James S. Brady Press Briefing Room

2:16 P.M. EST

MR. GIBBS:  You heard from the President today -- make the case why we need to get this done, and most importantly, why we need to get this done for our economy.  So I know some of you have had an opportunity, maybe on this agreement and certainly on other things, to talk with Director Summers.  We wanted him to come down today and talk you guys through and answer your questions on anything that relates to the most important part of the deal, and that's the economic substance of it.

So I'm going to turn this over to Larry, who will say a few words, and then the three of us will take your questions.

MR. SUMMERS:  Thanks, Robert.

This deal is a compromise.  That means it’s got things we like; that means it’s got things we don't like.  The President didn’t want to extend the high-income tax cuts for one day beyond January 1st.  The President wanted to return to 2009 estate tax parameters rather than make a substantial financial commitment to 6,000 families, each of whom would benefit by more than a million dollars.  It’s an imperfect agreement.

It does, however, change in a very important way the economic picture as most observers would have judged it even two weeks ago.  That's why essentially all the major economic forecasting firms are in the process of rerunning their models and revising upwards their estimates of GDP in the 1 percent range and their estimates of job creation over the next year-plus in the range of 1 million or more jobs.

That is because this bill does five fundamentally important things.  First, it ends the uncertainty regarding the middle-class tax cuts, which, if not extended past January 1st, would have led to sharply reduced payroll taxes, $2,000 increases in tax burdens for average families.  That uncertainty is removed.  That risk to the outlook is removed.

Second, it fully extends unemployment insurance benefits for 99 weeks and tweaks the benefit formula in a way that slightly increases eligibility for extended benefits for 13 months, beginning as of December 1st, at a cost of $60 billion.  That is the program that the Congressional Budget Office has identified as the single most potent stimulus in providing for job creation simply because the propensity to spend is highest for those unemployed.

Third, it extends the -- it provides for a roughly 2 percent payroll tax holiday, at a cost of $100-$120 billion.  Not only does this -- this represents essentially a doubling of the support for middle-class families that the Make Work Pay program that has been in place for the last two years provided.

Fourth, key refundable tax cuts contained in the Recovery Act are continued.  The Earned Income Tax Credit for those with a third child, the American Opportunity Tax Credit to support access to college education, and the child tax credit for all families with incomes above even $3,000 -- all of that is continued for the next two years.

I might just note that the benefit to those constituencies from the extension of those three tax cuts -- just those last three refundables that I mentioned -- is twice as great per year as the cost of the estate tax provisions.

Finally, the bill adopts the President’s proposal from September of 100 percent business expensing next year and 50 percent business expensing in 2012.  That means the total cost of an investment in equipment, in new factory, can be written off in the year that it has made.  That will, over the next two years, put an additional $180 billion into the economy, the vast majority of which will be recouped over the subsequent years, because if you take your depreciation allowance this year it’s no longer available to you in subsequent years, resulting in about a $20 billion improvement in the 2015 budget deficit picture.

These five measures taken together are, as I indicated, leading to significant revisions in the economic outlook.  And, of course, job creation and growth are enormously valuable in and of themselves.  They are also crucial to reducing the deficit over the medium to long run, to reducing poverty over the medium to long run, and to enabling the nation to afford all of its other objectives.

We believe that this is for the American economy a very important step that is providing more fiscal support for growth over the next couple of years than the vast majority of observers thought plausible even a few weeks ago.  

Much as we regret the elements in it that do not seem to us to be prudent use of public resources, on balance the benefits to the economy make this a very worthwhile deal.

Q    Let me ask you --

MR. GIBBS:  Snap quiz -- (laughter.)

Q    Let me ask you this.  If this was so -- what has jumped -- this 25 percent uptick -- whether it’s Moody’s, Goldman, all these people that are moving their growth charts from 2.5 percent to 3.5 or to 4 percent -- is it payroll tax?  Is it the extension of the tax cuts for the wealthy?  I mean, what -- what is it that really jumpstarted that growth?

MR. SUMMERS:  Most of them were assuming that the Bush middle-class tax cuts would be continued.  And if that had broken down, they would have been having a negative revision.  

The principal things that are driving it are, in order, the payroll tax holiday is probably the single most important factor. The second most important is the continuation of unemployment insurance.  The only reason I’m not putting that equal is that many of the forecasters had already been assuming that the unemployment insurance would be extended, but they would all agree on it being very important.  And third, the expensing provisions, the expensing of investment.  

The refundable tax credits are enormously important to the people who are dependent on them who are many of the most vulnerable people in our society.  But because the amounts of money are smaller, they are less important to the macroeconomic outlook.

Q    So payroll the most then?

MR. SUMMERS:  Payroll would be the most important.

MR. GIBBS:  And, Chuck, let me just add -- to build on what Larry said, the UI extension we’ve been arguing -- and the House voted only a couple of weeks ago on a three-month extension of UI; we’ve seen six-month extensions of UI -- this takes the politics out of UI all the way through 2011.  

Q    I just want to follow up.  Given the efficacy that you mentioned of the payroll tax holiday idea, why wasn’t it part of the original stimulus?  It was on the table.  It was talked about.

MR. SUMMERS:  It was discussed and at that time, the judgment was that continuation -- that the Make Work Pay tax credit that the President had talked about during the campaign, which had a similar basic idea -- raising middle-class families’ tax checks -- paychecks -- was the way to go.  But this is where -- and that was the President’s original proposal in this negotiation.  

But what came out of the compromise was the idea of the payroll tax holiday, which, frankly, a huge number of economists and other experts had been talking about over the last two years with a lot of support in both political parties.  And I think what’s significant is we were able to achieve a payroll tax holiday that will provide significantly more fiscal support to the economy than a continuation of Make Work Pay would have.    

I think it’s important also to recognize that even relative to the benchmark of the bill that passed the House, the combination of the payroll tax holiday, the total expensing, and the refundable tax credits means you’re doing both more for vulnerable families and for the economy than the proposal that had passed through the House.

Q    So the only reason that the payroll tax holiday will provide more stimulus is because it’s twice as large.  Making Work Pay was capped.  Why didn’t you preserve Making Word Pay?  Is it because, as the President said some months ago, it’s just a kind of invisible tax cut and didn’t provide any political benefit for the White House?

MR. SUMMERS:  No, it came out of the process of compromise with the Republicans who were more attracted to the payroll tax holiday concept, and that was a proposal that, as had been coming out of here, we had been giving considerable thought to in the context of the President’s budget.

Q    I was wondering if you could comment on The New York Times report today that those at the lower end of the economic spectrum will actually be the only ones with less money in their pocket as a result of the deal because of the Making Work Pay elimination.

MR. SUMMERS:  It’s a very good question.  You have to figure out what comparison you’re going to do.  It is true that for a $16,000 a year -- so that’s an all-year, minimum-wage worker -- it is true that the Making Work Pay would have given that worker $400.  And this proposal, the payroll tax holiday, will give $320, and there is that $80 difference.

On the other hand, the proposal such as the House bill that contained the Making Work Pay would not have included any of the three refundable tax credits that I mentioned, which cumulatively, for that family, are on average worth several hundred dollars.  Obviously it depends on how many kids the family has and what the situation is -- but on average would work out to about $300 for such a family, one; two, would not have included the continuation of unemployment insurance benefits, which provide $300 a week in benefits; and three, takes no account of the extra growth increment that will come from this program.  If you raised GDP by 1 percent, that's $2,000 for the average family.  

So as I’ve emphasized, this was a compromise.  But if you look cumulatively at the elements that were in this compromise relative to no deal, or even relative to the bill that passed through the House, that $16,000-a-year family gets much more support from this bill than it would have in its absence.  And we believe you have to look at the totality of the program, not just take one provision from it and compare it with one provision in some other bill.

Q    But just to be clear, there are those on the lower end of the economic chart who will be -- who will not benefit in 2011 compared to 2010 in this deal, while everyone else on the financial spectrum will?

MR. SUMMERS:  No, no, that's not right.  That's not right.  What you just said is factually -- is wrong.

Q    A single person, no family, doesn’t get a child credit, $16,000 a year --

MR. SUMMERS:  Right, that person will get $320.  That person will get $320 --

Q    As opposed to $400 this year?

MR. SUMMERS:  Right.  So there’s a person who if they have  -- if they don't benefit from the unemployment insurance, if they don't benefit from the economic growth, if they don't benefit from the EITC or the childcare or the American Opportunity credit, might be $80 behind.

There’s a far larger number of families, however, who will be hundreds, if not thousands, of dollars ahead because of the refundable tax credits, because of the unemployment insurance and because of the growth.

Q    I have two questions.  The first is a slightly less technical question, I think probably for David, and that is -- (Laughter.)

MR. SUMMERS:  You managed to offend us both.  (Laughter.)  You suggested that he can’t handle the technical and that I can’t handle the political.  We’re both offended.

MR. AXELROD:  I was hoping you could explain to me what you just said.  (Laughter.)

Q    All right, ignore my preface --

MR. GIBBS:  Much like your slight --

MR. AXELROD:  Happy holidays.  (Laughter.)    

Q    My question is whether, from a political point of view, it would have been better for these negotiations to have lasted a little bit longer to both force the Republicans to defend their estate tax provision and also to sort of make it appear to some that the President was really fighting and really just taking this because he had no other choice?

MR. AXELROD:  So your question is, should we have staged a kind of kabuki dance for a while longer in order to exact some political advantage that might risk having people’s taxes go up January 1st?  I’d say the answer to that is no.

I don't think there’s anybody in the country who doesn’t understand by now that the Republican Party fought hard and continues to fight hard for upper-income tax cuts and more generous treatment of wealthy estates.  That's what they were after.

What we were after was for tax relief for middle-income families.  What we were after were measures that would add to economic growth, create jobs and buttress our economy and accelerate our recovery.

We got what we wanted, and they got what they wanted.  And that's what compromise is.  As Larry said, compromise doesn’t mean you love every element of it.  Compromise means there are things you’re not going to like and things you like.  But on balance, this was a winner.

And the thing we shouldn’t do is play Russian roulette with people’s lives.  We shouldn’t risk having UI end and people thrown off of that.  We shouldn’t risk people’s taxes going up on the average for a typical family by $3,000.  That's not good politics and it’s not good policy.

MR. SUMMERS:  Look, Laura, let me just say this.  Economic forecasting is uncertain.  Our economy is growing slowly.  It is -- we have not achieved escape velocity and we have not stalled out.  If we had taken more time over this, the risk that the next thing that would happen would be the economy stalling out would have significantly magnified.

Q    Can you talk about the cost of this, because we haven’t really gotten a cost estimate yet, and what kind of impact it will be on the deficit?

MR. SUMMERS:  The bill is being scored as we speak by the Joint Tax Committee and, to lesser extent, by the CBO.  I gave the magnitudes of a variety of the provisions, and you can get them off of various fact sheets.  

The deficits will be higher in the short run and lower in the long run because of this bill -- lower in the long run for two reasons:  because the frontloading of business allowances means more revenue collections after 2012, and because the extra economic growth lifts the economy, which in turn lifts tax collection.  But there’s no question that there will be a significant increase -- that’s the other side of the fiscal support -- in the magnitude of the deficit in 2011.  

Q    What’s long term?  What’s long term?  Define long term.

MR. SUMMERS:  2013 and on.

MR. GIBBS:  Margaret.  

Q    So this thing isn’t done yet.  What if Democrats aren’t just blowing off steam?  What if they just balk and say, forget it, we’re not doing it, and it falls apart?  It seems to me like there would be pretty big political as well as economic implications.  Maybe you could both take that?

MR. SUMMERS:  Well, could you run over there and tell them.  (Laughter.)

Q    But what’s your plan B?  Or do you think you need a plan B?

MR. GIBBS:  Let me say, what animated the President’s desire to get something done quickly was what was best for the economy. I mean, as David said, well, you could do the kabuki dance.  My sense is you’d have now a lot less time to get something actually through Congress if you ate up a week or two for no apparent benefit or reason.  

But what has always animated him was how do we ensure that the certainty that we desire and what Larry talked about in terms of the estimates and growth and the jobs that this will help create -- that’s the sort of -- that’s exactly what animated him -- so that we did not get close to January 1st, that we didn’t find ourselves with millions of families facing that greater tax burden.

Q    But now that you have chosen not to draw it out to the last minute, Congress still has -- the Democrats still have to agree to this.  So I guess what I'm saying is, are you pretty convinced that going to --

MR. GIBBS:  I will say this -- I will say this --

MR. SUMMERS:  Failure to pass this bill in the next -- failure to pass this bill in the next couple weeks would materially increase the risk that the economy would stall out and we would have a double-dip.

MR. GIBBS:  And I would say this.  I think that most people -- I think you’ve seen --

Q    You believe a double-dip recession if this bill does not pass?

MR. SUMMERS:  -- what I said.  What I said was that it would significantly increase the risk.

MR. GIBBS:  And I would say this.  I mean, I think the likelihood -- as Larry said, we wanted to get this done quickly. And I think as you’ve seen throughout the course of the day, you’ve seen more and more people both in and out of Washington -- no, actually --

Q    Yes, but --

MR. GIBBS:  I don’t actually think it’s like this, Margaret. I think the more people look at what is in this -- what Larry talked about, the reason that you had a surprise among people that looked at the economy is they didn’t think you were -- they barely thought we’d get UI.  They certainly didn’t think -- and you can ask people all over this town whether they thought that a 99-week benefit extended throughout 2011 was possible to obtain in an agreement like this, and most people would tell you there’s no way.  You’ll go to 72; you’re not going to get 99.  They didn’t think either Make Work Pay or the money involved in Make Work Pay would be in any agreement.

MR. SUMMERS:  Let alone doubled.

MR. GIBBS:  Right.  And it is concentrated in the economic activity of one year.

Q    Well, but on the Hill you don't have it yet -- not officially, at least.  And what I'm asking is --

MR. GIBBS:  No, no, what I'm saying, Margaret, is I think that -- I think as people look at this, and I think people as they understand the refundability of the tax credits that were not going to be in there -- they didn’t think we’re going to be in there -- they basically thought we were doing this -- for high end, you’d get a few months of UI.  We got certainty for the middle class, certainty for UI, the most stimulative thing, as Larry said, through the end of 2011; a payroll tax cut, 2 percent of up to $106,800, which is the level at which people no longer pay payroll tax.  Take your salary, multiply it by .02 -- that's your tax cut next year.

And all of that certainty, none of -- people did not think that was in that.

I think the more people look the what is in this, the more people will understand and agree that what is in this agreement exceeds what they thought would ever be in that agreement and far exceeds what will be in any agreement come January 5th.  It just won't be.  

Q    But, Robert, Barney Frank was saying, who I assume understands what’s in the bill, and Chris Van Hollen -- says he’s not voting for it, period.  Chris Van Hollen, who was part of the negotiating effort, understands what’s in the bill, said that because of the estate tax provision he may not vote against it.  So you have people --

MR. GIBBS:  May not vote against it or --

Q    May not vote for it.  Excuse me.  So there are people who have looked at it and -- Democrats on the Hill.  So you can you guys just reflect on the division this seems to be causing within your own party?

MR. GIBBS:  Look, I think you heard the President quite clear yesterday.  If we ran the world, David, we wouldn't have upper-income tax rate increases --

Q    You don't?

MR. GIBBS:  No.   

Q    He’s the leader of the free world.

MR. GIBBS:  No, President of the United States.  President of the United States.

Q    He’s the leader of the free world.

MR. GIBBS:  Well, we can quibble about whether or not we have the ability to get anything we want to get done by waving the invisible magic wand that is somewhere in the West Wing.  But you don’t have the ability -- we wouldn’t do the upper-end tax rates, and we wouldn’t do the add-on to the estate tax.

Understand that the amount of money, David, that we added through -- Kyl-Lincoln adds I think about $12 billion a year times two years on to the bottom line.  There were estate tax provisions -- right now, we’re at zero.  If you pass away this year, regardless of the size of your estate, there is no exemption and there is no rate.

So, again, would we have extended that above basically what I think a 2009 rate or something like that?  We wouldn’t have done that.  But we don’t -- that’s part of what the compromise was.   

But, David, I think if you look at the other side of that ledger, the refundability of those tax credits, the certainty of UI, most importantly the thing that costs the most money in this agreement, two years of those middle-class tax cuts, plus a concentrated at least 2 percent payroll tax cut -- that greatly outweighs, in our opinion, the benefits.

Q    I think a lot of people understand that.  But then why is that still not working with people like Barney Frank and Chris Van Hollen?  I don’t think they disagree with you on the contours.

MR. AXELROD:  I guess the question back for those who ask that question is where does this go?  What is the endgame?  And what are the consequences of playing it?  Do they have a sense of how this ends?  And how long will that take?  Because as Larry said, there are real consequences to that.  Just as the forecast went up on the basis of this agreement, they will go down if this agreement fails.  That we know.  We know that on January 1st, people’s taxes will go up.  We know that at the end of this month, 2 million people will lose their unemployment insurance.  And so there are real consequences to that decision.  

I think we all stipulate, the President did, no one likes those provisions that they dislike.  But on the other side of the ledger are significant things that will help people and help the economy.  And what we know for sure is without any of it, we’re facing a really, really difficult situation and families across this country will be facing a really difficult situation.  So that's the choice that people need to take up.  

MR. SUMMERS:  It’s important to understand that if this process were hypothetically to break down and a bill was not to be passed before this Congress recess, not only would the upwards revisions you’ve all read about today be reversed, but a set of downwards revisions would commence because those who expected some unemployment insurance to continue would revise down their expectations.  The universal expectation that the Bush middle-class tax cuts would somehow get extended would be revised downwards.  Judgments about confidence would be revised downwards.  And I don’t think at the end of the day that Congress will take a step that materially increases the risk that this economy would stall out.

Q    Larry, a couple of times you’ve used the phrase, “fiscal support for growth.”  Is that fiscal stimulus?

MR. SUMMERS:  Yes, it is putting money in people’s pockets, so that they will have an opportunity to pay their debt down and be in a stronger position to spend.

Q    So this is a second stimulus?

MR. SUMMERS:  No, I don’t think that’s the right way -- I don’t think that’s the right way to think about it at all, actually.  The original Recovery Act included a whole set of spending measures directed at doing what I think at that time was very important, providing a major public investment support for the economy.

Q    So this fiscal stimulus is a non-stimulus package?

MR. SUMMERS:  I’m not going to play semantic games for you. These are fiscal measures that promote growth, in the judgment of the very substantial majority of economists who study these things and process them --

Q    In terms of the bond yield, if we could just do this -- you guys -- how close are you watching the 10-year note?  I mean, it’s at 3.3 percent now.  Are you closely watching this?

MR. SUMMERS:  I think you can safely assume that the public authorities watch the bond market very closely every day.  This day is no exception.

Q    Larry, could you tell whether it makes any difference to do the payroll tax on the employee -- all on the employee side versus the employer side?  And, David, could you say whether you think the President’s willingness to compromise is going to be a plus with independents?

MR. SUMMERS:  What most economists believe is the -- in the medium to long run, it doesn’t really make a difference which side of the market you put a tax on.  In the short run, when wages are relatively rigid, by providing the tax on the employee side, you put money more quickly and more directly in people’s pockets in the way that this is done.

MR. AXELROD:  In answer to your second question, look, I think the American people don’t think in the same terms as people in this town and they’re not thinking of this as a political strategy.  They just want the assurance of knowing that their taxes aren’t going up, and they want us to do things that will produce accelerated growth and jobs.  And if we do that, I think that they’ll look favorably on it.  If we don’t do that, and this gets mired in the kind of Washington-style gridlock, I think they’ll be angry.  And they’ll be angry at everyone.  They’re not just going to be angry at one party or the other.

So -- but the premise of your question perhaps is, what are the political calculations behind this?  Here’s the political calculation -- that we’re going to do best when we do what’s in the best interest of people across this country.  We’re going to do best when we do what produces the greatest economic punch and gets people back to work at a more rapid pace.  And that’s the only equation the President has been working on.

MR. GIBBS:  Wendell.

Q    At the risk of trying to push you on this, there seems to be a conscious effort to put the President’s face on this deal.  Robert has canceled his briefing two days running.  We’ve heard from the President.  Talk to me about that and talk to me about the price of the President signing a deal that most Democrats don’t support, which this could be.

MR. AXELROD:  Well, Wendell, you heard Larry speak about the positive impacts of this and the potential negative impacts of not doing it.  This is a weighty decision for the country and for people across this country.  And it’s thoroughly appropriate for the President of the United States to be on point on this, and that’s why he’s there.  We want people to understand the magnitude of this decision.  And so he’s the person that needs to make that case and he’ll continue to make that case.

MR. GIBBS:  April.

Q    The President was passionate yesterday at the podium, but many Democrats on the Hill are saying they want to see that passion, they want to hear for themselves, they want the President to sell this bill to them.  Now, so far on the schedule it’s not there for the President to go on the Hill.  Is he going to go on the Hill to try to sell this to his party?

MR. GIBBS:  There is -- Vice President Biden was up at the Senate caucus --

Q    With all respect, it’s not the President.

MR. GIBBS:  No, no, with all due respect, let me just try to finish my answer.  

He was up at the Senate Democratic caucus.  I believe Jack Lew and Gene Sperling are back up there today -- because we understand people have a lot of questions.  The Vice President is scheduled to at either 4:30 p.m. or 5:00 p.m. today go up and see the House Democratic parties.  There’s nothing on the President’s schedule.  That doesn’t preclude at some point that happening.

I think that -- but I will say this, April.  I think the President in his statement announcing the agreement was outlining why he thought it was best for the economy.  When he was in here yesterday, he was doing that.  When he was with the Polish President, he was doing that.  And as we said to Wendell’s question, the President will continue to be out there ensuring that people understand what’s in this, what’s at stake.

As David said, what happens on New Year’s Day when people wake up and realize their taxes have gone up?  They blame everybody in Washington.  And the likelihood that we’re going to then come back and somehow get an agreement that is tangibly better than where we are right now, I think you’d really have to ask somebody who said that -- somebody who says, let’s have some eight-week fight, and on February the 15th -- come in and say, all right, now, we’re ready to make a compromise.  Who on Earth  -- who on Earth thinks that that is somehow going to be a fundamentally better agreement than the one we’re looking at now? Nobody that I have ever talked to.

Q    Congressman Ed Towns, outgoing head of Oversight and Government Reform, says he was disappointed.  He felt that he should -- the President should have held the line and the rich should pay more; that this country was founded on compromise, but it wasn’t really a compromise.  It was giving the rich more and leaving the poor not getting what they deserved.

MR. AXELROD:  As Larry pointed out, the bill that the House passed would have been less kind to low-income people than the agreement that the President has reached.  So it’s hard to understand how you could vote for something less generous and then say this is not fair to low-income people.  We fought very hard to make sure that there was equity for people at the bottom of the income scale as well as the top and everyone in between.

MR. GIBBS:  Go ahead, I'm sorry.

MR. AXELROD:  No, no, go ahead.

Q    When the President laid out -- outlined the tax cut compromise, he left some pretty important gaps in the equation.  Does the President want to include in any compromise an extension of the Build America Bonds program?

MR. SUMMERS:  There are a number of provisions that are very important to the President that he would like to see ideally in the context of this bill; if not then, in the context of next year.  Build America Bonds is one of them.  The 1603 and 1705 programs are other examples.  And there are more as well.  

There is much we can do to get this economy started.  As I think we’ve emphasized repeatedly, this is a compromise, and therefore it does not reflect our ideal blueprint.  We would like to see it be better.  We will continue to pursue -- we won’t, because I won’t be here but -- (laughter) -- the President will continue --

MR. AXELROD:  Wait a second.  (Laughter.)  

MR. SUMMERS:  -- the President will continue to pursue these priorities next year.

Q    The President would like to have it in this current bill, but if it doesn’t work out he would go for it for next year?

MR. SUMMERS:  There’s a compromise that’s been reached.  There’s now a legislative process.  The President believes that Build America Bonds have made a very important contribution to spurring the various kinds of construction at the state and local level to strengthening the nation’s capital markets.  He’d like to see them go forward.

Q    This deal is take it or leave it, though, right?

MR. GIBBS:  Well, look, I think if somebody could improve it and convince everybody to still be on it, I don’t think anybody would say no.  I think the agreement that we have explained and we have outlined I think is the framework and the basis and the foundation of what Congress will ultimately consider.

Q    Build America is not currently in that package that’s been presented?  

MR. GIBBS:  Not that I'm aware of.

Sam.

Q    Yes, I wanted to ask you, you said a few minutes ago the agreement takes the UI -- the politics out of the UI extension for the next 13 months, through 2011.  Was there any consideration given to -- assuming you’re going to need to extend it again, which I think is a safe assumption, is there any consideration to having this fight again during the height of the Republican primary season?

MR. GIBBS:  Again, I think one year was what I think throughout the negotiations was there.  And if at the end of 2011, the President believes we need to seek an extension and a continuation of the 99-week benefit, I can assure you that we’ll make that case.  Just as we did at other times in which Republicans refused initially or over the course of several votes to extend it, we’ll continue to fight for it.

Q    Robert, can I --

MR. GIBBS:  Hold on --

MR. AXELROD:  Let’s be clear also that a three-month extension failed the House just in the last couple of weeks -- this House.  So this is a significant improvement over what couldn’t even pass this Democratic House.

Q    Robert, could you comment on the role of the Vice President --

MR. GIBBS:  Let me run around here for a second and we’ll come back.

Q    Thank you.

MR. GIBBS:  Yes, sir.

Q    Well, it sounds like you’re open to at least tinkering with the compromise, so to speak, as long as it doesn’t lose votes.  Is that a fair assessment?  I have just a quick follow-up.

MR. GIBBS:  Well, I appreciate the simplicity with which you made that statement.  I think the math and the physics and the blood and the sweat that might go and be involved in that I’m not entirely sure I would quite as simply submit.

Q    Okay.  And then the follow-up question is, you talked about your unwillingness to play Russian roulette with the economy at this juncture --

MR. AXELROD:  And with the lives of the American people --

Q    And with the lives of the American -- for Democrats who are now looking two years down the road to when these rates are going to expire now, what do you say to them when they ask why would you be willing to go to the mat to allow these rates to expire --

MR. AXELROD:  Well, I would say that we are going to be in a significantly different place in two years in our economy, assuming we make the right decisions here.  And we’ll have also gone through a period where I think it’s going to be painfully obvious the choices and the trade-offs involved in this.  And I think we’re going to have more leverage in that debate where the American people aren’t in a position to be held hostage, Sam.

And the truth is that the Republican position was they wanted a permanent increase in these tax cuts for the wealthy.  The President resisted that.  The President made clear he would veto that.  The second offer or line, was, well, let’s just do two years of the Bush tax cuts.  The President rejected that.  The President said he would veto that.

So I understand your question, but ours is not so much to worry about appearances.  Ours is to worry about the fate of the economy, how the American people are going to fare in a still difficult time.  And that's what’s framing our decision-making here.

MR. GIBBS:  Peter.

Q    Robert, thank you.  Can you talk a bit about the President’s commitment to deficit reduction and whether there might be some conflicting signals here?  In saying he wants to freeze federal salaries, some would say that's a token decrease in the federal deficit.  But in prolonging the tax cuts for high-end Americans, that that is a potentially substantial increase in the deficit.  What are Americans who are watching from home --

MR. SUMMERS:  Let me take that, if I could.  Look, I think the President has been consistent on this for quite a while.  We have got to do two things:  We have got to get growth and job creation going in the short run, and we have got to improve the picture in the long run.

The federal pay freeze isn’t just a reduction in the budget deficit in the short run because pay is set on the basis of a raise, and then a raise, and then a raise from a base.  By reducing the pay -- by freezing payroll growth for the next two years, he reduced the deficit all the way out through the out-years.

The tax measures in most cases here are explicitly temporary and are unlikely to be further extended and -- with the principal exception of the expensing tax provision, which is actually an increase in the taxes in 2015.  

So to repeat what I said before, this bill will reduce the projected 2015 deficit -- reduce the projected 2015 deficit because of the increase in corporate tax collections in 2015 and by raising the benchmark forecast of GDP.  So it’s actually very consistent with the President’s stated priority for the long-run deficit reduction.

Q    Could you comment on the Vice President’s role in reaching this agreement -- not from here forward, but reaching this agreement?  There are some members on the Hill who felt misled and felt that he had indicated that the President would be sticking and fighting on the high-end tax cuts more than actually occurred.  Was he the lead negotiator, the Vice President?

MR. GIBBS:  Well, look, I think the Vice President obviously -- I think has done a terrific job and got, as I said earlier, and I think we all have said, a very good agreement that remains imperfect.  And I think the Vice President would be the first person to tell you that.  

I want to say this.  The President has been opposed to extending the upper-end tax rates for -- you have heard me say that in this room a couple of thousand times probably since September -- the President has been opposed to increasing the upper-end rates since David and I worked for him when he ran for the United States Senate.

The notion somehow that either we didn't fight for that or that was a position that wasn’t apparent I just don't -- I fail to understand.  I think the Vice President has -- I think he was tough in ensuring that refundability of important tax credits, an extension of the certainty of unemployment benefits, and in ensuring that the bang for the buck that we’re going to see by combining two years of Make Work Pay into a one-year employee payroll tax cut is a good deal.

MR. AXELROD:  And I want to just add to that.  The Vice President, his role at the outset of this was not as a negotiator.  His role was as someone who had relationships across the aisle in the Senate as a result of 36 years in the United States Senate.  And he was -- in his soundings, he got a sense of what was possible and what was not possible.  

He became more actively involved at the end in negotiations as things accelerated because of that relationship.  But one of the great values he has here is his knowledge of the Senate and the personalities there, years of relationships, and that's useful and we’d be crazy not to take advantage of that.

Q    Robert, I just want to make sure we ask about “don't ask, don't tell” because there’s a big vote in the Senate tonight.  What kind of calls is the President making?  Is he talking to senators who are on the fence and --

MR. GIBBS:  The President -- I’m not going to get into a list of whom, but the President has over the course of the past several days made calls to Democrats and Republicans on two very important issues to him:  passage of the DREAM Act and repeal of “don't ask, don't tell”.  

I think we are -- on “don't ask, don't tell,” I think we are very, very close to seeing that repeal pass.  You’ve had important endorsements over the past few days.  And I think, in many ways, as a result of the process and the survey that the Pentagon issued last week, the President is hopeful and encouraging Democrats and Republicans to get behind that repeal.

Yes, sir, and then I’ll go back --

Q    Thanks.  This administration, as you know, Mr. Summers, predicted that with the passage of a $787 billion stimulus plan, the unemployment rate wouldn’t jump above 8 percent.  And obviously that didn't come to pass.  How difficult is it for you as an economic advisor to the President to come out here and talk about your forecasts about what this economic stimulus plan will do for the U.S. economy?  And how difficult is it for you to make this same argument to the skeptical members that you have of your party?

MR. SUMMERS:  I think it’s very important to distinguish between what is unknowable and what is relatively easy to judge based on economic models.  What can be judged, based on economic models, is the change in our language, the delta associated with a given program.  What is impossible to know is what shocks will hit the economy in the future, what traditional relationships will break down, what kinds of surges in confidence will or will not take place.  

So I would not presume to be able to judge with any significant degree of accuracy what the growth rate will precisely be, or what the unemployment rate will be at a given date as was recognized in that forecast.  Those are extremely uncertain.  What one can judge is what the impact of a given change will be.  I know that if I wear my coat home tonight, I’m going to be a bunch warmer than if I don’t wear my coat home tonight.  But I don’t know what the temperature is going to be when I walk home tonight.  

In the same way, we are able to make estimates of the impact of a change.  And, as I’ve said, it’s not just our judgment, but it’s the judgment of a very broad range of economists that the measures that have come along as part of this compromise that most people did not expect would be legislated this year will materially and significantly affect growth, the number of jobs, and the unemployment rate over the next year or two.

Q    So was it a mistake to make that initial forecast about the U.S. unemployment rate dropping --

MR. SUMMERS:  We’re looking forward.

MR. GIBBS:  Yes, ma’am.  

Q    A lot of congressional Democrats came out of caucus yesterday and said they were seeking modifications to the tax package.  How locked in are you to the specifics of this package, especially with Republicans?  Do you think this is the only package that can get the votes?

MR. GIBBS:  Well, again, I would repeat what I said I think when Sam asked about that.  I think what we have laid out, what you have seen, and what Vice President Biden and the President have talked about, is the foundation, the framework of an agreement that we expect to be voted on.  I don’t know what types of changes those individual members are talking about.  But as David said in an early answer, too, the agreement that we’ve outlined is materially better than -- includes more aspects that help all ranges of middle- and working-class families that weren’t involved in earlier legislation.

Q    Did you promise Republicans you wouldn’t change this?  Is this where you’re locked in?

MR. GIBBS:  Again, I think this is the basis of -- the framework of what will ultimately be voted on.

Q    -- just to small, little additions?  I’m not sure what you mean by “framework.”  

MR. GIBBS:  I’d refer you, again, to what I said to Sam.  Again, understanding that -- look, if somebody can figure out how to change this thing and keep everybody happy, I don’t doubt that -- Bill, let me just finish my answer, if I can.  If somebody can figure out how to get that done, I don’t doubt that anybody on Capitol Hill or here would listen.  I will say that’s not going to be an easy thing to do.

Jackie, then Ben, and then, I’ll go to Bill.

Q    Robert, you said that he is calling people on the DREAM Act and the “don’t ask, don’t tell.”  No plans yet to go to the Hill.  Is he calling anyone about this tax package?  Is he bringing people in?  

MR. GIBBS:  At this point, I’m not aware of any calls he’s made specifically around this at this point.  Again, the Vice President has been up yesterday, staff up today, and the Vice President up also later today to the House.

Q    You don’t feel he needs to be personally --

MR. GIBBS:  I think he was personally involved on Monday.  I think he was personally involved on Tuesday.  I think he is personally involved today.  I think, as Wendell said --

Q    On a one-on-one basis?

MR. GIBBS:  Again, I don’t preclude that that will happen --

Q    And one other thing.  There’s a lot of talk on the Hill or sense that White House aides, no names attached, are putting out word that they’re to blame for this issue being here at the end of the year and that’s it’s an intentional tactic on you all’s part.

MR. AXELROD:  Jackie, I think that to people in the country who are watching this, they’re a heck of a lot less interested in us trying to blame people for failure than in succeeding, and making sure that their taxes don’t go up; that our economy improves; that unemployment insurance continues for people who need it.  And we should spend less time worrying about pointing fingers and more time working to get this done.  And that’s what we’re urging.

MR. GIBBS:  Ben.

Q    Thanks, Robert.  Two questions.  Following up on Jackie’s point, it seems like this argument that we heard Larry make about potential risk, significant risk of a double-dip recession is obviously serious and compelling.  It’s the kind of thing that the President would call lawmakers about and say, can we get this done?

MR. GIBBS:  Fret not, my friends.  Fret not.

Q    Well, but can you provide --

MR. GIBBS:  But it’s all --

Q    -- some context?  Is that the kind of thing in a delicate matter like this that you do maybe closer to a vote?

MR. AXELROD:  Can I just say this?  And I don't want to get into semantics about calls versus -- the President’s --

MR. GIBBS:  We’re way past that --

MR. AXELROD:  Yes.  (Laughter.)  The President’s interacted with the leaders of Congress.  He’s interacted with members of Congress.  He got a chance to chat, however briefly, with members of Congress Monday night on this.  He’s interacting with -- the President is interacting with members of Congress all the time.

Robert’s point is he’s also saying publicly what he would say privately about why this is important.  So he’s making his case not just to the members but to the American people.

MR. GIBBS:  I doubt there are many on Capitol Hill who don't have a sense of where he is on this.

Q    May I ask a non-semantic --

Q    The other topic we wanted to ask about was on START.  The President spoke very confidently about that today -- he expects it to come up and be debated and passed.  Can you offer any context about what that confidence right now is based upon?

MR. GIBBS:  Well, I think if you look at the past several days, Senator Gregg, retiring senator from New Hampshire, said good things about the START deal -- the START treaty just yesterday.  

I think you have seen members -- particularly Republican members -- Senator Corker, Senator Voinovich and others who have said they’d like to see this thing -- Senator McCain -- like to see this treaty come up and like to see this treaty ratified this year -- not to mention the eloquent arguments that the past five Republican secretaries of state have made publicly and privately to their colleagues.

I, like the President, believe that this will come before the Senate before it goes home.  I think the Senate will have a full and robust debate on this.  And I think when they go home, the President will have passed a significant portion of his nonproliferation agenda that will considerably cut the deployed nuclear weapon stockpile that each of these countries has pointing at each other right now.  And we know in parts of the world, those type of weapons falling into the hands of terrorists would be unthinkable.

Q    Do you think you have the votes right now?  Or is that going too far?

MR. GIBBS:  I think if they voted on it right now, it would pass.

Q    Can I follow up on Ben’s question?  Did Senator McConnell say -- guarantee that -- or commit to making sure there wasn’t going to be any blocking of trying to bring this up, or that there wouldn’t any -- on START?

MR. GIBBS:  I don't know the answer to that.

Bill.

Q    -- Speaker Pelosi -- still -- has said that the estate tax is “a bridge too far,” she called it.  I notice that you did not mention that, Larry, in your opening five things that this --

MR. SUMMERS:  I did.

Q    I didn't hear it stressed --

MR. SUMMERS:  I mentioned two things that we had compromised on that the President strongly disapproved of -- the high-income tax cuts and the estate tax.

Q    And -- I mean, a Republican member told me yesterday they were stunned that the estate tax was thrown in, $5 million they didn't even think was on the table.  So the question is, could you have just as good a deal without that estate tax provision?

MR. SUMMERS:  Not in the judgment to the people who negotiated the deal.  I think it was very clear that while it was surprising to some, the Republicans were enormously committed to delivering that benefit to what is, after all, only 6,400 families.  And therefore a whole range of things that they had previously been very, very uncomfortable with -- support for middle-income families, unemployment insurance --

MR. AXELROD:  Bill, let me just add to what Larry said -- that's -- people were also surprised that we got 13 months of UI. People were surprised that we got these refundable tax credits.  People were surprised that we got the payroll tax cut in here.  So there were surprises on both sides.  And if you look at the ledger, we came away with more significant tax relief for the middle class and more for the economy than anybody thought possible.  So the nature of this compromise is there were surprises on both sides.

MR. GIBBS:  Let me get Richard, and then we’ll --

Q    Let me follow on that answer, David.  If that's the case, what’s wrong with this picture that you have Republicans pretty much in agreement that this is a good deal and the Democrats squawking? You would think if it was a compromise, you’d have equal numbers on both sides dissatisfied.  And it seems like all the dissatisfaction is on the Democratic side.

MR. GIBBS:  Well, I don't know if you guys get Sarah Palin’s tweet, but it does not appear she likes this deal.  I don't know where Jim DeMint is at the current moment but it does not appear that he likes said deal.

MR. AXELROD:  Representative Bachman was critical because she didn't like the unemployment insurance elements of it.  There’s dissent on their side.  Admittedly, they're better at stifling dissent on their side than we are.  (Laughter.)  But you know, the Democratic Party is democratic.

Q    Has Senator McConnell committed to giving the majority of Republicans will vote for this deal as currently -- have they actually committed to that to you --

MR. GIBBS:  I don't know where that discussion -- if that discussion was had or where it is.

Jake, did you have something?

Q    I just wanted to ask about the report from the Office of the Director of National Intelligence that came out I believe yesterday, but sometime this week -- stating that it’s the judgment of the intelligence community that five detainees released or transferred from Guantanamo under President Obama, under this new revised system -- two of them are confirmed returned to terrorism; three of them are suspected.

And I’m wondering if this is causing -- since this new system has -- requires the unanimous vote of all the members of this group, I’m wondering if this is causing anyone in the administration to think that maybe this revised system isn’t good enough.  I know that it’s a smaller number than happened under Bush.  And I know that you never said that it wouldn’t happen.  But I’m wondering if there are now going to be any changes in the procedure?

MR. GIBBS:  Well, I would, first and foremost, refer you to the comment that we put out and the comments from DNI.  

Q    That didn’t address that, though, on whether there would be revisions.

MR. GIBBS:  Right.  Look, I think that we will certainly continue, based on all sorts of information coming from all over the world in order to make determinations about the likelihood that some are more susceptible to -- upon leaving Guantanamo Bay, whether they’re more susceptible to returning to terrorism.  I have no doubt that they will continue to evaluate that.

Obviously -- and I have not read the full report, but in a number of these -- in some cases -- and, again, I don’t want to take these five -- I don’t know the exact reasoning behind -- go back and look at the report -- but in many cases -- in some cases, some of the transfers have been -- some of the transfers are required by law, because there is not either sufficient evidence with which to charge individuals and there’s not sufficient reason to continue to hold them.

Thanks, guys.

Q    A quick oil question?  Oil prices are up really high.  Why?  And -- (laughter.)

MR. SUMMERS:  Oil goes up and oil goes down.

END
3:16 P.M. EST