[Weekly Compilation of Presidential Documents Volume 44, Number 10 (Monday, March 17, 2008)]
[Pages 376-384]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to the Economic Club of New York and a Question-and-Answer 
Session in New York City

March 14, 2008

    The President. Glenn, thanks for the kind introduction. Thanks for 
giving me a chance to speak to the Economic Club of New York. It seems 
like I showed up in a interesting moment--[laughter]--during an 
interesting time. I appreciate the fact that you've assembled to give me 
a chance to just share some ideas with you. I also appreciate the fact 
that

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as leaders of the business and financial community, you've helped make 
this city a great place, and you've helped make our country really, in 
many ways, the economic envy of the world.
    First of all, in a free market, there's going to be good times and 
bad times. That's how markets work. There will be ups and downs. And 
after 52 consecutive months of job growth, which is a record, our 
economy obviously is going through a tough time. It's going through a 
tough time in the housing market, and it's going through a tough time in 
the financial markets.
    And I want to spend a little time talking about that. But I want to 
remind you, this is not the first time since I've been the President 
that we have faced economic challenges. We inherited a recession. And 
then there was the attacks of September the 11th, 2001, which many of 
you saw firsthand, and you know full well how that affected our economy. 
And then we had corporate scandals. And I made the difficult decisions 
to confront the terrorists and extremists in two major fronts, 
Afghanistan and Iraq. And then we had devastating natural disasters. And 
the interesting thing: Every time, this economy has bounced back better 
and stronger than before.
    So I'm coming to you as an optimistic fellow. I've seen what happens 
when America deals with difficulty. I believe that we're a resilient 
economy, and I believe that the ingenuity and resolve of the American 
people is what helps us deal with these issues. And it's going to happen 
again.
    Our job in Washington is to foster enterprise and ingenuity, so we 
can ensure our economy is flexible enough to adjust to adversity and 
strong enough to attract capital. And the challenge is not to do 
anything foolish in the meantime. In the long run, I'm confident that 
our economy will continue to grow because the foundation is solid.
    Unemployment is low at 4.8 percent. Wages have risen; productivity 
has been strong. Exports are at an alltime high, and the Federal deficit 
as a percentage of our total economy is well below the historic average. 
But as Glenn mentioned, these are tough times. Growth fell to 0.6 
percent in the fourth quarter of last year; it's clearly slow. The 
economy shed more than 80,000 jobs in 2 months. Prices are up at the gas 
pump and in the supermarket. Housing values are down. Hardworking 
Americans are concerned--they're concerned about their families, and 
they're concerned about making their bills.
    Fortunately, we recognized the slowdown early and took action. And 
it was decisive action in the form of policies that will spur growth. We 
worked with the Congress. I know that may sound incongruous to you, but 
I do congratulate the Speaker and Leader Reid, as well as Boehner and 
Mitch McConnell and Secretary Paulson, for anticipating a problem and 
passing a robust package quickly.
    This package is temporary, and it has two key elements. First, the 
growth package provides incentives for businesses to make investments in 
new equipment this year. As more businesses take advantage, investment 
will pick up, and then job creation will follow. The purpose was to 
stimulate investment. And the signal is clear, once I signed the bill, 
the signal to--folks in businesses large and small know that there's 
some certainty in the Tax Code for the remainder of this year.
    Secondly, the package will provide tax rebates to more than 130 
million households. And the purpose is to boost consumer spending. The 
purpose is to try to offset the loss of wealth if the value of your home 
has gone down. The purpose is to buoy the consumer.
    The rebates haven't been put in the mail yet. In other words, this 
aspect of the plan hasn't taken to effect. There's a lot of Americans 
who've heard about the plan; a lot of them are a little skeptical about 
this ``check's in the mail'' stuff that the Federal Government talks 
about. [Laughter] But it's coming, and those checks, the Secretary 
assures me, will be mailed by the second week of May.
    And so what are the folks, the experts--guys like Hubbard--
anticipate to happen? I'm not so sure he is one now, but the people that 
have told me that they expect this consumer spending to have an effect 
in the second quarter and a greater effect in the third quarter. That's 
what the experts say.
    The Federal Reserve has taken action to bolster the economy. I 
respect Ben Bernanke. I think he's doing a good job

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under tough circumstances. The Fed has cut interest rates several times. 
And this week the Fed--and by the way, we also hold dear this notion of 
the Fed being independent from White House policy. They act 
independently from the politicians. And they should. It's good for our 
country to have that kind of independence.
    This week, the Fed also announced a major move to ease stress in the 
credit markets by adding liquidity. It was strong action by the Fed, and 
they did so because some financial institutions that borrowed money to 
buy securities in the housing industry must now repair their balance 
sheets before they can make further loans. The housing issue has dried 
up some of the sources of credit that businesses need in our economy to 
help it grow. That's why the Fed is reacting the way they are. We 
believe the actions by the Fed will help financial institutions continue 
to make more credit available.
    This morning the Federal Reserve, with support of the Treasury 
Department, took additional actions to mitigate disruptions to our 
financial markets. Today's events are fast-moving, but the Chairman of 
the Federal Reserve and the Secretary of the Treasury are on top of them 
and will take the appropriate steps to promote stability in our markets.
    Now, a root cause of the economic slowdown has been the downturn in 
the housing market, and I want to talk a little bit about that today. 
After years of steady increases, home values in some parts of the 
country have declined. At the same time, many homeowners with adjustable 
rate mortgages have seen their monthly payments increase faster than 
their ability to pay. As a result, a growing number of people are facing 
the prospect of foreclosure.
    Foreclosure places a terrible burden on our families. Foreclosure 
disrupts communities. And so the question is, what do you do about it in 
a way that allows the market to work and, at the same times, helps 
people? Before I get to that, though, I do want to tell you that we 
fully understand that the mounting concern over housing has shaken the 
broader market; that it's spread uncertainty to global financial 
markets; and that it has tightened the credit, which makes it harder for 
people to get mortgages in the first place.
    The temptation is for people, in their attempt to limit the number 
of foreclosures, is to put bad law in place. And so I want to talk about 
some of that. First of all, the temptation of Washington is to say that 
anything short of a massive Government intervention in the housing 
market amounts to inaction. I strongly disagree with that sentiment. I 
believe there ought to be action, but I'm deeply concerned about law and 
regulation that will make it harder for the markets to recover; and when 
they recover, make it harder for this economy to be robust. And so we 
got to be careful and mindful that any time the Government intervenes in 
the market, it must do so with clear purpose and great care. Government 
actions are--have far-reaching and unintended consequences.
    I want to talk to you about a couple of ideas that I strongly 
reject. First, one bill in Congress would provide $4 billion for State 
and local governments to buy up abandoned and foreclosed homes. You 
know, I guess this sounds like a good idea to some, but if your goal is 
to help Americans keep their homes, it doesn't make any sense to spend 
billions of dollars buying up homes that are already empty. As a matter 
of fact, when you buy up empty homes, you're only helping the lenders or 
the speculators. The purpose of government ought to be to help the 
individuals, not those who, like--who speculated in homes. This bill 
sends the wrong signal to the market.
    Secondly, some have suggested we change the bankruptcy courts, the 
bankruptcy code, to give bankruptcy judges the authority to reduce 
mortgage debts by judicial decree. I think that sends the wrong message. 
It would be unfair to millions of homeowners who have made the hard 
spending choices necessary to pay their mortgages on time. It would 
further rattle credit markets. It would actually cause interest rates to 
go up. If banks think that judges might step in and write down the value 
of home loans, they're going to charge higher interest rates to cover 
that risk. This idea would make it harder for responsible first-time 
home buyers to be able to afford a home.

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    There are some in Washington who say we ought to artificially prop 
up home prices. You know, it sounds reasonable in a speech--I guess--but 
it's not going to help first-time home buyers, for example. A lot of 
people have been priced out of the market right now because of decisions 
made by others. The market is in the process of correcting itself; 
markets must have time to correct. Delaying that correction would only 
prolong the problem.
    And so that's why we oppose those proposals, and I want to talk 
about what we're for. We're obviously for sending out over $150 billion 
into the marketplace in the form of checks that will be reaching the 
mailboxes by the second week of May. We're for that. We're also for 
helping a targeted group of homeowners, namely those who have made 
responsible buying decisions, avoid foreclosure with some help.
    We've taken three key steps. First, we launched a new program at the 
Federal Housing Administration called FHASecure. It's a program that's 
given FHA greater flexibility to offer refinancing for struggling 
homeowners with otherwise good credit. In other words, we're saying to 
people: We want to help you refinance your notes. Over the past 6 
months, this program has helped about 120,000 families stay in their 
homes by refinancing about $17 billion worth of mortgages. And by the 
end of the year, we expect this program to have reached 300,000 
families.
    You know the issue like I do, though. I'm old enough to remember 
savings and loans, and remember who my savings and loan officer was who 
loaned me my first money to buy a house. And had I got in a bind, I 
could have walked across the street in Midland, Texas, and say: I need a 
little help. Can you help me readjust my note so I can stay in my house? 
There are no such things as that type of deal anymore. As a matter of 
fact, the paper--you know, had this been a modern era, the paper that 
had--you know, my paper, my mortgage, could be owned by somebody in a 
foreign country, which makes it hard to renegotiate the note.
    So we're dealing in a difficult environment--to get the word to 
people, there's help for you to refinance your homes. And so Hank 
Paulson put together what's called the HOPE NOW Alliance to try to bring 
some reality to the situation, to focus our help on helping creditworthy 
people refinance, rather than pass law that will make it harder for the 
market to adjust. This HOPE NOW Alliance is made up of industry--is made 
up of investors and service managers and mortgage counselors and 
lenders. And they set industry-wide standards to streamline the process 
for refinancing and modifying certain mortgages.
    Last month, HOPE NOW created a new program. They take a look--they 
took a look at the risks, and they created a program called Project 
Lifeline, which offers some homeowners facing imminent foreclosure a 30-
day extension. The whole purpose is to help people stay in their houses. 
During this time they can work with their lender. And this grace period 
has made a difference to a lot of folks.
    An interesting statistic that has just been released: Members of the 
Alliance report that the number of homeowners working out their 
mortgages is now rising faster than the number entering foreclosure. The 
program is beginning to work; it's beginning to help. The problem we 
have is a lot of folks aren't responding to over a million letters sent 
out to offer them assistance and mortgage counseling. And so one of the 
tasks we have is to continue to urge our citizens to respond to the 
help, to pay attention to the notices they get describing how they can 
find help in refinancing their homes. We got toll-free numbers and web 
sites and mailings, and it's just really important for our citizens to 
understand that this help is available for them.
    We've also taken some other steps that will bring some credibility 
and confidence to the market. Alphonso Jackson, Secretary of HUD, is 
proposing a rule that require lenders to provide a standard, easy-to-
read summary statements explaining the key elements of mortgage 
agreements. These mortgage agreements can be pretty frightening to 
people; I mean, there's a lot of tiny print. And I don't know how many 
people understood they were buying resets or not. But one thing is for 
certain: There needs to be complete transparency. And to the extent that 
these contracts are too complex and people made

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decisions that they just weren't sure they were making, we need to do 
something about it. We need better confidence amongst those who are 
purchasing loans.
    And secondly, yesterday Hank Paulson announced new recommendations 
to strengthen oversight of the mortgage industry and improve the way the 
credit ratings are determined for securities and ensure proper risk 
management at financial institutions. In other words, we've got an 
active plan to help us get through this rough period. We're always open 
for new ideas, but there are certain principles that we won't violate. 
And one of the principles is overreacting by Federal law and Federal 
regulation that will have long-term negative effects on our economy.
    There are some further things we can do, by the way, on the housing 
market, that I call upon Congress to do. By the way, Congress did pass a 
good bill that creates a 3-year window for American families to 
refinance their homes without paying taxes on any debt forgiveness they 
receive. The Tax Code created disincentives for people to refinance 
their homes, and we took care of that for a 3-year period. And they need 
to move forward with reforms on Fannie Mae and Freddie Mac. They need to 
continue to modernize the FHA, as well as allow State housing agencies 
to issue tax-free bonds to homeowners to refinance their mortgages.
    Congress can also take other steps to help us during a period of 
uncertainty--and these are uncertain times. A major source of 
uncertainty is that the tax relief we passed in 2001 and 2003 is set to 
expire. If Congress doesn't act, 116 million American households will 
see their taxes rise by an average of $1,800. If Congress doesn't act, 
capital gains and dividends are going to be taxed at a higher rate. If 
Congress doesn't make the tax relief permanent, they will create 
additional uncertainty during uncertain times.
    A lot of folks are waiting to see what Congress intends to do. One 
thing it's certain that Congress will do is waste some of your money. So 
I've challenged Members of Congress to cut the number of--cost of 
earmarks in half. I issued an Executive order that directs Federal 
agencies to ignore any future earmark that is not voted on by the 
Congress. In other words, Congress has got this habit of just sticking 
these deals into bills without a vote--no transparency, no light of day; 
they just put them in. And by the way, this Executive order extends 
beyond my Presidency, so the next President gets to make a decision as 
to whether or not that Executive order stays in effect.
    I sent Congress a budget that meets our priorities. There is no 
greater priority than to make sure our troops in harm way have all they 
need to do their job. That has been a priority ever since I made the 
difficult commitment to put those troops in harm's way, and it should be 
a priority of any President and any Congress. And beyond that, we've 
held spending at below rates of inflation--on nonsecurity spending, 
discretionary spending, we've held the line. And that's why I can tell 
you that we've submitted a budget that's in balance by 2012, without 
raising your taxes.
    If the Congress truly wants to send a message that will calm 
people's nerves, they'll adopt the budget I submitted to them and make 
it clear they're not going to run up the taxes on the working people, 
and on small businesses, and on capital gains, and on dividends, and on 
the estate tax.
    Now, one powerful force for economic growth that is under--is being 
questioned right now in Washington is whether or not this country is 
confident enough to open up markets overseas, whether or not we believe 
in trade. I believe strongly it's in our Nation's interest to open up 
markets for U.S. goods and services. I believe strongly that NAFTA has 
been positive for the United States of America, like it's been positive 
for our trading partners in Mexico and Canada. I believe it is dangerous 
for this country to become isolationist and protectionist. I believe it 
shows a lack of confidence in our capacity to compete. And I know it 
would harm our economic future if we allow the--those who believe that 
walling off America from trade to have their way in Congress.
    And so I made it clear that we expect for Congress to move forward 
on the Colombia free trade agreement. And this is an important 
agreement. It's important for our national security interests, and it's 
important for our economic interests. Most Americans

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don't understand that most goods and services from Colombia come into 
the United States duty free; most of our goods and services are taxed at 
about a 35-percent rate heading into Colombia. Doesn't it make sense to 
have our goods and services treated like those from Colombia? I think it 
does. I think our farmers and ranchers and small-business owners must 
understand that with the Government finding new markets for them, it'll 
help them prosper.
    But if Congress were to reject the Colombia free trade agreement, it 
would also send a terrible signal in our own neighborhood. It would 
bolster the voices of false populism. It would say to young democracies: 
America's word can't be trusted. It would be devastating for our 
national security interests if this United States Congress turns its 
back on Colombia and a free trade agreement with Colombia.
    I intend to work the issue hard. I'm going to speak my mind on the 
issue because I feel strongly about it. And then once they pass the 
Colombia, they can pass Panama and South Korea as well.
    Let me talk about another aspect of keeping markets open. A 
confident nation accepts capital from overseas. We can protect our 
people against investments that jeopardize our national security, but it 
makes no sense to deny capital, including sovereign wealth funds, from 
access to the U.S. markets. It's our money to begin with. [Laughter] It 
seems like we ought to let it back.
    So there's some of the things that are on my mind, and I appreciate 
you letting me get a chance to come by to speak to you. I'm--you know, I 
guess the best to describe Government policy is like a person trying to 
drive a car on a rough patch. If you ever get stuck in a situation like 
that, you know full well it's important not to overcorrect, because when 
you overcorrect, you end up in the ditch. And so it's important to be 
steady and to keep your eyes on the horizon.
    We're going to deal with the issues as we see them. We're not afraid 
to make decisions. This administration is not afraid to act. We saw a 
problem coming, and we acted quickly with the help of Democrats and 
Republicans in the Congress. We're not afraid to take on issues. But we 
will do so in a way that respects the ingenuity of the American people, 
that bolsters the entrepreneurial spirit, and that ensures when we make 
it through this rough patch, our driving is going to be more smooth.
    Thank you, Glenn, for giving me a chance to come. And I'll answer 
some questions.
    Chairman of the Economic Club of New York R. Glenn Hubbard. Thank 
you very much, Mr. President.
    As is the Club's tradition, we do have two questioners: On my left, 
Gail Fosler, the president and chief economist of the Conference Board; 
on my right, literally and metaphorically, Paul Gigot--[laughter]--the 
editorial page editor of the Wall Street Journal.
    Gail, the first question for the President is yours.
    Gail Fosler. Thank you, very much.
    The President. Who picked Gigot? I mean, why does he--[laughter] All 
right. Excuse me. [Laughter]
    Ms. Fosler. I'm glad you don't know me, Mr. President.
    The President. Yeah, well--[laughter]. I'd be more polite; trust me. 
[Laughter] My mother might be watching. [Laughter]

Education/Trade/U.S. Foreign Policy

    Ms. Fosler. I would like to probe your thoughts on trade. You raised 
trade in your speech very passionately. And the Conference Board is made 
up of 2,000 businesses around the world; about a third of them are 
outside of the United States. And they look at the move toward 
protectionism in the United States with great alarm, even the shift in 
the Republican Party toward protectionism. And you mention that a 
confident nation opens its borders, and there does seem to be a lack of 
confidence in this country. And I wonder if you would give us a 
diagnosis of why we find ourselves in the situation we do today?
    The President. First of all, a lot of folks are worried about their 
neighbors losing work. In other words, they fear jobs moving overseas. 
And the best way to address that is to recognize that sometimes people 
lose work because of trade. And when that happens, the best way to deal 
with it is to provide educational opportunities so somebody can

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get the skills necessary to fill the higher paying jobs here in the 
United States.
    And I think, for example, of what happened to the textile industry 
in North Carolina. And stories like these really do affect how people 
think about trade. You know, some companies because of mismanagement, 
some companies because of trade couldn't survive. And it created a 
wholesale displacement of workers throughout North Carolina. And what 
the State of North Carolina did was, they wisely used their community 
college system to be able to fit needs and skills.
    In other words, a community college system--the interesting thing 
about it, it's probably the most market-driven education system in the 
United States. Unlike some higher education institutions that are either 
unwilling or sometimes incapable of adjusting curriculum, the community 
college system is capable of doing that.
    And North Carolina recognized they had a great opportunity to become 
a magnet for the health care industry. And a lot of their textile 
workers--with Government help, called trade adjustment assistance--went 
to community colleges to gain new skills. And it turns out that when you 
analyze what happened, just the added value, just kind of the increase 
in productivity and the relevancy of the job training, made the wages 
higher for those than they were in the textile industry. There's a 
classic example of how to respond, rather than throwing up trade 
barriers.
    Secondly, a lot of people don't understand this fact: that by having 
our markets open, it's good for consumers. The more consumers get to 
choose, the more choice there is on the shelves, the less likely it is 
there will be inflation. And one of the great things about open markets 
is that markets respond to the collective wisdom of consumers. And so 
therefore, it makes sense to have more choice, more opportunities. And 
yet when you read ``made from another country'' on the shelves of our 
stores, people automatically assume that jobs are fragile. And so we've 
got to do a better job of educating people about the benefits of trade.
    Third, it's--sometimes, when times are tough, it's easy to--it's 
much easier to find a--somebody else to blame. And sometimes that 
somebody else that's easier to blame is somebody in a distant land.
    And so those are some of the fact--and plus it's easy politics. It's 
easy to go around and hammer away on trade. It's--and I guess if you're 
the kind of person that followed polls and focus groups, that's what 
your tendency to be. I'm the kind of person who doesn't give a darn 
about polls and focus groups, and I do what I think is right. And what 
is right is making sure that--[applause]. And sometimes if you're going 
to lead this country, you have to stand in the face of what appears to 
be a political headwind.
    So those are some of the dynamics that makes it hard. And I'm 
troubled by isolationism and protectionism. As a matter of fact, I 
dedicated part of my State of the Union Address a couple of years ago to 
this very theme. And what concerns me is, is that the United States of 
America will become fatigued when it comes to fighting off tyrants, or 
say it's too hard to spread liberty, or use the excuse that just because 
freedom hadn't flourished in parts of the world, therefore it's not 
worth trying. And that, as a result, we kind of retrench and lose 
confidence in our--the values that have made us a great nation in the 
first place.
    But these aren't American values; they're universal values. And the 
danger of getting tired during this world is any retreat by the 
America--by America was going to be to the benefit of those who want to 
do us harm. Now, I understand that since September the 11th, the great 
tendency is to say we're no longer in danger. Well, that's false; that's 
false hope. It's either disingenuous or naive, and either one of those 
attitudes is unrealistic.
    And the biggest job we've got is to protect the American people from 
harm. I don't want to get in another issue, but that's why we better 
figure out what the enemy is saying on their telephones, if we want to 
protect you. Notice how I've deftly taken a trade issue and working in 
all my other issues. [Laughter]
    But I'm serious about this business about America retreating. And 
I've got great faith in the transformative power of liberty, and that's 
what I believe is going to happen in

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the Middle East. And I understand it undermines the argument of the 
stability-ites--people who say, you just got to worry about stability. 
And I'm saying, we better worry about the conditions that caused 19 kids 
to kill us in the first place.
    And the best way to deal with hopelessness is to fight disease, like 
we're doing in Africa, and fight forms of government that suppress 
people's rights, like we're doing around the world. And a retreat from 
that attitude is going to make America less secure and the world more 
dangerous, just like a loss of confidence in trade.
    And yet the two run side by side, isolationism and protectionism. I 
might throw another ``ism,'' and that's nativism. And that's what 
happened throughout our history. And probably the most grim reminder of 
what can happen to America during periods of isolationism and 
protectionism is what happened in the late--in the thirties, when we had 
this America first policy and Smoot-Hawley. And look where it got us.
    And so I guess to answer your question: There needs to be political 
courage, in the face of what may appear to be a difficult headwind, in 
order to speak clearly about the effects of retreat and the benefits of 
trade. And so I appreciate you giving me a chance to opine. [Laughter]
    Mr. Hubbard. Thank you, Mr. President. The second and final----
    The President. Never bashful; never short of opinions. [Laughter] 
Just like my mother. [Laughter]
    Mr. Hubbard. The second and final question for the President is from 
Paul Gigot.

Monetary Policy/Energy

    Paul Gigot. Welcome to New York, Mr. President. And I want to ask 
you about something you didn't--an issue you didn't address, which is 
prices.
    The President. Which is what?
    Mr. Gigot. Prices. Gasoline is selling for $4 a gallon in some parts 
of the country, but food prices are also rising very fast--grain prices, 
meat prices, health care prices. And the dollar is weak around the 
world, hitting a record low this week against the Euro. The price of 
gold is now about $1,000 an ounce. Many observers say all of this means 
that we have an inflation problem. Do you agree with them, and what can 
be done about it?
    The President. I agree that the Fed needs to be independent and make 
considered judgments and balance growth versus inflation. And let me 
address some of those issues one by one.
    We believe in a strong dollar. I recognize economies go up and down, 
but it's important for us to put policy in place that sends a signal 
that our economy is going to be strong and open for business, which 
will--you know, which supports the strong dollar policy, such as not 
doing something foolish during this economic period that will cause--
make it harder to grow; such as rejecting--shutting down capital from 
coming into this country; such as announcing that--or articulating the 
belief that making the tax cuts permanent takes uncertainty out of the 
system.
    Energy--our energy policy has not been very wise. You can't build a 
refinery in the United States; you can't expand a refinery in the United 
States. The Congress believes we shouldn't be drilling for oil and gas 
in a productive part of our country like ANWR because it will destroy 
the environment; which, in fact, it won't. Technology is such that will 
enable us to find more oil and gas. And so as a result of us not having, 
you know, been robust in exploring for oil and gas at home, we're 
dependent on other countries. That creates an economic issue, obviously, 
and it creates a national security issue.
    And, look, I'm very--I'm an alternatives fuel guy; I believe that's 
important. As a matter of fact, we've expanded--mightily expanded the 
use of ethanol--a slight consequence if you rely upon corn to grow your 
hogs. But nevertheless, it's a--it is a policy that basically says that 
we got to diversify. But diversification does not happen overnight. You 
know, I firmly believe people in New York City are going to be driving 
automobiles on battery relatively quickly. And it's not going to be like 
a golf cart; it'll be a regular-sized vehicle that you'll be driving in. 
[Laughter] And I think it's coming. I think this technology is on its 
way.
    But there's a transition period, and we, frankly, have got policies 
that make it harder for us to become less dependent on oil. You talk 
about the price of oil--yeah, it's high.

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It's high because demand is greater than supply, is why it's high. It's 
high because there's new factors in demand on the international market, 
namely China and India. It's also high because some nations have not 
done a very good job of maintaining their oil reserves--some of it 
because of bureaucracy, some of it because of State-owned enterprise. 
And it's a difficult period for our folks at the pump, and there's no 
quick fix.
    You know, when I was overseas in the Middle East, people said, ``Did 
you talk to the King of Saudi about oil prices?'' Of course I did. I 
reminded him two things: One, you better be careful about affecting 
markets--reminding him that oil is fungible; even though we get most of 
our oil, by the way, from Canada and Mexico, oil is fungible. And 
secondly, the higher the price of oil, the more capital is going to come 
into alternative sources of energy. And so we've got a plan that calls 
for diversification, but it's--our energy policy hadn't been very wise 
up to now.
    Anyway, I'm going to dodge the rest of your question. [Laughter] 
Thank you for your time.

Note: The President spoke at 11:20 a.m. at the Hilton New York. In his 
remarks, he referred to King Abdallah bin Abd al-Aziz Al Saud of Saudi 
Arabia. The Office of the Press Secretary also released a Spanish 
language transcript of these remarks.