    [Public Papers of the Presidents of the United States: George W. Bush (2007, Book II)]
    [August 9, 2007]
    [Pages 1052-1064]
    [From the U.S. Government Publishing Office www.gpo.gov]

    The President's News Conference
    August 9, 2007

        The President. Good morning, thank you. When I came into office in
    2001, our Nation was headed into a recession, so we cut the taxes across
    the board. And hard-working Americans have used this tax relief to
    produce strong and lasting economic growth.
        Since we began cutting taxes in 2001, our economy has expanded by
    more than $1.9 trillion. Since the tax cuts took full effect in 2003,
    our economy has added more than 8.3 million new jobs and almost 4 years
    of uninterrupted growth. Inflation is low; unemployment is low; real
    after-

    [[Page 1053]]

    tax income has grown by an average of more than $3,400 per person since
    I took office. The American economy is the envy of the world, and we
    need to keep it that way.
        Our economy is growing in large part because America has the most
    ambitious, educated, and innovative people in the world, men and women
    who take risks, try out new ideas, and have the skills and courage to
    turn their dreams into new technologies and new businesses. To stay
    competitive in the global economy, we must continue to lead the world in
    human talent and creativity.
        So in my 2006 State of the Union Address, I announced the American
    Competitiveness Initiative, and I called on Republicans and Democrats in
    Congress to join me in this effort to encourage innovation throughout
    our economy. As part of this initiative, I asked Congress to expand
    America's investment in basic research, so we can support our Nation's
    most creative minds as they explore new frontiers in nanotechnology or
    supercomputing or alternative energy sources. I asked Congress to
    strengthen math and science education, so our children have the skills
    they need to compete for the jobs of the future. I asked Congress to
    make permanent the research and development tax credit, so we can
    encourage bolder private sector initiatives in technology.
        Today I'm going to sign into law a bill that supports many of the
    key elements of the American Competitiveness Initiative. This
    legislation supports our efforts to double funding for basic research in
    physical sciences. This legislation authorizes most of the education
    programs I called for in the initiative I laid out at the State of the
    Union. These programs include Math Now proposals to improve instruction
    in mathematics and the Advanced Placement program my administration
    proposed to increase the number of teachers and students in AP and
    International Baccalaureate classes.
        These are important steps forward, and so I'm going to sign the
    bill. I'm looking forward to it. Yet the bill Congress sent to my desk
    leaves some of the key priorities unfulfilled and authorizes unnecessary
    and duplicative programs. I will continue to focus my budget requests on
    the key priorities in the bill I outlined and will work with Congress to
    focus its spending on those programs that will be most effective.
        I will continue to press Congress to approve the remaining measures
    of the American Competitiveness Initiative. These measures include the
    Adjunct Teacher Corps program to encourage math and science
    professionals to take time out of their lives and teach in our schools
    and to inspire the youth to become more interested in math and science.
    I believe Congress ought to make the research and development tax credit
    a permanent part of the Tax Code to encourage investment.
        The bill I will sign today will help ensure that we do remain the
    most competitive and innovative nation in the world. I thank Members of
    Congress from both parties who worked hard to secure its passage. I
    particularly want to thank Senators Pete Domenici, Jeff Bingaman, Lamar Alexander, and John
    Ensign, as well as Congressmen Bart
    Gordon and Vern Ehlers.
        You know, this bill shows that we can work together to make sure
    we're a competitive nation. There's a lot of areas where we can seek
    common ground coming this fall, and I'm looking forward to working with
    members of both parties to do that.
        Thank you for coming. I'll be glad to answer some of your questions,
    starting with you, Terry [Terence Hunt, Associated Press].

    Transportation Infrastructure

        Q. Mr. President, former chairman of the House Transportation
    Committee, Republican Don Young, says there are about 500 bridges around
    the country like the one that collapsed in Minneapolis last week.

    [[Page 1054]]

    And Young and other Transportation Committee members are recommending an
    increase in Federal gasoline taxes to pay for repairs. Would you be
    willing to go along with an increase in gasoline taxes of 5 cents a
    gallon or more?
        The President. First of all, Secretary Peters is gathering information and will report to the White
    House and report to the Nation about what she finds about whether there
    are any structural design flaws that may be applicable to other bridges.
    She's in the process of gathering this information now.
        The American people need to know that we're working hard to find out
    why the bridge did what it did, so that we can assure people that the
    bridges over which they will be traveling will be safe. That's step one.
        You know, it's an interesting question about how Congress spends and
    prioritizes highway money. My suggestion would be that they revisit the
    process by which they spend gasoline money in the first place.
        As you probably know, the public works committee is the largest
    committee--or one of the largest committees in the House of
    Representatives. From my perspective, the way it seems to have worked is
    that each member on that committee gets to set his or her own priority
    first, and then whatever is left over is spent through a funding
    formula. That's not the right way to prioritize the people's money. So
    before we raise taxes, which could affect economic growth, I would
    strongly urge the Congress to examine how they set priorities. And if
    bridges are a priority, let's make sure we set that priority first and
    foremost before we raise taxes.

    Situation in Pakistan

        Q. Thank you, Mr. President. One of your chief allies in the war on
    terrorism, President Musharraf of Pakistan, has faced so much
    instability and civil strife recently that there has been talk of
    declaring a state of emergency. How concerned are you about President
    Musharraf's situation and whether this might undermine Pakistani efforts
    against the Taliban and Al Qaida elements in the bordering areas of his
    country, which have been roundly criticized recently?
        The President. You know, I've seen the reports of what they call an
    emergency declaration. I have seen no such evidence that he's made that decision. In my discussions with President
    Musharraf, I have reminded him that we share a common enemy, extremists
    and radicals who would like to do harm to our respective societies. In
    his case, they would like to kill him, and they've tried.
        I have made it clear to him that I would expect there to be full
    cooperation in sharing intelligence, and I believe we've got good
    intelligence sharing. I have indicated to him that the American people
    would expect there to be swift action taken if there is actionable
    intelligence on high-value targets inside his country. Now, I recognize
    Pakistan is a sovereign nation, and that's important for Americans to
    recognize that. But it's also important for Americans to understand that
    he shares the same concern about radicals and extremists as I do and as
    the American people do.
        So my focus in terms of the domestic scene there is that he have a
    free and fair election. And that's what we have been talking to him
    about, and I'm hopeful they will.
        Yes, we'll just go down the line here. Yes, you.

    Pat Tillman

        Q. Thank you, Mr. President. You speak often about taking care of
    the troops and honoring their sacrifice. But the family of Corporal Pat
    Tillman believes there was a coverup regarding his death, and some say
    perhaps he was even murdered, instead of just friendly fire. At a
    hearing last week on Capitol Hill, your former Defense Secretary, Donald
    Rumsfeld, other officials used some version of ``I don't recall'' 82

    [[Page 1055]]

    times. When it was his term to step up, Pat Tillman gave up a lucrative
    NFL career, served his country, and paid the ultimate sacrifice. Now you
    have a chance to pledge to the family that your Government, your
    administration will finally get to the bottom of it. Will you make that
    pledge to the family today, that you'll finally, after seven
    investigations, find out what really happened?
        The President. Well, first of all, I can understand why Pat
    Tillman's family, you know, has got significant emotions, because a man
    they loved and respected was killed while he was serving his country. I
    always admired the fact that a person who was relatively comfortable in
    life would be willing to take off one uniform and put on another to
    defend America. And the best way to honor that commitment of his is to
    find out the truth. And I'm confident the Defense Department wants to
    find out the truth too, and we'll lay it out for the Tillman family to
    know.
        Q. But, Mr. President, there have been seven investigations and the
    Pentagon has not gotten to the bottom of it. Can you also tell us when
    you, personally, found out that it was not enemy fire, that it was
    friendly fire?
        The President. I can't give you the precise moment. But obviously,
    the minute I heard that the facts that people believed were true were
    not true, that I expect there to be a full investigation and get to the
    bottom of it.

    2008 Presidential Election/Al Qaida in Pakistan

        Q. Sir, on Monday at Camp David, when you met with President Karzai
    from Afghanistan, you were asked if you had actionable intelligence in
    Pakistan of top Al Qaida leaders, would you take action unilaterally; if
    in fact you felt that President Musharraf simply, for one reason or
    another, just simply couldn't get his people there in time, would you
    move in? And you said, if we had actionable--good, actionable
    intelligence, we would get the job done.
        My question, one, is, who is ``we''? Does that we include the
    Pakistanis or--because the question says, Musharraf wouldn't be able to
    be in--would you do it unilaterally? And one reason this is a hot
    question this week is that one of the Democratic Presidential
    candidates, Barack Obama, talked about taking unilateral action. He kind
    of got beaten up by people in the Democratic Party and by Mitt Romney in
    your party, Romney comparing him to Dr. Strangelove. I don't know if you
    would agree with that, or if you would feel----
        The President. John [John Cochran, ABC News], I suspect that over
    the course of the next months, when I hold a press conference, you'll be
    trying to get me to engage in Presidential politics; trying to get me to
    opine about what candidates are saying, whether they be Republicans or
    Democrats. And hopefully, I'll be disciplined enough not to fall prey to
    your question, not to fall into that trap.
        To the question you asked and to my answer in Camp David, I said I'm
    confident that we--both the Paks and the Americans--will be able to work
    up a plan, based upon actionable intelligence, that will bring the top
    Al Qaida targets to justice. I meant what I said. We spend a lot of time
    with the leadership in Pakistan, talking about what we will do with
    actionable intelligence. And the question was, am I confident that they
    will be brought to justice? And my answer to you is, yes, I am
    confident.
        Q. Are you confident--permit me to have one followup, sir?
        The President. Sure.

    Intelligence/Pakistan

        Q. I assume the CIA----
        The President. See, we're getting into kind of a relaxed period
    here. I'll try to be more accommodating to fellows like you.
        Q. It's widely assumed that the CIA operatives are in Pakistan,
    cooperating with

    [[Page 1056]]

    the Pakistanis, and that they're sharing everything with you and vice
    versa. Is that a fair assumption?
        The President. John, what's fair is, I'm not--what you must assume
    is that I'm not going to talk about ongoing intelligence matters.
        Yes, sir.

    Progress in Iraq

        Q. Mr. President, I was talking with a journalist about an hour ago
    in Baghdad who says, to be a cynic in Iraq is to be naive at this point;
    that there is discernible progress, undeniable progress on the
    battlefield, but there is just as discernable and undeniable lack of
    progress on political reconciliation. Given the premise of the surge is
    to give the Iraqi Government breathing space to get its business done,
    given that they're not getting their business done, are the American
    people entitled to hear from you more than, ``I've told Prime Minister
    Maliki he's got to do better''?
        The President. As you know, General Petraeus and Ambassador Crocker will be
    coming back to report on the findings of the success of the surge. The
    surge success will not only include military successes and military
    failures but also political successes and political failures. And my own
    perspective is, is that they have made some progress but not enough. I
    fully recognize this is a difficult assignment. One of the things that--
    it's difficult because of years of tyrannical rule that have created a
    lot of suspicions. And there's a lot of--these folks need to trust each
    other more.
        Secondly, from my perspective, we're watching leaders learn how to
    be leaders. This is a new process for people to be democratic leaders.
    Now, no question, they haven't passed some of the law we expected them
    to pass up to now. That's where a lot of people will focus their
    attention. On the other hand, there is a Presidency Council, with people
    from different political parties, trying to work through some of these
    difficult issues, trying to work through the distrust that has caused
    them not to be able to pass some of the law we expect.
        And the July 15th report that I submitted to Congress, there were
    indications that they had met about half the benchmarks and some of the
    political benchmarks they were falling short. One of the things I found
    interesting is that the assembly, their elected parliament, has passed
    about 60 pieces of legislation this year, some of which are directly
    relevant to reconciliations, like judicial reform, some of which were
    unwinding Saddam's laws in the past.
        One of the questions I recently asked about, is there a functioning
    government? Is there--a lot of Americans look at it and say, ``There's
    nothing happening there. There's, like, no government at all,'' I expect
    they're saying. So I asked about the budgeting process. In other words,
    is there a centralized budgeting system that takes the oil revenues? As
    I understand, about 97 percent of the Iraqi revenues to date come from
    oil. And do they have a rational way of spending that money for the good
    of society? Now, most of the money, it turns out, is going into their
    military operations, operating expenses, and capital expenses.
        But one of the things I found interesting in my questions was there
    is revenue sharing. In other words, a central Government revenue sharing
    to Provincial governments. It surprised me, frankly, because the
    impression you get from people who are reporting out of Iraq is that
    it's, like, totally dysfunctional. That's what your--I guess your kind
    of--your friend or whoever you talked to is implying.
        In 2006, the central Government allocated $2.3 billion to the
    Provinces. You know, I'm not exactly sure how the funding formula
    worked, but a quick analysis: There is no question that Shi'a and Sunni
    Provinces and Kurdish Provinces were receiving money. Of the 2.3
    billion, 1.9 had been obligated or spent. Now, some of that money is
    being better spent now because of bottom-up reconciliation that's taken

    [[Page 1057]]

    place in places like Anbar, particularly with the help of our Provincial
    Reconstruction Teams. The PRTs are helping. That's not to say what--my
    point to you there is that there needs still to be work in making sure
    that the Provincial governments are functioning well, to earn the trust
    of the people. It's not just the central Government that we're working
    with; we're also working with Provincial governments to make sure that
    people have--are inspired to believe that the state is in their
    interest.
        The point I'm making to you on this, Jim [Jim Axelrod, CBS News], is
    that there is a lot of work left to be done; don't get me wrong. If one
    were to look hard, they could find indications that--more than
    indications, facts that show the Government is learning how to function.
    People say we need an oil revenue sharing law. I agree with that; that
    needs to be codified. However, there is oil revenue sharing taking
    place, is my point. There's a lot of work to be done, and the
    fundamental question facing America is, is it worth it? Does it matter
    whether or not we stay long enough for a ally in this war against
    radicals and extremists to emerge? And my answer is, it does matter.
    Long-term consequences will face our country if we leave before the job
    is done. How the troops are configured, what the deployment looks like
    will depend upon the recommendations of David Petraeus.
        David [David Gregory, NBC News].

    National Economy/Home Loan Industry/Financial Literacy

        Q. Mr. President, I want to get your thoughts about the volatility
    in the financial markets, but specifically, a series of questions. Do
    you think that housing prices will continue to fall? Do you think that
    the inability of people to borrow money the way they used to is going to
    spill over into economy generally? And what are you prepared to do about
    it? And specifically, are you considering some kind of government
    bailout for people who might lose their homes?
        The President. David, I'm wise enough to remind you that I'm not an
    economist, and that I would ask you direct predictions and forecasts
    about economic matters to those who make a living making forecasts and
    predictions. I suspect you'll find, ``on the one hand; on the other
    hand,'' in how they predict. [Laughter]
        Now, what I focus on are the fundamentals of our economy. My belief
    is that people will make rational decision based upon facts. And the
    fundamentals of our economy are strong. I mentioned some of them before.
    Job creation is strong; real after-tax wages are on the rise; inflation
    is low. Interestingly enough, the global economy is strong, which has
    enabled us to gain more exports, which helped the second-quarter growth
    numbers to be robust at 3.4 percent.
        Another factor one has got to look at is the amount of liquidity in
    the system. In other words, is there enough liquidity to enable markets
    to be able to correct? And I am told there is enough liquidity in the
    system to enable markets to correct. One area where we can help
    consumer--and, obviously, anybody who loses their home is somebody with
    whom we must show enormous empathy.
        The word ``bailout,'' I'm not exactly sure what you mean. If you
    mean direct grants to homeowners, the answer would be no, I don't
    support that. If you mean making sure that financial institutions like
    the FHA have got flexibility to help these folks refinance their homes,
    the answer is yes, I support that.
        One thing is for certain, is that there needs to be more
    transparency in the--in financial documents. In other words, a lot of
    people sign up to something they're not exactly sure what they're
    signing up for. More financial literacy, I guess, is the best way to put
    it. We've had a lot of really hard-working Americans sign up for loans,
    and the truth of the matter is, they

    [[Page 1058]]

    probably didn't fully understand what they were signing up for. And
    therefore, I do believe it's a proper role for Government to enhance
    financial education initiatives. And we're doing that; we've got money
    in the budget to do that.
        Let's see here--Mike [Michael Emanuel, FOX News].

    Housing Market

        Q. Can I just ask one followup, sir? Come on. [Laughter]
        The President. Sure.
        Q. Because you weren't this circumspect when you were talking to
    reporters yesterday about the economy.
        The President. How do you know? You weren't there, Dave.
        Q. Well, you're right; I wasn't, but----
        The President. I'm curious to know why you weren't there. Ask Baker
    [Peter Baker, Washington Post]; he was there. [Laughter]
        Q. Only economics reporters were allowed.
        The President. I think I pretty much said the same thing yesterday,
    in all due respect.
        Q. What's going on in the housing market? Is it a correction or a
    crisis, in your view? Can you assess that?
        The President. Yesterday I did comment upon that, that there was a--
    I talked about the different scenarios that I had been briefed on about
    whether or not there would be a precipitous decline in housing or
    whether it would be what one would call a soft landing. And it appeared
    at this point that it looks we're headed for a soft landing. And that's
    what the facts say.
        Thank you. Mike.

    Iran-Iraq Meeting/Iran

        Q. Mr. President, thank you. There is more evidence of Iranian
    weapons ending up in Iraq and, ultimately, killing U.S. troops. And I'm
    wondering today, sir, if you have a message to the regime in Tehran
    about these weapons ending up in Iraq and obviously doing harm to
    American citizens?
        The President. One of the main reasons that I asked Ambassador
    Crocker to meet with Iranians inside Iraq
    was to send the message that there will be consequences for people
    transporting, delivering EFPs, highly sophisticated IEDs that kill
    Americans in Iraq. Prime Minister Maliki is
    visiting in Tehran today. His message, I'm confident, will be,
    ``Stabilize; don't destabilize.'' And the sending of weapons into Iraq
    is a destabilizing factor. That's why we--yes, we've sent the message
    here and in that meeting.
        Holly [Holly Rosenkrantz, Bloomberg News].

    Fannie Mae and Freddie Mac Corporations

        Q. Sir, getting back to the credit crunch caused by defaults of
    subprime mortgages, should Fannie Mae and Freddie Mac be allowed to buy
    mortgages beyond their current limits or play any additional role that
    could help revive mortgage finance?
        The President. As you know, we put up a robust reform package for
    these two institutions, a reform package that will cause them to focus
    on their core mission, first and foremost; a reform package that says,
    like other lending institutions, there ought to be regulatory oversight.
    And therefore, first things first when it comes to those two
    institutions. Congress needs to get them reformed, get them streamlined,
    get them focused, and then I will consider other options.
        Baker.

    Guantanamo Bay Detainees

        Q. Thank you, sir. A two-part question: The New Yorker reports that
    the Red Cross has found the interrogation program in the CIA detention
    facilities used interrogation techniques that were tantamount to
    torture. I'm wondering if you have read that report and what your
    reaction to it is. And the second part of the question is, more than a
    year ago, you said that you wanted to close the detention facility at
    Guantanamo,

    [[Page 1059]]

    and a year later, nothing has actually happened in that regard. Your
    Vice President, Attorney General, and Homeland Security Secretary are
    reported to be resisting such a move. I wonder if you could tell us
    who's really in charge on this issue. Are you doing anything about it?
    Do you expect Guantanamo to be open or closed when you leave office?
        The President. I did say it should be a goal of the Nation to shut
    down Guantanamo. I also made it clear that part of the delay was the
    reluctance of some nations to take back some of the people being held
    there. In other words, in order to make it work, we've got to have a
    place for these people to go. I don't know if you noticed a resolution
    of the Senate the other day, where all but three Senators said we don't
    want these prisoners in the country. I don't know if it was a 97-3 vote,
    but it was something-to-3 vote. In other words, part of the issue,
    Peter, is the practical issue of what do we do with the people?
        And you say nothing has taken place. I strongly disagree with that.
    First of all, we are working with other nations to send folks back.
    Again, it's a fairly steep order. A lot of people don't want killers in
    their midst, and a lot of these people are killers. Secondly, of course,
    we want to make sure that when we do send them back, they're treated as
    humanely as possible.
        The other issue was whether or not we can get people to be tried.
    One of the things I'm anxious about, want to see happen, is that there
    to be trials. Courts have been involved with deciding how to do this,
    and Defense is trying to work out mechanisms to get the trials up and
    running. And the sooner we can get that up and running, the better it
    is, as far as I'm concerned. I don't want to make any predictions about
    whether Guantanamo will be available or not. I'm just telling you it's a
    very complicated subject.
        And I laid out an aspiration. Whether or not we can achieve that or
    not, we'll try to. But it is not as easy a subject as some may think on
    the surface. Again, I refer to you to the Senate vote. When asked
    whether or not you want to shut down Guantanamo and, therefore, receive
    some of those prisoners in your home State, there didn't seem to be a
    lot of support for it. Like, three people said, ``It's okay by me,'' in
    the Senate.
        Your other question, sir?

    International Committee of the Red Cross Report on the Treatment of
    Prisoners of War

        Q. Red Cross report?
        The President. I haven't seen it. We don't torture.
        Yes, Jim [Jim Rutenberg, New York Times].

    Iran-Iraq Meeting/Iran

        Q. Thank you, Mr. President. I'd like to pivot off of what you were
    talking about earlier, with Prime Minister Maliki's visit to Iran.
    Reports out of Iran today, out of Iran, say that Prime Minister Maliki
    told President Ahmadi-nejad that he appreciated Iran's positive and
    constructive stance. The pictures from the visit are very warm. I'm
    wondering, do you and your Iraqi counterparts see eye to eye on Iran?
    And what kind of message do those images send to your allies in the
    region and Americans who are skeptical about the Prime Minister's role?
        The President. Jim, I haven't seen the reports. Before I would like
    to comment upon how their meetings went, I would like to get a readout
    from our Embassy, who, of course, will be in touch with the Prime
    Minister and get his readout. And so it's
    a--you're asking me to be a little speculative on the subject. I haven't
    seen the picture.
        Look, generally the way these things work is you try to be cordial
    to the person you're with, and so you don't want the picture to be kind
    of, you know, duking it

    [[Page 1060]]

    out; okay, put up your dukes. That's an old boxing expression.
    [Laughter]
        Q. Once more, please?
        The President. And so I don't know, Jim. You've obviously followed
    this a lot. You've seen the reports. I'm sure you're confident that what
    you've asked me is verifiable. I'm not surprised that there's a picture
    showing people smiling.
        Q. However----
        The President. Let me finish, please. And so it's a--anyway, let me
    get the facts on what happened. Now if the signal is that Iran is
    constructive, I will have to have a heart to heart with my friend, the
    Prime Minister, because I don't believe they
    are constructive. I don't think he, in his heart of heart, thinks
    they're constructive either. Now, maybe he's hopeful in trying to get
    them to be constructive by laying out a positive picture. You're asking
    me to speculate.
        Should I be concerned of a picture--should the American people be
    concerned about Iran? Yes, we ought to be very concerned about Iran.
    They're a destabilizing influence. They are a Government that has--its
    declared policy is very troubling, obviously, when they announce--when
    Ahmadi-nejad has announced that the
    destruction of Israel is part of its foreign policy.
        That's something obviously we cannot live with. They have expressed
    their desire to be able to enrich uranium, which we believe is a step
    toward having a nuclear weapons program. That, in itself, coupled with
    their stated foreign policy, is very dangerous for world stability. They
    are funders of Hizballah. Hizballah is intent upon battling forces of
    moderation. And so it's a very troubling nation right now.
        Iran can do better. The Government is isolating its people. The
    Government has caused America and other nations, rational nations, to
    say, ``We will work together to do everything we can to deny you
    economic opportunity because of the decisions you are making.'' My
    message to the Iranian people is, you can do better than this current
    Government; you don't have to be isolated; you don't have to be in a
    position where you can't realize your full economic potential. And the
    United States of America will continue to work with our friends and
    allies in the Security Council and elsewhere to put you in a position to
    deny you your rightful place in the world, not because of our intention,
    because of your Government's intention.
        So it is a very--it's a difficult issue, Jim. And American people
    should be concerned about Iran. They should be concerned about Iran's
    activity in Iraq, and they ought to be concerned about Iran's activity
    around the world.

    Iraq/Iran

        Q. Sorry. In your previous conversations with Prime Minister Maliki,
    have you been confident that he shares your view on Iraq?
        The President. On Iran?
        Q. Yes.
        The President. Yes. He knows that
    weaponry being smuggled into Iraq from Iran and placed in the hands of
    extremists over which the Government has no control, all aimed at
    killing innocent life, is a destabilizing factor. He absolutely
    understands that.
        I don't know if you saw yesterday, there was a--we talked to General
    Petraeus, or I talked to General Petraeus
    and Ambassador Crocker yesterday. I noticed
    in the papers today there was a description of a military operation that
    took place in Sadr City. The military operation in Sadr City was going
    after extremist elements, Shi'a extremist elements. And it was a very
    robust operation. Obviously, it--well, I shouldn't say ``obviously''--it
    was done with the full understanding of the Maliki Government.
        Now, I don't know whether this extremist element had been fueled by
    Iran, but I do know that Maliki is committed
    against extremist elements who are trying to create enough chaos and
    confusion that this young

    [[Page 1061]]

    Government and young democracy is not able to progress. So the first
    thing I looked for was commitment against the extremists. The second
    thing is, does he understand with some extremist groups there is
    connections with Iran, and he does. And I'm confident.
        Now, is he trying to get Iran to play a more constructive role? I
    presume he is. But that doesn't--what my question is--well, what my
    message to him is, is that when we catch you playing a nonconstructive
    role, there will be a price to pay.
        Let's see here, Mark [Mark Smith, Associated Press Radio].

    Tax Reform

        Q. Mr. President, are you considering a plan to cut corporate taxes?
    Do you believe America's corporations are not making enough money these
    days?
        The President. Actually, we had an interesting discussion on this
    subject. And if you read carefully the penetrating reporter by the
    financial reporter--kind of, like, semi-financial reporter--[laughter]--
    you'll find that it was--I was talking about an idea that has begun to
    surface as a result of meetings being held at the Treasury Department.
        And the whole reason to look at corporate rates is to determine
    whether or not they make us less competitive in a global economy. And if
    so--in other words, if the conclusion is, is that our tax structure
    makes it harder for businesses to compete, therefore making it harder
    for people to find work over time, then we need to address the
    competitive imbalance in our Tax Code.
        I also made it clear that we're at the very early stages of
    discussion and that, in my own judgment, anything that would be
    submitted to Congress--if submitted at all--would have to be revenue
    neutral. And therefore, what we'd really be talking about is a
    simplification of a very complex Tax Code that might be able to lower
    rates and, at the same time, simplify the code, which is, like,
    shorthand for certain deductions would be taken away--in other words,
    certain tax preferences in the code.
        My view all along has been, the more simple the code, the better,
    whether it be in the individual income tax side or the corporate tax
    side. However, I would readily concede to you this is a difficult issue,
    because the reason there is tax preferences in the first place are there
    are powerful interests that have worked to get the preference in the
    code. And as I remarked to the distinguished group of writers I was
    talking to yesterday, it's much easier to get something in the code than
    get it out of the code.
        But I do think it's in the interests to constantly evaluate our
    competitive advantages and disadvantages. And what Hank Paulson told me was that there's a lot of folks who
    really believe the Tax Code creates a competitive disadvantage, and
    therefore, it's certainly worth looking at.
        Q. On the subject of tax preferences, what about carried interest?
    Do you think that taxing those at capital gains rates is fair? A lot of
    people think it's not.
        The President. First of all, I think, Mark, that what ends up
    happening is that in trying to deal with one particular aspect of
    partnerships is that you end up affecting all partnerships. And
    partnerships are an important vehicle to encourage investment and
    capital flows; they've been important vehicles to encourage the
    entrepreneurial spirit. In other words, small businesses have been
    organized as limited partnerships. So we're very, very hesitant about
    trying to target one aspect of limited partnerships for fear of the
    spillover it'll have in affecting small-business growth. So we don't
    support that.
        Ann [Ann Compton, ABC News].

    Cooperation With Congress/Legislative Agenda

        Q. You've been clear about saying that you will veto overspending by
    Congress when they come back next month to do

    [[Page 1062]]

    appropriations bills. You've also been clear you don't want to raise
    taxes. Can you do justice to the kind of programs the Government needs
    for bridges, for housing, and also continue to spend as much as you do
    with the war in Iraq?
        The President. One can meet priorities if they set priorities. The
    problem in Congress is they have trouble actually focusing on
    priorities. Appropriators take their title seriously, and they all feel
    like they got to appropriate, which means there's a myriad of
    priorities. So the role of the President, it seems to me, is to help
    Congress focus on that which is important. We have a debate over that
    which is important, of course, but one thing that we shouldn't have a
    debate over is whether or not it's important to fund our troops in this
    war against radicals, extremists, the war on terror. And I think we'll
    be able to get that kind of cooperation. I would hope that they would
    get the defense bill to my desk as quickly as possible.
        Part of my concerns, of course, is that there are different sets of
    priorities in both bodies. And it seems like to me that the Congress
    needs to come together, solve their differences--solve their differences
    first, and then bring them to the White House and see if we can find
    accommodation. I have proven in the past, though, Ann, that one is able
    to set priorities--keep taxes low, grow the economy--and reduce the
    deficit. In other words, we have cut taxes, causing economic growth,
    which caused there to be this year alone 187 billion more tax dollars
    coming into the Treasury; the deficit is reduced to 1.5 percent of GDP,
    which on a 40-year historical average is very low, or is low, below the
    average; and we've proven that you can set priorities and meet
    obligations. And so the Congress needs to learn to do that itself.

    Congressional Support for the U.S. Armed Forces

        Q. But you're confident that you can continue to sustain the kind of
    level of spending that you've invested in, in Iraq?
        The President. I would certainly hope so, because when you say,
    sustain the level of spending, you're mainly talking about making sure
    our troops have what it takes to do the job we've asked them to do. I
    know there's a lot of Members who don't agree with the decisions I've
    made. I would certainly hope they would agree, however, that once
    someone is in combat or in harm's way, that they get the full support of
    the Federal Government. That's exactly what their families expect, and
    that's what the Commander in Chief expects as well.

    I. Lewis ``Scooter'' Libby/Attorney General Alberto R. Gonzales/Congressional Priorities

        Q. Thank you, sir. Mr. President, I wanted to ask you about
    accountability. You're a big believer in it; you've talked about it with
    regard to the public schools. But given the performance of Iraqi
    leaders, given your decision to commute the sentence of Lewis Libby,
    you've also stood by the Attorney General recently--there have been a
    lot of questions about your commitment to accountability. And I'm
    wondering if you could give the American people some clear examples of
    how you've held people accountable during your Presidency?
        The President. Lewis Libby was held accountable. He was declared
    guilty by a jury, and he's paid a high price for it.
        Al Gonzales--implicit in your questions is that Al Gonzales did
    something wrong. I haven't seen Congress say he's done anything wrong.
    As a matter of fact, I believe, David [David Greene, National Public
    Radio], we're watching a political exercise. I mean, this is a man who
    has testified; he's sent thousands of papers up there. There's no proof
    of wrong. Why would I hold somebody accountable who has done nothing
    wrong? I mean, frankly, I think

    [[Page 1063]]

    that's a typical Washington, DC, assumption. Not to be accusatory--I
    know you're a kind, openminded fellow--but you suggested holding the
    Attorney General accountable for something he did wrong.
        And as a matter of fact, I would hope Congress would become more
    prone to deliver pieces of legislation that matter, as opposed to being
    the investigative body. I mean, there have been over 600 different
    hearings, and yet they're struggling with getting appropriations bills
    to my desk.

    The Presidency/Military Operations in Iraq

        Q. If I could follow--sorry. Given the decision to commute the
    sentence of Libby and given the performance of Iraqi leaders, is it fair
    for people to ask questions about your commitment to accountability?
        The President. I would hope people would say that I am deliberate in
    my decisionmaking; I think about all aspects of the decisions I make;
    and I'm a fair person.
        And the--back to Iraq, no question, they haven't made as much
    progress as I would have hoped. But I also recognize how difficult the
    task is. And I repeat to you: The fundamental question is, does it
    matter whether or not there is a self-governing entity that's an ally in
    the war on terror in Iraq? Does it matter? Does it matter to a guy
    living in Crawford, Texas? Does it matter to your children? As you know
    from these press conferences, I have come to the conclusion that it does
    matter. And it does matter because enemies that would like to do harm to
    the American people would be emboldened by failure.
        I recognize there's a debate here in America as to whether or not
    failure in Iraq would cause there to be more danger here in America. I
    strongly believe that's the case. It matters if the United States does
    not believe in the universality of freedom. It matters to the security
    of people here at home if we don't work to change the conditions that
    caused 19 kids to be lured onto airplanes to come and murder our
    citizens.
        The first question one has to ask on Iraq is, is it worth it? I
    could not send a mother's child into combat if I did not believe it was
    necessary for our short-term and long-term security to succeed in Iraq.
    Once you come to the conclusion that it's worth it, then the question
    you must ask is, how difficult is the task of a young democracy
    emerging? Those who study the Articles of Confederation would recognize
    that there are difficult moments in young democracies emerging,
    particularly after, in this case, tyrannical rule.
        That's not to say that, Dave, we shouldn't be pushing hard for all
    opportunities for reconciliation. But for those of us who believe it's
    worth it, we'll see progress. For those who believe it's not worth it,
    there is no progress. And that's going to be the interesting debate. And
    what it's going to come down to is whether or not the United States
    should be in Iraq and in the region in a position to enable societies to
    begin to embrace liberty for the long term. This is an ideological
    struggle.
        Now, I recognize some don't view it as an ideological struggle, but
    I firmly believe it is an ideological struggle. And I believe it's a
    struggle between the forces of moderation and reasonableness and good
    and the forces of murder and intolerance. And what has made the stakes
    so high is that those forces of murder and intolerance have shown they
    have the capacity to murder innocent people in our own country. And so I
    put that in the context of accountability.
        In the case of Iraq, it's a lot more complicated than just the
    passage of four laws, even though I would hope they would get the four
    laws passed. But again, I repeat the threshold question: Does it matter;
    does it matter to our security here at home? And the answer is,
    absolutely, it does. It does. And then the second question really for a
    lot of Americans is, can we succeed? And, in my mind, the answer to that
    is, absolutely; not only we must succeed, we can succeed.

    [[Page 1064]]

        Listen, thank you all for your time. I appreciate it.

    Note: The President's news conference began at 10:33 a.m. in the James
    S. Brady Press Briefing Room at the White House. In his remarks, he
    referred to Secretary of Transportation Mary E. Peters; Gen. David H.
    Petraeus, USA, commanding general, Multi-National Force--Iraq; U.S.
    Ambassador to Iraq Ryan C. Crocker; Prime Minister Nuri al-Maliki of
    Iraq; President Mahmud Ahmadi-nejad of Iran; and I. Lewis ``Scooter''
    Libby, former Chief of Staff to the Vice President. He also referred to
    H.R. 2272, the America COMPETES Act. A reporter referred to Republican
    Presidential candidate Willard M. ``Mitt'' Romney.