-tax haven effort?

MR. GIBBS:  Let me check with USTR and folks here on what's in the trade agreement and some of the statements that have been made.  I don't have anything with me, but I'll check on it.

Chip.

Q    Fed Chairman Bernanke said today that business -- and he said a lot of things, but one thing he said was that business investment remains extremely weak, and because of that unemployment is going to remain at high levels for quite some time now.  Is that a concern for the White House to hear that, or was it consistent with what you --

MR. GIBBS:  Well, I would say that anytime we're experiencing the type and the magnitude of job layoffs that we've seen over the past many months it's very concerning to this White House and this economic team.  I will say, as I've said several times from here in the last month, I anticipate that because of the way the business cycle works and the recovery -- the progress that has to be made on recovery, that it will be quite sometime before we see a lessening of the pace in job loss that we've seen over the past many months.  And I assume several hundred thousand jobs will be -- will have been lost last month, and the Department of Labor will announce that on Friday.

This President understands that even as we're seeing, as he's talked about, some good data and some glimmers of hope and progress, he won't be satisfied until we begin to create jobs and really get this economy moving again.  So I think what Chairman Bernanke said is obviously concerning, but at the same time, not completely unexpected.

Q    On the stress tests, word has been leaking out that somewhere in the vicinity of 10 of these 19 banks are going to be found to need more capital.  Are you worried about the effect that's going to have on Thursday when that does come out on the markets, and could this be something that sends things south again?

MR. GIBBS:  Well, look, I'm not going to get ahead of the Thursday announcement that will be made by the regulators that conducted these tests, and Treasury and others, to make available to you all the results. 

The goal of the stress tests always was to get, as I've said here many times, to get a -- once and for all, a firm grasp on the exact level of the problem, the amount of capital cushion that a bank might need if the recession we're in becomes even more severe.  I think we've -- we wanted to ensure that as we're making decisions moving forward, there's an accurate projection of exactly what the health is of individual banks.

So I think -- without getting ahead of the results, I think that the tests will be worthwhile in providing some clarity and transparency into what we're facing, understanding that even it is simply one step in the process of financial stability.

Q    If there are 10 or so banks that need more capital, is that bad news, in the White House's view?

MR. GIBBS:  Well, look, I think -- I hate to get into playing market predictor.  I think you've seen -- I think it's always hard to correlate what's happening in the market with any particular news sometimes.  Obviously you've seen banks -- many banks in the last few weeks have mentioned they're raising capital.  Some of them are selling assets to increase their capital position at the same time that the market has gone up.

So, again, I hate to be a predictor on the ups and downs of the market, except to say, as we said earlier this year, the President has conducted -- regulators conducted these tests and the President believes they're important in order to provide that clarity and certainty on what we're facing, not making individual decisions on the ups and downs of the market.

Helen.

Q    Does the President have congressional approval to send thousands of troops to Afghanistan?  And what does he mean that extremists are a direct and general threat to us?  Can you explain that?

MR. GIBBS:  Sure.  I presume that the authorization for increased troop activity in Afghanistan goes back to 2000 -- I don't know exactly when the vote was, late 2001.  I think the President outlined a strategy to deal with this region and to deal with Afghanistan and Pakistan, understanding that al Qaeda and its extremist allies operated in these two countries.  I think it is clear from their actions that they pose a threat not only to those countries, but also to the United States.  And I think we saw that --

Q    Are they a threat because we're there intervening in their civil war?  Or are they going to come here?

MR. GIBBS:  I think it was pretty apparent the threat that they posed and the destruction that they ultimately caused in 2001, and that the President will take action to disrupt, dismantle, and defeat al Qaeda and its extremist allies.

Q    Robert, what is the President going to do to reassure Zardari in Pakistan when he comes here tomorrow that this growing opposition on Capitol Hill or sort of reticence opposition on the Hill is from reticence about providing aid to the country -- how is he going to reassure him that he can guarantee the money, that the money is going to come, that Congress will be able to get this done?

MR. GIBBS:  Flesh out for me the reticence a bit.

Q    I guess that it seemed to be -- Chairman Obey today saying that he -- on sort of a stricter basis, he's not going to have an -- sort of an unfunded aspect to Afghanistan and Pakistan.  And there's clearly -- the Pakistanis are nervous that they're not going to get the same amount of aid that they've seen in the past.

MR. GIBBS:  Well, a couple different things.  Understand that nobody is more impatient in seeing progress on a strategy to deal with Afghanistan and Pakistan than the President of the United States.  He has talked about this for several years.  These meetings over the course of the next couple of days make good on the promise of being engaged in this region actively.  As I said to Helen, there is a shared threat from al Qaeda and its extremist allies, and the best way to confront that threat is through an alliance and cooperation with both of those countries.

Q    You say al Qaeda, but then is it the Taliban, or do you call al Qaeda -- the Taliban one of al Qaeda's allies in this case?

MR. GIBBS:  Well, I'd say al Qaeda's -- I think I said al Qaeda and its extremist allies.  Obviously that denotes al Qaeda, and in specific instances, the Taliban.

Q    Who Pakistan is, at one hand, at war with; on the other hand, negotiating with.

MR. GIBBS:  I think they can speak to the danger of doing that.

Q    Well, I understand it, but I guess, going back to the funding --

MR. GIBBS:  Well, let me -- back to your funding, I mean, understand that we organized -- helped organized a donors conference in Japan that brought forward $5 billion worth of assistance to help with this problem in Pakistan.  But, Chuck, as I said here yesterday, and I think the President has said on numerous occasions, there shouldn't be and there won't be blank checks; that the President supports the building in of accountability measures to ensure that we're making progress and that if progress isn't made that we'll readjust our strategy.  He said that in ordering and conducting the review of our strategy in this region, and in the delivery of that review just a little while ago.

Q    Disengagement could be a possibility here?  That seems to be what some on Capitol Hill are saying -- hey, if progress can't be seen in a year, then why should we keep throwing more money at it; in fact, we should back off.

MR. GIBBS:  Well, I think the President has made clear the priority in ensuring that we're addressing this extremist threat. Nobody is more impatient than the President in seeing that succeed as quickly as possible, and if, for whatever reason, parts of, or aspects of the strategy aren't succeeding as well as we'd like, then those will be changed in order to succeed.

But again, Chuck, we have a threat, the Pakistanis and the Afghanis have a threat that has to be addressed and that's what the President intends to do.

Q    A couple of things.  On "cash for clunkers," the German experience has been that this has been really great for the Japanese carmakers, has not done much for the German carmakers, not for Benz and BMW.  What makes the President think that this will be anything but a boon to foreign carmakers and not much help to the American carmakers?

MR. GIBBS:  Well, I think if you talk to -- I don't know the years that you're talking about in terms of Germany, but I think the agreement that was announced with Chrysler and Fiat in part we believe -- part of the utility of that was the bringing of more fuel-efficient engines into this market.  I think the President has long talked about building more fuel-efficient cars here in America and ensuring that our auto industry is preserved by doing so.

And I think if anything, if the past few years and the recent -- and I go back a year or two on auto sales -- if those are any gauge that the auto companies have to begin to build something that Americans want to buy, I think it could be no clearer than that.  And the President hopes and believes that we'll make progress in doing that.

Q    And on the broader cap and trade system.  The President campaigned saying that he wanted a hundred percent auction; that means all emissions would have to be covered by a permit that was paid for.  What kind of give did he signal to the members of the committee today on that?

MR. GIBBS:  I was not in the meeting.  I know that the President is clear that any increase cost for consumers should be compensated through rebates.

Q    Robert, can you try and get us an answer as to why the White House doesn't want to release those Air Force One photos?

MR. GIBBS:  Sure.

Q    Is that definite, you're just not going to --

MR. GIBBS:  Wait a minute, Mark said would I try, and I said, yes.  So you're -- let me find Mark's answer before you follow up with the negative.

Q    And on tomorrow's summit meetings, what is the overriding goal of the talks tomorrow?

MR. GIBBS:  As I said to Chuck, our goal is to ensure -- well, let me start again.  The President, I think, is doing exactly what he said he would do in working aggressively with both bilateral and trilateral meetings over the next couple of days.  The first series of these meetings were in February.  The second is now.  Obviously the President looks forward to the third, the fourth, the fifth and so on -- those meetings continuing to be engaged in this region and, as I said to Chuck, the recognition by Afghanistan and Pakistan, as well as the United States; that there is a shared threat from al Qaeda and its extremist allies; that the best way to confront that extremism is to work towards a cooperative alliance with those countries to meet that shared threat; that we have a shared threat, and the best way to meet that is through that mutual cooperation.

Yes, sir.

Q    If I could just on the carbon -- if I could follow up on the carbon auction, is the President still committed to that a hundred percent?  And is he still counting on that in his -- the revenue from that?

MR. GIBBS:  I have not honestly seen the details of what the House is working on, and I'd have to check on that.

Q    Okay.  But we can expect for the budget on Thursday that it will include the revenue from carbon auctioning?

MR. GIBBS:  It will include revenue from that.  I have not looked at the individual aspects of the budget as far as that goes though.

Q    Members who have come back and talked about the meeting have said the President committed at least one year of waiving the auction fee in regions where this would be most damaging.  That would sound to me like a concession the President has made to win the votes necessary on the House side to get this legislation passed, moving back from what he promised on the campaign trail.

And the European experience is that he -- not something that's going to work to reduce carbon pollution, because if they're free, the market doesn't price the carbon in a way that increases the desire of companies who pay for the credits to reduce pollution.  And I'm wondering if it's a concession on both --

MR. GIBBS:  Well, I think your model only presumes if you don't change the allowance, or change the threshold on a yearly basis to ultimately make it -- I mean, the concept of pollution trading is based, in many ways public-policy wise, in the late '80s in dealing with acid rain.  Regardless of where you start, you have to make progress so that ultimately the market sets a price for an externality like pollution that ultimately becomes more expansive than doing -- or taking steps necessary to deal with those costs. 

Q    Right, and those who debate whether there should be cap and trade or a direct carbon tax say at least on the cap and trade, if you're going to have a price at the beginning, you can begin to have that market assessment of a price.  They say it may take a little bit longer than a direct carbon tax, but if you delay that process, you're only delaying the market's response, therefore, undercutting at the front end your ability to deal with pollution.

MR. GIBBS:  Again, I think you're projecting --

Q    I'm just asking on the basis of what the debate about this issue has been.

MR. GIBBS:  I understand.  But I think you're projecting one year in the totality of the program.  And I think that's a somewhat unfair comparison of --

Q    You would concede, however, in Congress sometimes, when an allowance is made at the beginning it sometimes has the tendency to continue on.  

MR. GIBBS:  Well, I don't know that I'm an authoritative speaker on Congress.

Q    You have some experience.

MR. GIBBS:  I used to work in that building.  But I also think, again, Major, your question I think is in many ways premised on not knowing the back end of this.  Again, I think if --

Q    It's a concession on the front end -- you would acknowledge that.

MR. GIBBS:  Well, I think it understands, without knowing exactly what was discussed or the details of the legislation that are currently on the Hill or what might spit out of that, I think the President -- and I read in this that we have to take into account regional impacts.  But again, the end game of this process will depend on those intervening years, again, where the externality of pollution is priced at a level that makes it cost-effective for business to deal with through clean energy.  That's exactly the proposal that the President has made in order to spur job growth, and to give certainty to private investors for the creation of clean-energy jobs to deal with the problems that they face.

Q    On the stress tests, the IMF, in a report that it issued late last week, projected that there was a lot more write-downs that U.S. banks have to do -- they estimate $275 billion to $500 billion more in write-downs for U.S. banks in the not-too-distant future.  Is that a number that the White House either agrees with or disagrees with?  Should those who are looking at the banks' health from the outside be alarmed at a number like that?  That number is not associated with anything we've heard about what the stress tests have revealed to date.

MR. GIBBS:  Right.  I have not either read the IMF report or seen the results of the stress tests.

Q    I'll be glad to --

MR. GIBBS:  If you would just give me a couple of minutes I'm sure I can -- but I think in some ways you're talking about something that impacts on one problem, but also there are a separate set of realities that, regardless of results of the stress tests, are going to have to be dealt with, in terms of the continued movement of bad or toxic assets off of the books of these individual banks, the process that Treasury and others have set up to begin to do that.  And without either -- like I said, without seeing that report or understanding exactly what the results show -- look, I think, as I said earlier, these stress tests are one step in understanding the capital requirements that are necessary for these banks, understanding that we're going to have to take additional steps to remove toxic assets.  The final level I just don't --

Q    I understand, but my question is -- suggesting that with these write-downs there will be greater capital requirements that these banks are going to have to meet to survive than the stress test, based on what we've heard so far, appeared to indicate, that even with the stress tests banks could be in worse shape --

MR. GIBBS:  Well, I --

Q    I'm just wondering if the White House and the administration and the regulators would contest that overall assessment.

MR. GIBBS:  Well, I think without prejudging the criteria that you'll get a chance to see I think it's -- like a I said, I think it's a bit premature to use a report from last week before we have results in two days to denote what you think of as the credibility.  I think the credibility -- I think you'll get a chance to see and be pleased with the credibility of these tests in denoting clarity moving forward.

Q    One last quick thing on "cash for clunkers."  Is the administration going to do that separately or within the overall cap and trade legislation?

MR. GIBBS:  I don't know whether they're going to move that bill separately or not.  I would point you to --

Q    -- you would prefer it that way --

MR. GIBBS:  Well, I think notwithstanding Jonathan's example, I think the President believes that it would help the American auto industry and at the same time providing a powerful incentive for Americans that are hoping to buy new cars.  I think doing that as quickly as possible would have great benefit.

Q    In an interview in The New York Times this morning the political leader of Hamas, Khaled Meshaal, said that rocket fire has stopped into southern Israel -- he ordered that -- and that he extended a 10-year truce to Israel, and that they seek a state inside the 1967 borders.  He did not recognize Israel, however.  Will the Obama administration at some point, given how important Hamas will be to an eventual peace agreement, encourage the Israeli government to begin talking to them?

MR. GIBBS:  Well, I'm not going to get into what we might tell the Israelis before we have substantive conversations with them both today and later on in the month.  I will say that we have long said that we believe there were certain things that had to be done before we would take any step like that, including the renunciation of terror, the recognition of Israel, and abiding by past agreements.  And those haven’t changed.

Q    The process with the Palestinian Liberation Organization started the same way.  They did not recognize Israel.  They vowed its destruction.  They did not renounce violence.  That was managed through a peace negotiation.  Could you explain how the administration sees the difference between Hamas is now and where the PLO was?

MR. GIBBS:  Well, again, I'm not going to get into prejudging this.  I think it's important -- we'll have readouts on the meeting that we had today with President Peres, and the President looks forward to continuing engagement with leaders throughout the region, with Prime Minister Netanyahu to come to Washington soon, as well as others. 

Q    Robert, can I ask about Thursday?  The National Day of Prayer -- the President, as I understand it, is going to sign a proclamation but there's not going to be a public ceremony, as the Bush administration did.  Why the difference in approach?  Does the President have a different feeling about this event than his predecessor?

MR. GIBBS:  No, I mentioned, I think when I was asked about this last week, that prayer is something that the President does every day.  I think, given some of the issues that you all have denoted today, it might be a healthy thing.  But we're doing a proclamation, which I know that many administrations in the past have done.

Q    The previous administration had a ceremony with prayers and speeches and such.  Does he think -- the current President think that that was politicized in some fashion?

MR. GIBBS:  No, I'm not going to get into that.  Again, I think the President understands, in his own life and in his family's life, the role that prayer plays.  And I would denote that administrations prior to the past one did proclamations.  That's the way the President will publicly observe National Prayer Day.  But as I said, privately he'll pray as he does every day.

Q    Is he going to pray at the church that he calls his own?

MR. GIBBS:  I'm sorry --

Q    Will he soon pray in a church that he calls his own?

MR. GIBBS:  He may.  Amen.  (Laughter.)

Q    Can you give us a little more set-up for tomorrow's meetings?  Are they only with the two of them together?  Are there going to be also bilaterals?  How does this work tomorrow?

MR. GIBBS:  There will be a series of meetings.  There will be -- there will be bilateral meetings before the trilateral meeting.

Q    With the President and each leader?

MR. GIBBS:  Yes.  Hence bilateral.  And the -- I don't have the schedule in front of me -- these meetings also continue throughout the day and into the next day.  And one of the aspects of this, again, to build the type of cooperation that the President talked about, will have other Cabinet Secretaries that will come and meet with their counterparts in each of these countries in order to forge those relationships in understanding, as I said earlier, the common threats that we have to face, and doing so in a way that understands and shares those challenges.

For instance, Secretary Vilsack will meet with both of his counterparts.  I think others in the administration -- and I'll get a better list of this -- will meet with -- will bring their counterparts together much as the President will in order to strengthen that relationship.

Q    Robert --

Q    Thank you.

MR. GIBBS:  Well, I'll go to both of you, but go back first.

Q    Okay, thank you.  Last week Mahmous Abbas refused to acknowledge Israel as a Jewish state.  Prime Minister Netanyahu, however, has said that that acknowledgment is necessary in order to go forward with negotiations.  How does that affect the administration's position as far as creating peace in the Middle East?

MR. GIBBS:  Well, I think you know where the United States stands on that issue.  And I think -- you heard Vice President Biden today discuss a two-state solution.  And the President looks forward to continuing to work on this issue with, as I said, President Peres, Prime Minister Netanyahu and others in the coming weeks.

Yes, ma'am.

Q    I had a follow-up, please.  Israeli officials say the world must stop Iran's efforts to produce nuclear weapons before there can be progress on the Palestinian front.  And U.S. administration officials have indicated that progress between Israel and the Palestinians is necessary first.  How do you see this administration reconciling that difference?

MR. GIBBS:  Well, I think the administration would denote --to the administration's position that you just intoned, I don't think that -- this administration does not believe that, as we've said on a number of other issues, that there's an either/or option here, that -- I think it's a pretty obvious point that while we can make progress on one it will help on the other, but we can do both simultaneously.

Q    I didn't hear you address about a Jewish state, though.

MR. GIBBS:  I'm sorry?

Q    I didn't hear you address the issue of acknowledging a Jewish state.

MR. GIBBS:  I did address that.  The President and the administration and this government are very clear on that.

Q    The situation in the Swat Valley is deteriorating.  What does the President want President Zardari to do that he's not already doing?  And what sense of urgency does he intend to communicate to him about doing it?

MR. GIBBS:  Well, I'll let the President make his points to both of those leaders during the meeting without me doing it here, except to underscore what I had previously said, that the President wants to help forge an alliance with the United States and these two countries in meeting that shared extremist threat. That's what these meetings are about.  Strengthening this relationship and growing it moving forward is the goal of tomorrow and Thursday and we'll continue throughout this.

Q    Does he feel that Pakistan is adequately addressing the situation?

MR. GIBBS:  Well, the President is deeply concerned about the security situation.  That's why he ordered the review.  That's why we're sending additional troops to Afghanistan.  And that's why we'll talk with both the Afghans and the Pakistanis about our renewed commitment in helping them seek the aid that they need to address those extremists.

Margaret.

Q    I have an IMF question.  The President at the G20 meeting had pledged $100 billion.  That is money that is not at all at this point in the supplemental.  And I want to talk to you about how much the White House is concerned about this.  Do you see this as a temporary delay or one of specific negotiation? Do you think it will work itself out, or are you reducing your expectations?

MR. GIBBS:  No, I think the commitment that the President and the world made to spurring economic growth with this important aid is something the President believes that we have to keep, and we'll work with Congress to ensure that the authority to do that is ultimately contained in the bill.

Q    Do you know what the hang-up is about?  Is it a matter of specifically assurances, or is it a bartering for something?

MR. GIBBS:  I don't know what the specific hang-up is, but, like I said, the President intends to work, and his team do, to work with Congress to straighten that out.

Yes, sir.

Q    Richard Holbrooke said today that the administration unambiguously supports President Zardari.  Is there a similar level of support for President Karzai?  Earlier this year the President did mention that it seems to him that the Afghan government perhaps was a little bit detached from some of the communities it's supposed to serve.

MR. GIBBS:  Well, no, I think -- as I mentioned here yesterday, the President supports the democratically elected governments of both of these countries and looks forward, as I said, to working with each, and working together trilaterally to address the extremist threat from al Qaeda and its allies that all three of these countries face.  And I think the President believes the meetings Wednesday and ultimately on Thursday will be productive in doing that.

Thank you, all.

Q    Thank you.

Q    Hey, Robert, on the Supreme Court, can you rule out next week, too?

MR. GIBBS:  I will check on next week.  I can certainly rule out this week.

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