President Obama holds news conference

By Michael A. Memoli and James Oliphant

Feb. 15, 2011 12 AM PT

Washington Bureau

12:10 p.m. EST: You can’t quite call it triangulation -- but it’s seems President Obama may be playing a bit of a game of chicken with Republican budget hawks on the Hill, daring them to work with him on the deficit.

Answering his final question, Obama said he “welcomed” criticism of his budget from Republicans that he didn’t focus enough on entitlement reform. He said it was an admission that reducing the federal deficit can’t simply be done through slashing domestic programs.

He called that “significant progress.” And he said he would sit down with congressional leaders in the coming months to hammer out a plan on tackling the budget gap and entitlement spending. The deficit commission, he said again, had provided a “framework.”

“I will probably not give you a play by play of every negotiation that takes place,” Obama said, adding that all sides will likely have to do “a little bit of posturing” on television even as they talk.

The president said that Wall Street and the markets didn’t expect his administration to solve the deficit issue immediately but simply to make substantial progress.

“The markets understand we didn’t get here overnight and we’re not going to get out of it overnight,” Obama said. “What they want to see is that we have the capacity to work together.”

With that, the president ended the press conference.

11:59 a.m. EST: President Obama defended his budget’s job-creating potential, highlighting investments in areas such as clean energy that are the “industries of the future.”

As it relates to taxes, he again defended his intention to let tax rates enacted in the Bush administration to expire, saying bluntly that government “doesn’t come for free.”

“It’s important as we think about corporate tax reform, as we think about individual tax reform, that we try to keep taxes as simple as possible and as low as possible,” he said. “But government has to pay for what it buys. And if we believe that its important to have a strong military ... we’ve got to pay for it.”

The president said that most economists, even some who “tend to lean to the right,” agree with his view that allowing tax rates to return to higher levels “doesn’t in any way impede job growth.”

“If you’re serious about deficit reduction you don’t do that,” he said.

Repeating a common theme of Tuesday’s press conference Obama said he hoped Republicans and Democrats would “have an adult conversation” and “a full and open debate with the American people” as they begin working on the budget.

“There are going to be some significant disagreements,” he said. “At the margins, I think that I’ll end up having to compromise on some things. Hopefully others will have that same spirit.”

11:52 a.m. EST: President Obama was asked whether he supported the demonstrations erupting across the Middle East, and he used the occasion to defend his foreign policy team, which has been accused of being inconsistent on its approach to the crisis in Egypt.

“History will end up recording, at every juncture, in the situation in Egypt that we were on the right side of history,” the president said, quoting, in fact, his old adversary, Sen. John McCain. “What we didn’t do is pretend we could dictate the outcome in Egypt -- because we can’t.”

The president said Egypt’s sovereignty was key. “It was important for this to remain an Egyptian event -- that the United States did not become the issue -- but that we sent out a very clear message that we believed in an orderly transition.”

And, he maintained: “We were consistent on that message throughout.”

Obama said that he was calling for change in Egypt 2 1/2 weeks before Mubarak resigned.

“I think we calibrated it just about right,” he said, noting that the result was “relatively anti-American sentiment, or anti-Israel sentiment, or anti-Western sentiment.”

As for the demonstrations in other nations, he said the U.S. supported the push for greater opportunities and freedom, but he cautioned, “We do want to make sure transitions do not degenerate into chaos and violence,” he said. “That’s not just good for us, that’s good for those countries.”

11:44 a.m. EST: President Obama said he would work with Republicans to avoid a government shutdown but warned against cuts that might “destabilize the economy.”

House Republicans have proposed a series of spending cuts totaling $100 billion, following through on a pledge they made in the 2010 campaign.

“I think it’s important to make sure that we don’t try to make a series of symbolic cuts this year that might endanger the recovery,” Obama said.

One reason he agreed to extend the tax rates enacted during the Bush administration was because the economic recovery was “fragile,” he said, and now Republicans must acknowledge the same.

“If the steps that we take then prompt thousands of layoffs in state and local government ... well, that could also have a dampening impact on the recovery as well,” he said.

11:40 a.m. EST: President Obama was asked whether he’s rebuilding the economy “on the backs of the most vulnerable Americans” by slashing items such as community block grants, Pell Grants, heating oil assistance and by freezing the pay of federal workers.

Obama defended the cuts, saying the budget sustained “the core functions” of the programs. He said his administration had boosted both the Pell Grant and home heating programs earlier in his administration.

“There are always more people who could use some help across the country than we have resources,” he said. “I understand people’s frustrations with some of these decisions.”

“There are just some things that aren’t working at all,” he said, noting that the budget eliminates scores of inefficient programs.

Taking a line from President Clinton, he said, “I definitely feel folks’ pain.”

What was also notable about the response: Unlike other Democrats, the president passed on an opportunity to blame congressional Republicans for pushing for more sweeping spending cuts.

Obama also was asked about whether he’s making calls in support of Rahm Emanuel in his Chicago mayoral bid.

“I don’t have to make calls for Rahm Emanuel,” he said. “He seems to be doing just fine on his own.”

11:34 a.m. EST: Asked about the likelihood of ending the so-called Bush tax cuts with a Republican Congress, President Obama said the party must be open to all options to stem red ink.

“If we are going to get serious about deficit reduction and debt reduction, then we’ve got to look at all the sources of deficit and debt,” he said. “We can’t be just trying to pick and choose and getting 100% of our way. The same is true of Democrats.”

He pointed to budget cuts on home heating assistance and community block grants that his party supported.

“My expectation is that everybody is going to have to make those same sorts of compromises,” he said. Obama said any corporate tax reform must include closing loopholes.

“Part of what you have to look at is unjustifiable spending through the tax code,” he said. “Why are we letting some folks pay lower taxes than other folks who are creating jobs here in the United States and are investing?”

11:28 a.m. EST: The president was asked why he had seemingly ignored the recommendations of the bipartisan deficit commission he created, which called for entitlement and tax reform.

Sounding a bit chagrined, Obama said the Washington press corps expected too much, too soon.

“Let’s face it, you guys are pretty impatient. If something does not happen today, the assumption that it isn’t going to happen,” he said.

Obama cited the healthcare fight, don’t ask, don’t tell and Egypt as examples. Why did Egypt take three weeks? he asked rhetorically.

As far as the fiscal commission, Obama noted that the recommendations “provide a framework for a conversation.”

He noted that Paul Ryan, chairman of the House Budget Committee and a member of the panel, did not sign the final report and said, “I’m going to have a conversation with him” about his own approach to budget reform.

11:25 a.m. EST: President Obama described his administration’s approach to the nation’s fiscal challenges as a two-step process, saying the first priority is to get control of discretionary spending before addressing long-term deficits and entitlement.

“We still have all this accumulated debt as a consequence of the recession and as a consequence of a series of decisions that were made over the past decade,” Obama said. “[Don’t] discount the tough choices that are required just to stabilize the situation.”

Obama said he does support tax reform and entitlement reform. But lawmakers in both parties need to demonstrate the good will it will take to do so by first showing we “can in a serious way cooperate” on spending.

11:20 a.m. EST: The president was asked whether he had a message for the Iranian people. He has been criticized for not supporting demonstrators in that nation in 2009.

“People should be able to express their opinions and their grievances and seek a more responsive government. What’s different has been the Iranian government’s response,” Obama said. “My hope we’ll continue to see the people of Iran to have the courage to express their yearning for greater freedoms and a more representative government.”

The president cautioned, however, “America can’t dictate what happens in Iran. These are sovereign countries. What we can do is lend moral support.”

He said the U.S. was “concerned about stability throughout the region. Each country is different.”

“The world is changing. You have a young, vibrant generation,” Obama said. “If you are governing these countries, you have to get out ahead of change. You can’t be behind the curve.”

He said governments in the Middle East must understand that they have to provide more opportunities for their young people.

“The more steps these governments are taking to provide these avenues for mobility and opportunity, the more stable these countries are,” the president said. “You can’t maintain power through coercion. At some level, in any society, there has to be consent. That’s particularly true in this new era where people can communicate ... where they can get on smart phone or a Twitter account and mobilize hundreds of thousands of people.”

11:16 a.m. EST: Obama hailed “positive” signs from Egypt following the resignation of President Hosni Mubarak but said the nation will require help during the transition.

“So far, at least, we’re seeing the right signals,” he said.

Speaking to growing pro-democratic demonstrations in the region, Obama defended his administration’s approach. “Each country is different. Each country has its own traditions. America can’t dictate how they run their societies,” he said. “But there are certain universal principles we adhere to.”

He called on governments to “respond to peaceful protests peacefully” and singled out Iran in particular for “gunning down and beating people who have expressed themselves peacefully.”

“Real change in these societies is not going to happen because of terrorism” or violence, he said. “It’s going to happen because people come together and apply moral force to a situation.”

11:12 a.m. EST: President Obama was immediately asked why his budget does not deal with Social Security, Medicare and Medicaid reform. In answering, the president, basically, said those are issues for another day.

“What my budget does is to put forward some tough choices, some significant spending cuts so that at the middle of this decade, our annual spending will match our annual revenues,” he said. “We will not be running up the credit card anymore. “

Obama said that discretionary spending only accounted for 12% of the budget. The real drivers of spiraling government spending, he said, are Medicare and Medicaid. “Social Security is not the huge contributor to the deficit,” he said. “Medicare and Medicaid are huge problems.”

He said Republicans and Democrats would have to work together, down the road, to tackle those entitlements after stabilizing the discretionary budget.

11:07 a.m. EST: President Obama began a rare news conference Tuesday by expressing confidence that he could find common ground with Republicans over spending.

“Everybody’s going to have to give a little bit,” he said, but “we have found common ground before.”

Obama referred to Ronald Reagan and Bill Clinton finding compromise with Congresses led by the opposite party. The president is defending his new $3.7-trillion budget package, widely panned by Republicans after it was released Monday.

Reacting to complaints about spending and deficits, the president said: “I’m eager to tackle excessive spending wherever we find it.”

But he also acknowledged painful cuts that were criticized by some Democratic allies.

“These are programs I wouldn’t be cutting if we were in a better fiscal situation,” he said. “But we’re not.”

The president began by joking that he wanted to offer his new press secretary, Jay Carney, “one last taste of freedom” before he conducts his first on-camera briefing with the White House press corps.

10:56 a.m. EST: President Obama is set to begin a news conference a day after he released a $3.7-trillion budget for fiscal 2012 that calls for spending cuts and investment in areas such as education and energy efficiency.

Obama faces a fight over the budget with congressional Republicans, who say his spending cuts are not deep enough to attack the U.S. deficit.

The news conference will be a chance for Obama to argue for his spending and deficit reduction plans. It also likely will feature questions about Egypt and the Middle East.

A White House official said the president would begin by speaking about the budget before taking questions from reporters.