[Weekly Compilation of Presidential Documents Volume 44, Number 50 (Monday, December 22, 2008)]
[Pages 1547-1560]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to the American Enterprise Institute and a Question-and-Answer 
Session

December 18, 2008

    Christopher DeMuth. Mr. President, what's on your mind this morning?
    The President. First, thanking you for being the leader that you've 
been, and thanking AEI for generating good thought. People in the public 
arena need to have support for philosophy, and that's what you provide. 
So I appreciate all your hard work.
    I thought I'd share some thoughts about the Presidency; you could 
call it ``reflections on a--by a guy who's headed out of town.'' 
[Laughter] And then I'd be glad to answer questions--and foreign policy, 
if you want to.
    First, I have found that--and by the way, every President is going 
to conduct their own way of doing business there in the White House. So 
mine is just mine. I have found that in order to have good 
decisionmaking and a White House that functions well, that the President 
needs to articulate a set of principles from which he will not defer. In 
other words, a set of principles that are inviolate, such as the 
universality of freedom. That's part of my foreign policy. A cornerstone 
of my foreign policy is my firm belief that freedom is universal. And 
freedom applies to Methodists and Muslims, men and women.
    I've just come from an Afghan Women's Council that Laura was 
hosting. I believe that Afghan women have a right to be free just like 
women in America have a right to be free.
    I believe in the collective wisdom of the American people. In other 
words, I believe we ought to trust individuals to be making decisions 
for their families. And it's always a tension between government--who 
can spend the money better, government or the individual? And that's 
been the basis of my tax-cut policy.
    The tax cuts, of course, have been, you know, obscured--the benefits 
of the tax cuts have been obscured by the recent economic crisis, no 
question about it. But when they finally take a look back at whether or 
not tax cuts were effective or not, it's hard to argue against 52 
uninterrupted months of job growth as a result of tax policy. And so my 
hope is, is that after this crisis passes--and it will--that people 
continue to write about and articulate a public policy of low taxes.
    My health care policy also was all aimed at empowering individuals 
to make decisions for themselves and an attempt to establish a 
marketplace for individual policy by changing the Tax Code or health 
savings accounts.
    I've been a firm believer in markets. That may sound contradictory 
to some of the policies that I have been making recently, which I'd be 
glad to discuss with you. [Laughter] But I strongly believe in the 
principle that markets really do represent the--a free society. I mean, 
after all, people produce goods and services based upon the demand of 
the individual.
    I can remember going to China when my dad was the envoy there, and 
everybody had the same clothes on. It was like there was no demand. And 
then having gone back at the Olympics and saw a society in which the 
marketplace is beginning to function, it's just a vastly different 
society. And I happen to believe it's a society that--societies based 
upon the marketplace will be not only more free but more hopeful.
    I have found that a President should take on tough problems. The 
temptation in politics sometimes is just kick them down the road; like, 
it's too hard to do, so let's just let somebody else do it. One such 
problem was immigration reform. And in this case I chose to put the 
spotlight directly on the issue by giving an Oval Office address. 
Obviously, we weren't successful about getting comprehensive immigration 
reform. Nevertheless, I feel good about having tried.
    Part of the Presidency is the willingness to say, no matter how 
tough the issue may look, if it requires solution, go after it. And we 
did. And I do believe there will be a blueprint for a way forward. In 
other words, we must change the system. It's not working. Obviously, 
there needs to be more border enforcement--and we're doing that--but 
people need to be treated with dignity, and there needs to be a way 
forward for people who are lawful citizens. And there needs to be a 
temporary-worker program, for example, so that our employers who are 
relying upon people who are doing jobs Americans weren't doing aren't 
criminalized.

[[Page 1548]]

    Anyway, the job of the President is to tackle these problems. And 
finally, the job of the President is to look over the horizon. And 
that's--sometimes that gets you in conflict with the legislative branch. 
The legislative branch tends to have a shorter term horizon than the 
executive branch. And so Chris mentioned Social Security; it's an 
example of a President looking beyond the moment and recognizing that 
this system is going to be bust unless we change it.
    And I worked to lay out solutions. Rather than just call attention 
to the issue, I actually used my State of the Union Address a couple of 
times to talk about how we can look at changing the benefit structure, 
based upon wealth, as a way forward.
    And I also talked about something that was quite controversial, and 
that's personal savings accounts. And of course, any time you go from a 
defined benefit plan to a defined contribution plan, and you're the 
person who gets to define the benefits, you're not likely to want to 
give up that ability. Nevertheless, there too is an issue where the--it 
didn't succeed. But nevertheless, I used the Presidency, the executive 
branch, the concept of the Presidency, to lay out a way forward. And so 
I appreciate you giving me a chance to come by and just share thoughts.
    One final thought on the Presidency is, the Presidency--the 
institution of the Presidency is more important than the individual. And 
that's what really makes our country great. The Presidents will come and 
go with their strengths and weaknesses, but the ship of state sails on 
because of the institution being greater than the person.
    And so the job of the President is to not only make decisions--you 
campaign for office, and you lay out what you're going to do--but a lot 
of times decisions come that you didn't expect. You got to be hoping for 
the best and planning for the worst in your Presidency. But it's also to 
bring stability to the institution itself.
    And so there are some reflections for you. I'd be glad to answer 
some of the questions.

Presidential Powers

    Mr. DeMuth. I have a batch here for you. And I'd like to start with 
a few questions about the institution of the Presidency, and with a 
genuinely hard, difficult question involving the President as 
constitutional officer. When you were a candidate in 2000, you said that 
you thought that you would veto legislation that you thought was 
unconstitutional. In office you've done what all of your predecessors--
recent predecessors have done, which is to sign legislation and leave 
the constitutional questions to the courts.
    It was pretty clear, at least to me, that you had real 
constitutional reservations about McCain-Feingold. But you signed it, 
your Justice Department argued for it, rather than against it, in the 
Supreme Court and won. And I'm wondering if, looking back, what you 
think of the old practice, which is for the President to stick to his 
own views on the Constitution, rather than leaving the Supreme Court as 
the sole decider.
    The President. Well, there's been a big debate about war powers 
inherent in the Constitution. And I made some decisions during this war 
based upon what I thought was my constitutional power. And so there's an 
example of--as opposed to a piece of legislation, there's an example of 
me not allowing--you know, initially having the courts define what the 
power is. And that's--this has been a long-time debate, constitutional 
debate, is what are the war powers of a President?
    And as you know, I have been aggressive at pursuing the enemy within 
the bounds of the Constitution. And some of the decisions I have made 
are being adjudicated in the Court. And so I'll dodge the one on 
legislation, but I won't when it comes to taking a constitutional view 
of the office of the Presidency.

Working With Congress

    Mr. DeMuth. On legislation and dealings with the Congress, tell me, 
which is harder for a Republican President, a Democratic Congress or a 
Republican Congress? [Laughter]
    The President. Sometimes they're both equally difficult. [Laughter] 
A Republican Congress was easier in some ways because we were able to 
work with the leadership to--on the timing of votes, for example, or 
judicial nominees. In some ways it was more difficult because when you 
worked with the

[[Page 1549]]

Congress, there was a ability at times to forgo Republican principles, 
and it put the President in a awkward position.
    For example, budgeting; without the line-item veto, the President is 
in an awkward position when it comes to budgeting. So we sit down the 
leadership and say, here's the top line. We agreed to the top line. 
That's what the budgets did in the top line--with the top line. And yet, 
the slices of the pie were, in the recent past, really earmarks. And so 
without the line-item veto, it made it very difficult for me to bring 
budgets discipline. They could have--people said, well, just veto the 
whole budget. And my answer to that is, we, in good faith, negotiated 
the size of the pie. And so some Republican principles were violated 
when it came to earmarks, for example.
    It's easier to veto bills when you're going against the--when the 
Democrats are in power, because, after all, it's Republicans who crafted 
the bills coming in. And so both are difficult, and both are necessary, 
and both have been interesting. [Laughter]

No Child Left Behind Act/Medicare

    Mr. DeMuth. Presidents have to make compromises to get legislation 
that they really want. You made several compromises in winning your 
first big legislative victory, the No Child Left Behind program. Were 
there compromises that you made in obtaining that legislation, in 
legislation or execution, that you regret as you look back on it?
    The President. I'm pleased with the progress in No Child Left 
Behind. The philosophy of No Child Left Behind was that in return for 
money, you must measure. That, of course, created some issues. Some 
Republicans and conservatives said, ``What business is it of the Federal 
Government to insist upon accountability?'' After all, there shouldn't 
be much of a role for the Federal Government. And people on the other 
side said, ``We don't want to be measured.''
    I believe it is a Republican and conservative principle that we 
ought to ask for results. And if you're going to spend money, then it 
makes sense to say, ``Are we achieving results?''
    Secondly, as you know, I campaigned on compassionate conservatism. 
It's conservative to ask for accountability, and it's compassionate to 
insist that inner-city children be able to read at the fourth grade 
level. And yet, oftentimes the system was so process-oriented that the 
school districts would say, how old are you, and if you're 10, you're 
supposed to be here; and 11, here; 12, here--without wondering whether 
or not the child can read or write and add and subtract. So the basic 
principle inherent in No Child Left Behind, the philosophy of it, 
remained very much intact in the bill, and it's working.
    And the Medicare bill--a quite controversial bill--was one where 
Republicans wrote the bill, and there was some compromising inherent in 
the bill. Nevertheless, the two broad principles remained intact: one, 
if you're going to make a promise, reform the program so it's effective. 
So, like, for example, we paid thousands of dollars for surgery but not 
a dime for the prescription drugs that could prevent the surgery from 
being needed in the first place. And we put market-oriented principles 
in the bill. You probably remember the debate where the--you know, there 
was a big debate about how much would this cost. And the CBO came up 
with a number, and I think it's now 40 percent less than what was 
anticipated because of market principles. Nevertheless, the bill wasn't 
as strong on market principles as I would have liked to have seen it.
    And so, yes, you're, obviously, making compromises all the time with 
Congress. The key is to compromise without compromising principle. You 
can compromise points, but don't sell out the principle that is inherent 
in the bill.

National Economy

    Mr. DeMuth. You'll be surprised that I have several questions about 
the auto bailout. [Laughter] Let me put it in the context of this 
discussion. Isn't the Detroit bailout an example of interest groups 
thinking they can get a better deal from the executive branch than from 
the Congress?
    The President. That's an interesting way of putting it. First, let 
me take a step back. I haven't made up my mind yet, so you're assuming 
something is going to happen. [Laughter] This is a difficult time for a 
free

[[Page 1550]]

market person. Under ordinary circumstances, failed entities--failing 
entities should be allowed to fail.
    I have concluded these are not ordinary circumstances, for a lot of 
reasons. Our financial system is interwoven domestically, 
internationally. And we got to the point where, if a major institution 
were to fail, there is great likelihood that there would be a ripple 
effect throughout the world, and the average person would be really 
hurt.
    And what makes this issue difficult to explain is--to the average 
guy is, why should I be using my money because of excesses on Wall 
Street? And I understand that frustration. I completely understand why 
people are nervous about it. I was in the Roosevelt Room, and Chairman 
Bernanke and Secretary Paulson, after a month of every weekend where 
they're calling, saying, we got to do this for AIG, or this for Fannie 
and Freddie, came in and said, the financial markets are completely 
frozen, and if we don't do something about it, it is conceivable we will 
see a depression greater than the Great Depression.
    And so I analyzed that and decided I didn't want to be the President 
during a depression greater than the Great Depression, or the beginning 
of a depression greater than the Great Depression. So we moved, and 
moved hard. The autos, obviously, are very fragile, and I've laid out a 
couple of principles. One, I am worried about a disorderly bankruptcy 
and what it would do to the psychology and the markets. They're 
beginning to thaw, but there's still a lot of uncertainty.
    I'm also worried about putting good money after bad; that means, 
whether or not these autos will become viable in the future. And 
frankly, there's one other consideration, and that is, I feel an 
obligation to my successor. I've thought about what it would be like for 
me to become President during this period. I have an--I believe that 
good policy is not to dump him a major catastrophe in his first day of 
office. So those are some of the considerations that we're weighing.
    What was the question on autos? [Laughter]

American Auto Industry

    Mr. DeMuth. The President-elect said----
    The President. Oh, you said Congress and the executive branch.
    Mr. DeMuth. Yes, yes.
    The President. Well, just remember a majority of Congress voted for 
a plan that we thought was a good plan. It didn't get the requisite 
votes in the Senate in order to move it on, but there was a majority 
vote if you add up the House and the Senate. So the Congress, in one 
way, expressed its will for a way forward with some--with a plan, or a 
strategy for viability.
    Mr. DeMuth. But there must be some question in your mind whether the 
two political branches are better at bankruptcy restructuring than a 
bankruptcy court. I mean, we do have a law.
    The President. Absolutely.
    Mr. DeMuth. Do you think when everybody stops----
    The President. I think under normal circumstances, no question, the 
bankruptcy court is the best way to sort through credit and debt and 
restructuring, no question. These aren't normal circumstances; that's 
the problem. This is--it's a hard issue for political people, because 
people never know how bad it could have been. And so the decisions you 
make are easy to--for people to say, ``Why did he do that? Why is he 
wasting our money on this?'' Or, ``Why is he doing that?'' Because 
without a catastrophe, the reasoning doesn't--it just doesn't really 
make it down to the grassroots.
    People look at, ``My money being used because Wall Street got 
excessive.'' And I make the case that I didn't want to do this. It's the 
last thing I wanted to do. Nevertheless, I felt compelled to do it, 
because it would make life worse for you. We lost 533,000 jobs last 
month. What would another million jobs lost do to the economy? What 
would that do to the psychology in markets? What would that do--how 
would that affect the working people? And so as you can tell, we're all 
in, in this administration. And if need be, we'll be in for more.

[[Page 1551]]

National Economy

    Mr. DeMuth. It may be bad form to recall campaign rhetoric during a 
transition, but I remember President-elect Obama during the campaign 
blaming the crisis on Bush deregulation. Do you have any opinion on that 
assessment of the causes?
    The President. I'm looking forward to the true history of this 
financial crisis being written. No question, part of the crisis came 
about because of excesses in lending in the housing market. My 
administration early on expressed concern about implicit government 
guarantees and the mortgage industry in Fannie and Freddie, and that we 
were concerned about excesses in lending and concerned about Freddie and 
Fannie having too much capacity to lend because of the implicit 
guarantee. And so we called for a regulator.
    But this will all be sorted out when they finally analyze what went 
right or what went wrong. When you're the President, you can think about 
what went right and what went wrong; you can analyze it. But when you're 
getting phone calls from the Secretary of the Treasury saying, we got to 
do something on AIG, otherwise there could be an international collapse, 
that's where your mind is. And that's where my mind--it turns out this 
isn't one of the Presidencies where you ride off into the sunset, you 
know, kind of--[laughter]--waving goodbye.

President's Advice to Elected Officials

    Mr. DeMuth. Do you have--on Fannie and Freddie, do you have any 
advice for our new President, such as that they be abolished? [Laughter]
    The President. No, my advice for all elected officials after this 
crisis passes is to remember that markets and free enterprise is what 
made the country great, and that these measures were temporary measures. 
They're not an excuse for the Government to be running automobile 
companies, if that's the decision I make, or for the Government to be 
always involved in mortgages; that there is a proper role for 
Government, which is oversight; and that the role of Government really 
is to create an environment in which risk takers feel comfortable taking 
risk and where capital moves as freely as possible.
    That's why I am a big believer in free trade, for example. Trade 
opens markets; trade gives--and fair trade, I might add--and trade gives 
people an opportunity to risk and have their products sold in 
environments other than the domestic environment.
    The danger is, of course, that people who believe the government can 
manage the economy better than the private sector will use this decision 
as an excuse to keep Government involved. And that's why AEI is going to 
be important long after my Presidency, to be talking about the merits of 
markets and the merits of free enterprise.
    I hosted this international conference, and what was interesting out 
of the international conference was that people said we should defend 
the marketplace and defend trade. One of the great fears I have is--a 
couple of things--one, that the United States could become isolationist. 
We have done so in the past, and it's kind of a--could be a fatigue 
about helping liberate people, or helping people advance, or helping 
people on HIV/AIDS on the continent of Africa--you know, ``We're tired 
of doing this; can't other people do it?'' That could lead to 
isolationism. I'm very worried about that. The world needs America's 
involvement. We're a compassionate, decent, strong nation.
    And I'm worried about protectionism. Protectionism tends to be the 
twin of isolationism. And I'm worried about protectionism because I--if 
you study the economic past, protectionism is what caused the Great 
Depression to be a greater depression--Smoot-Hawley Tariff. If you're 
interested in development and helping poor nations become less poor, 
then you ought to be an advocate for trade. It's one thing to give out 
grants, but the amount of wealth generated by trade overwhelms the 
amount of money that the world gives out in grants.
    And so anyway, keep going.

Government Bureaucracy

    Mr. DeMuth. Keep going. I have a question or two about inside the 
executive branch.
    The President. Okay.
    Mr. DeMuth. Presidents also have to contend with the fourth branch 
of Government; that is the bureaucracy, the permanent Government.

[[Page 1552]]

    The President. Oh, I thought you were going to say the press. 
[Laughter] Symbiotic relationship with the press, I want you to know.
    Mr. DeMuth. That's right, it's the bureaucracy and the press. The 
bureaucracy can outmaneuver the White House. And domestic and foreign 
policy agencies have, you may have noticed, opposed your policies and 
undermined them on occasion. And I wonder if you have any advice for 
future Presidents about how to contend with that very difficult problem.
    The President. Make sure information gets into the Oval Office on a 
timely basis so that when you find bureaucracies delaying policy, then 
you do something about it. It's not inevitable that--the best 
bureaucratic move, if people disagree with policy, is just to delay and 
hope the President isn't paying attention.
    And so therefore, the structure of the office is going to be 
important, and I've tried to keep a relatively flat organizational chart 
so that key players can come into the office on a regular basis. I did 
so for two reasons. I like to hear different points of view, and I want 
people to feel comfortable coming and saying, ``Here's what I think,'' 
or, ``Here's this delay taking place''--``Do you understand that you 
said this and then nothing has happened, Mr. President?''
    And the other thing is, is that a lot of the job is to build a sense 
of teamwork, a sense of team. Listen, these people in the White House 
work incredibly long hours. And if they don't see the President, it 
creates anxieties. And so people walk in, and they tell me what's on 
their mind. They go home and say, ``You know, I told him--you know, I 
saw the President.'' [Laughter] They didn't say whether I listened or 
not. [Laughter]
    And so one way to deal with the bureaucracy is to be well informed. 
And the best way to be well informed is to make sure you have an 
organization that enables information to get in the Oval Office in a 
timely fashion. And therefore, you're going to need to have a Chief of 
Staff--at least this is the way I thought it should be done; I'm not 
telling anybody else how to do it. You scholars can figure out whether 
it's right or wrong, how it's worked relative to other Presidents.
    But my Chiefs of Staff, Andy Card and Josh Bolten, are--have been--
are unusual people because they have not said, everybody must go to me 
before you go see the President. In other words, they're not junior 
prime ministers. They are facilitators who understand that this system 
suits me best, and therefore, aren't jealous about the time that I 
allocate to somebody who they haven't necessarily blessed in the White 
House, in the Oval Office. And so it's worked pretty good.

President's Staff

    Mr. DeMuth. That's fascinating. Let me pursue one point that you 
made. Ronald Reagan was once asked if it was true that his Secretary of 
State and Secretary of Defense were arguing openly in front of him. And 
he said, ``All the time.'' Have you encouraged people to argue to move 
the hard questions in the Oval Office?
    The President. Oh, absolutely. Absolutely. Creating tension is good 
for decisionmaking, so long as it doesn't become destructive. And I see 
Leon there; we've had some serious debates inside the White House on 
stem cell. And they were open, and they were--all opinions were 
welcomed. And there was a variety of opinions.
    Sometimes issues are easy to resolve, where the national security 
adviser and the domestic policy adviser could come in and say, ``We've 
discussed the issue internally, Mr. President, and we all agree.'' But 
in matters of war, for example, there's difference of opinions; the 
surge, for example. There was a lot of different opinions on the surge. 
And that's the way it should be. People say, ``Well, do you ever hear 
any other voices other than, like, a few people?'' Of course I do. And I 
have enjoyed listening to the debates among people I work with. And I 
also like the idea of people being able to walk into the Oval Office and 
said, ``Have you thought of this?'' Or, ``The debate is headed this way; 
I'd like you to consider this.''
    And sometimes that can be disruptive, obviously, but the President 
has got to have a--be grounded enough and have enough judgment to know 
how to manage the advisers.

[[Page 1553]]

Bioethics/Stem Cell Research

    Mr. DeMuth. You mentioned stem cell research.
    The President. Yes.
    Mr. DeMuth. Some people forget that before 9/11, that was one of the 
big issues of your first months in office.
    The President. It was.
    Mr. DeMuth. It was the subject of your first national address on 
television.
    The President. It was.
    Mr. DeMuth. And I wonder if looking back, you think--what you think 
you're most important legacy is in the area of bioethics? And what you 
think your most important accomplishments were? If there was more that 
could have been done?
    The President. Well, I told the American people I believe in a 
culture of life. I believe a healthy society is one that protects the 
most vulnerable among us. And clearly, the most vulnerable among us are 
those who aren't born yet. Obviously, abortion is a very controversial 
subject, and it's one that creates a lot of emotions.
    I try to diffuse the emotions by saying, look, good people disagree 
on the issue; I understand that. But throughout my Presidency, I have 
tried to help advance the culture of life. And one of the really classic 
tensions between the culture of life is that with science. And it's--
Leon Kass instructed me throughout this process that tensions existed 
for a long time, and will continue to exist.
    And the fundamental question with stem cells is, do you destroy life 
to save life? And it's a difficult issue for a lot of people. I came 
down on the side that there are other opportunities available to save 
lives other than the destruction of life. And secondly, I was concerned 
about using taxpayers' money to--that would end up destroying life. 
There's a lot of people in our country that don't want their money spent 
on--for that purpose.
    I developed a policy, which I thought sounded rational. And that is, 
there have been some stem cells lines already developed, embryonic stem 
cell lines developed prior to this decision; therefore, we should go 
forward with research on them. But from that point forward, no 
destruction of life with Federal money. Since then, adult skin cells 
have been used to develop the equivalent of embryonic stem cells. And so 
science has advanced, and at the same time, we were able to stake a 
claim for the culture of life. It was a very emotional issue. And that's 
what happens when you confront controversial topics.
    And I believe the President should have a core set of beliefs and 
stand on those beliefs.

Health Care System/Prescription Drugs

    Mr. DeMuth. Thank you. The U.S. is one of the--it's the only 
advanced society that doesn't have comprehensive price controls on 
pharmaceutical drugs. We have the highest-priced drugs, and we have the 
highest rate of innovation in lifesaving new drugs. We're moving, 
clearly, toward increased price controls at the administrative level and 
in Congress. Pharmaceutical companies are cutting back on their R&D 
investments. Do you think this trend is inevitable? Do you think that 
your Medicare Part D reforms will make that problem worse, or by 
introducing market mechanisms, help be the solution?
    The President. The whole medical debate is headed toward whether or 
not the Government ought to be setting the price of medicine. I believe 
that we ought to resist that and cause markets to flourish. And we don't 
have a real functioning market in health care right now. I'm going to 
get to the drugs in a minute but--generically, to use a drug term that 
the problem is, is that you've got many people's policies being paid by 
somebody else, and there's--so therefore, there's no market. People 
don't say, well, how much is this costing, or what's the quality of 
health care with this person or this hospital?
    So the consumer--there's no consumerism. There's no demand for 
better price. And so part of the policies I described early were to, 
like, do health savings accounts or changing the Tax Codes, all aiming 
at putting the patient in the midst of the market, getting that person 
to demand better quality at better price.
    In terms of drugs, I am concerned about Government pricing drugs to 
the point where drug manufacturers don't have enough capital to keep 
reinvesting in new discoveries. One of the great things about our 
medicine is we're the best in the world. And all policy ought to be 
aimed at keeping us the best

[[Page 1554]]

in the world. There are policies in place that allow manufacturers to 
amortize the cost of their R&D, and then generics become available. And 
it seems like to me that we can do a better job of making people aware 
of generic drugs.
    And part of Medicare Part D does just that. It shows seniors what 
options are available, and they get to choose a variety of plans. I 
remember the debates on Medicare. People said, well--and kind of 
inherent in the debate was this sense of--that, well, maybe seniors 
don't know how to choose things. You know, they're used to the 
Government plan, and therefore, isn't it a--too much of an imposition to 
provide people with all different options? And when we were selling the 
Medicare reform, I can remember going to senior centers, and there would 
be seniors looking at 10 different plans to choose from. And people were 
competing for their business. And these plans would go out and find the 
generics, to make them available.
    And so I--the marketplace is a much better allocator of resources 
than the Government trying to allocate resources. And secondly, the 
American people need to know, if somebody needs financial help, if 
somebody is poor and destitute, they'll get help in our system. And 
there's a lot of help for people who are destitute.

National Economy

    Mr. DeMuth. A related question is the ownership society, a major 
theme of yours. Will it survive the financial crisis? Will we recover 
our bearings? Are the initiatives you put forward in the name of greater 
ownership going to--are they going to come back after----
    The President. Oh, absolutely. Absolutely. I mean, you know, the 
danger, of course, is that Government stays so involved that markets 
don't really develop. Just some thoughts on this: I am--the markets 
sometimes create excesses. We're living through the consequences of the 
excess.
    I quipped in Texas that Wall Street got drunk, and we got a 
hangover. And that's what happened. There wasn't much transparency. 
There was so much liquidity that people felt like they needed to invent 
product to get in front of the money train. And the danger, of course, 
will be that we--instead of having rational regulation that's balanced, 
we'll over-regulate. And if we do, then it's going to make it harder for 
the ownership society, because it's going to make it harder for free 
enterprise to flourish. But the idea of owning small businesses has been 
a integral part of our country's past and should be in the future.
    The key there is the tax policy. Will we price small businesses out 
of the capacity to retain capital and grow? So most small businesses pay 
individual income taxes because they're subchapter S or limited 
partnerships. And so when you hear people say, tax the rich--when they 
start raising that upper bracket, they're also taxing a lot of small-
business owners. And policy ought to be asking the question, how do we 
encourage small business ownership growth, not how do we penalize it?
    So over-regulating the overall economy will make it harder for the 
ownership society, and I just hope that doesn't happen. I don't think it 
will. I understand the concerns; I share the concerns, and there's going 
to be a lot of people like AEI speaking out against keeping the 
Government at the helm of the economy. And good tax policy and good 
regulatory policy beyond that will help small businesses grow. That's an 
integral part of the ownership.
    Same with housing. The key on housing is, obviously, the interest 
rates: How much does it cost to buy a house? And people are going to own 
homes. And the housing market will lead this recovery when it starts. 
And it's going to take a while though. I'm not an economist, but it'll 
take a while. And there are some encouraging signs--not many, but some. 
Evidently the amount of mortgage applications rose, which is a good 
sign. I don't know whether that's working off unsold homes yet, but it's 
a good sign.
    And by the way, there's a lot of talk about stimulus. And I'd like 
to remind our fellow citizens, there is a stimulus package taking place 
right now, and that is the reduction of gasoline prices. And the 
reduction of gasoline prices from July to now on an amortized basis--if 
you take the reduction here, and you amortize it over a year, it's about 
$2,000

[[Page 1555]]

a family, which is an effective stimulus package.

Energy

    Mr. DeMuth. Let me ask you two questions, if I may, about energy 
policy. The first is, are you satisfied with the progress in recent 
years in reviving nuclear energy? The second is about ethanol. The 
question says, ``Ethanol subsidies are popular with politicians of both 
parties''----
    The President. Like me.
    Mr. DeMuth. ----``but not with ordinary folk outside the State of 
Iowa.'' [Laughter] Does this have something to do with the timing of the 
first presidential primary?
    The President. Sounds like some of my friends in Texas asking that 
question. [Laughter]
    Mr. DeMuth. You can talk about nuclear power.
    The President. Yes. [Laughter] The country needs to overcome its 
fear about nuclear power if we want to have ample electricity so we can 
grow and be good stewards of the environment.
    Part of the problem with nuclear power was that the regulatory 
scheme was such that people would risk a lot of capital and then have to 
seek permission for final approval late in the process, and would find 
themselves tied up in a court of law. And so they had enormous capital 
spent, earning no money, waiting for permission to build the plant. And 
therefore, capital chose not to go into the nuclear industry.
    In terms of safety, the engineering has changed dramatically from 
the past. And I think people who are objective on this issue would tell 
you that nuclear power plants are very safe.
    In terms of regulatory relief, as a result of the last energy bill I 
signed--I think it's the last energy bill--we began to streamline the 
process, and as well was we provided some insurance incentives for 
people to start building. I'm satisfied that we're beginning to change 
the environment. I'm satisfied that more Americans understand why we 
ought to be using nuclear power. I am pleased that there are, I think, 
like, 13 permits that have been on application. And I am pleased that 
some plants are beginning to expand on their current footprint.
    I am not pleased about how slow we're moving overall though. I think 
we ought to really get after nuclear power, I mean, if we really want to 
solve our dependency upon foreign energy.
    What's going to happen is, by the way, the technologies will help 
change our habits. For example, there's going to be battery technologies 
in automobiles that will enable people to drive the first 40 miles on 
electricity. And everybody is going to--oh, that's great, hybrid plug-in 
batteries. The question will be, where do we get the electricity? And 
it's very important to pursue nuclear energy.
    Secondly, I'm a big supporter--I presume I'm one of those guys you 
were talking about on ethanol--pandering to the corn--actually, I think 
it's important--I felt it was important to begin a diversification of 
our energy sources. And whether or not the ethanol market will stay 
viable, I don't know, but it has certainly become a relatively 
significant part of our mix right now. And I laid out a mandatory goal 
that we ought to head toward, because I'd rather have our farmers 
growing our energy than rely upon certain parts of the world that don't 
like us.

Presidential Transition/Defense Spending/U.S. Armed Forces

    Mr. DeMuth. You mentioned the word stimulus. And as you know, your 
successor is thinking about a big new stimulus program emphasizing 
public works, I believe. An issue that has interested a lot of people at 
AEI recently is this: While we're looking for public expenditures to 
help stimulate the economy, we're also at a point where defense 
expenditures are I think something like 3.4 or 3.5 percent of GDP--very, 
very constrained. A lot of weapons systems that a lot of people like to 
buy from us are being closed down, even after we've only produced fewer 
of the weapons than had been anticipated.
    One of the things we're pursuing is that a very effective stimulus 
program would be a significant increase in defense expenditures. Have 
these ideas been kicking around the White House, the Pentagon? This is 
just think-tankery so far. I wonder if----

[[Page 1556]]

    The President. No, that's good. I'm glad you're doing it. No, no, 
we're not going to tell President-elect Obama how to run his 
administration, nor will I spend a lot of time second-guessing him. I 
believe once the President gets off the stage, you get off the stage and 
let the next man do the job.
    Matter of fact, I worked hard to make this transition a smooth 
transition. I want him to succeed. And I know you do as well. And so we 
really haven't been trying to help him fashion an economic policy. It's 
his job when he gets sworn in.
    And I fully understand, however, your concerns about the defense 
budgeting. There will be a lot of debate about systems, what's relevant 
and what's not relevant. One of the successes of this administration--
and Secretary Rumsfeld gets a lot of credit for having started a major 
transformation of our military, so that the weapons systems we build are 
relevant to the war that we're going to be fighting in the 21st 
century--or, hopefully, not fighting, but be prepared to fight.
    I'm sure you follow this, Chris. We've changed our basing around the 
world so that our forces no longer are configured based upon cold war 
problems, but based upon the ability to keep morale high and move 
quickly. Our soldiers are carrying unbelievably new technologies, using 
Predators to use over-the-wall intelligence to be able to have better 
battlefield awareness. They're well equipped.
    In terms of the big systems, those will be choices that are always 
in conflict. I can remember campaigning in 2000, and they said, ``Name a 
weapons system you'll get rid of.'' I said, the Arrow. [Laughter] I 
think it was the Arrow system; not the bow and arrow, but it was a big, 
huge cannon. And it turns out, the cannon had parts made in 42 States. 
Needless to say, it was hard to put the cannon on the shelf. I didn't 
think we needed a huge cannon that required enormous ships and trucks to 
move around in a--what turns out to be a battle that requires special 
operators to move in the dark of night, on real-time intelligence, in a 
quick way.
    So there will be a lot of debate about weapons systems, no question 
about it. And a lot of communities around the country rely upon defense 
spending and the jobs that accrue as a result of defense spending.
    By the way, people say, ``What are you going to miss?'' I know I'm 
not--I'm asking myself questions. [Laughter] But I'm going to miss being 
the Commander in Chief of our military. My view of America is, 
obviously, different from everybody else's, but I get to look at these 
troops, and I marvel at their courage. And I marvel at the fact that 
these folks have volunteered in a time of war.
    And the Commander in Chief--at least I've tried to say to our 
troops: Thank you. Thank you for your courage; thank your families. You 
do that by visiting the wounded and meeting with the families of the 
fallen. I've been reading a lot about Abraham Lincoln recently. I just 
finished James McPherson's book, and, once again, he talks about how 
Lincoln would visit with the enlisted folks as well as the generals, 
visit with the widows as well as the moms, visit with the wounded. And 
it's going to be very important for the country as we head down the 
future to recognize that this all-volunteer force is--needs to be 
sustained by commitment as well as--by monetary commitment as well as 
psychological commitment. We got to be with these kids.

War on Terror

    Mr. DeMuth. Another book that you famously read was Eliot Cohen's 
``Supreme Command.'' And he later went to work for you.
    The President. Yes, he did.
    Mr. DeMuth. Do you think he got it right in that book?
    The President. I can't even remember the book. [Laughter] I remember 
reading it, but give me a synopsis. [Laughter]
    Mr. DeMuth. That----
    The President. You can't remember it either. [Laughter]
    Mr. DeMuth. No. [Laughter]
    The President. Just teasing. Did he work for you at AEI? Is that why 
you're----
    Mr. DeMuth. He was on our council of academic advisers.
    The President. Yes, okay. I did read it.
    Mr. DeMuth. The essential point is that in history, in wartime, 
Presidents do well not leaving the war to the military, but being the 
supreme commander themselves.

[[Page 1557]]

    The President. Oh, that's right, yes. Well, you're going to have to 
rely upon the military a lot. There's four basic constituencies for a 
President during war; one is the American people. And this has been a 
difficult assignment, to convince the people that what happens in Iraq 
matters to our own security at home; that what happens in Afghanistan 
matters to the security; and that--the first task was to remove the 
regimes that threatened peace and threatened our security. And the next 
task is to not replace one strongman with another, but encourage a 
democracy to grow, because we're in an ideological struggle. And it's 
the ideology of liberty that defeats the ideology of hate every time.
    A second constituency was the enemy. And they got to know we're 
going to go after them all times, all places--unrelenting pressure on 
them.
    Third, in the case of Iraq, were the Iraqi people; they wanted to 
know whether or not America was going to keep its word, because if not, 
they're going to find a local militia that could keep their families 
safe.
    And the fourth is the military. And the military must know that the 
mission is just, the goals are clear, and the President will not be 
making decisions with their lives based upon an opinion poll. And, 
anyway.

Prime Minister Vladimir Putin of Russia

    Mr. DeMuth. Thank you. You said that you'd entertain a question or 
two about foreign policy.
    The President. Sure.
    Mr. DeMuth. Let me ask you another one. You caught a lot of flak for 
saying that you'd looked into Vladimir Putin's soul and seen a friend.
    The President. I looked in his eyes and saw his soul.
    Mr. DeMuth. In his eyes and saw his soul.
    The President. Right.
    Mr. DeMuth. Thank you. He----
    The President. Sometimes Presidents get misquoted. [Laughter]

Russia-U.S. Relations

    Mr. DeMuth. That was in I think 2001. And the Putin of 2004 was very 
different, and in 2008 is different still. What's your thinking on the 
evolution of the Kremlin during your Presidency?
    The President. First of all, there's common ground between Russia 
and the United States. And one area of common concern is the issue of 
proliferation. And there's a lot of cooperation taking place to work 
constructively with Russia to make sure that raw materials don't get in 
the hands of rogue regimes or terrorist groups.
    Secondly, we found common ground on Iran, believe it or not. People 
don't think we have, but I know we have. And that is that the Russians 
are just as worried about Iran developing a nuclear weapon and the 
capacity to deliver it as we are.
    And I've told this story publicly, that Vladimir and I were 
talking--I think it was, like, '06 maybe--and he went to the leader in 
Iran and said, ``You know, George Bush thinks you should have civilian 
nuclear power and so do I, but we don't believe you should have the 
right to make that uranium, to enrich it, because you've violated IAEA 
treaties, and therefore, we don't believe you're trustworthy. And 
therefore, why don't you just take--we'll deliver the fuel, and we'll 
pick up the fuel, and you can have your nuclear power. And if you 
continue to insist on enriching, it must mean you want something other 
than nuclear power--civilian nuclear power like you've claimed.''
    Obviously, we have big differences over Georgia. And I saw Vladimir 
at the Olympics right as the troops moved into Georgia. And I was--I 
expressed my concerns, and he expressed his. I would say that our 
relationship is still friendly, although I haven't seen him much because 
there's a new President. And I really haven't had that much of a chance 
to get to know President Medvedev.
    I will tell you that--my only point is there's common interests, and 
there's going to be a lot of tensions. And the President has got to be 
in a position where he can deal with those tensions in a way that 
doesn't send chilling signals with other allies.

President-Elect Barack Obama

    Mr. DeMuth. I have a few general questions. At some point--maybe 
it's already happened--you'll sit down with President-elect

[[Page 1558]]

Obama, and give him a little candid President-to-President advice, 
lessons learned. Would you be willing to share any of that advice with 
the rest of us?
    The President. No. [Laughter] He came in the Oval Office. We had a 
very good discussion. I was impressed by the questions he asked. And I 
told him I wouldn't reveal them, so that if he ever asked for my advice 
again, he would feel comfortable doing it knowing that it wouldn't be 
out there for public consumption.
    I'll tell you this though; I will say this--the guy loves his family 
a lot. And we spent some time talking about what it meant to be--for me 
to be a dad with two daughters in the White House. And he's a dad who 
will have two daughters in the White House. And his family is a top 
priority for him.

Presidential Advice for Conservatives

    Mr. DeMuth. I have another advice-like question. Political 
conservatives believe that they're in for a period in the wilderness. 
What advice do you have for political conservatives in the years ahead?
    The President. Look at history. I think you're old enough to 
remember 1964. Nineteen sixty-four was a wipeout for conservatives and 
Republicans. In my State of Texas, the legislature was 149 Democrats and 
1 Republican. [Laughter] And there were no Republicans in the State 
senate. I think there was one elected Congressman--Bruce Alger out of 
Dallas--and John Tower wasn't up for election. I don't know if there 
were any elected Republicans at the courthouse. And yet in 1966, 
Republicans and conservatives rebounded; one of whom got elected that 
year, it was George H.W. Bush, by the way, out of Houston.
    And my point is, is that things go in cycles in politics. Now, 
what--in order to win, it's important to recruit good candidates who 
stand on principle. Most Americans believe what we believe: that 
Government ought to be limited and wise; that taxes ought to be low; 
that we ought to encourage entrepreneurship and small businesses; and 
that we ought to have a strong national defense.
    And I'm a little concerned about the tone of the immigration debate, 
labeling our party as ``anti''-people. It's one thing to say they want 
the border enforced, and I understand that. But if a group of people 
think that a political party is against them, it doesn't matter what 
else you stand for. And the tone, in my judgment, at times got to be 
``anti.'' At one point in our history we had too many Jewish people and 
too many Italians. I don't know if you remember that. And it was--I'm 
just confident people were saying, ``I can't believe this is the America 
that I came to live in where I'm ``anti''--people are ``anti''-me.''
    And so we're going to have to work, like, with the Latino vote to 
say, we care about you, we hear you, and we share your values: faith and 
family, small businesses, military vets or, you know, disproportionate--
more Latinos serve as a percentage of their--of population in the 
military than any other group, if I'm not mistaken.
    So we'll come back, absolutely. And I'll be out there, the old sage, 
sitting around, you know--[laughter]--``if only you did it this way.'' 
[Laughter]

President's Post-Presidency Agenda

    Mr. DeMuth. I have a couple of old sage questions for you.
    The President. Sure, an old sage at 62, but----
    Mr. DeMuth. Well----
    The President. ----headed to retirement. [Laughter]
    Mr. DeMuth. Immigration is a subject that you've--you thought a lot 
about----
    The President. I have.
    Mr. DeMuth. ----before you came to the White House, had very strong 
views on. Is this one of the issues that you might stay involved in in 
your post-White House----
    The President. I'm going to stay involved in the freedom initiative, 
that's for certain. I am concerned that our country becomes 
isolationist; I really am. I--you know, there is a debate that basically 
says, well, maybe certain people shouldn't be free. It's like if you 
ever heard--people say, ``Bush is imposing his view.'' Well, if you ever 
hear somebody say that, they must not understand the universality of 
freedom. Freedom is not mine to give. I happen to believe it's a gift of 
an Almighty to everybody. And therefore, the role of the United States 
is to help people

[[Page 1559]]

be free. And that--you know, sometimes, obviously, you never want to 
use--I mean, you only use your military reluctantly.
    But I'm not talking about just freedom from tyranny. I'm talking 
about freedom from disease. You know, an enemy that we face, and will 
face for the next decades, can only recruit when they find hopeless 
people. Think about their recruiting posters: ``Hey, join us; you get to 
be a suicide bomber.'' You have to be pretty hopeless to fall prey to 
that evil.
    And so therefore, it's in our national interests to help free people 
from poverty and disease.
    And so I'll be involved with the freedom movement. I'm particularly 
involved right now with the malaria and HIV/AIDS initiative, PEPFAR. I 
will be involved with free trade. As I told you, I'm worried about 
protectionism. I am very disappointed that the Colombia free trade 
agreement and the Panama free trade agreement and the South Korea free 
trade agreement did not get a vote prior to the election.
    An initiative that I believe is a very important initiative is the 
faith-based and community-based initiative. The fundamental principle 
behind that initiative is, if your program works, we should help you, if 
it meets a societal need. For example, if you're a drug addict, and, you 
know, you believe you need a higher power to help heal your heart so you 
get off drugs, and the program that you're going to works, I have no 
problem giving a voucher to that person so they can redeem it at a 
program that works.
    And so there will be a lot of things I'm going to do out of Southern 
Methodist University. I will--this will not compete with AEI. It's going 
to be a policy center; it will be complementary--[laughter]--to AEI.
    Mr. DeMuth. We've talked to them.
    The President. And we'll be living in Texas. Laura is going to be--
listen, my wife has been a fabulous First Lady, she really has. She has 
used her position to be able to articulate some important causes. She 
heralds teachers; she promotes literacy; she believes strongly in 
freedom in Burma; and she is very much involved in the Afghan women. And 
she will continue doing--using her position as ex-First Lady to do that.

The Presidency/Texas Sport Teams

    Mr. DeMuth. I have two more questions along these same lines.
    The President. Okay.
    Mr. DeMuth. These are very serious questions, and I'll ask them 
both. The first is, what will you miss the least? [Laughter] And the 
second is, when you're back in the Lone Star State, which sports teams 
are you going to be paying the most attention to?
    The President. All Texas teams, of course. You know, I have been--
first of all, some will probably say, ``Oh, the press.'' Well, that's 
not true. I've had a good relationship with the White House press. I 
don't like some of the things they say. Of course, they don't like some 
of the things I say. But we've had a good relationship with the press. 
And the press and the Presidency is a very important relationship, and 
it requires a lot of work to get along. But I recognize they need me for 
news, and I need them for outlets. And so it's been a good relationship 
in some ways. I don't--as I say, I don't like everything they write, so 
therefore, ignore that part that I don't like. [Laughter]
    I'll miss the petty name-calling--I mean, I won't miss it. I have 
been disappointed at times about the politics of personal destruction. 
It's not the first time it's ever happened in our history, but I was--I 
came with the idea of changing the tone in Washington, and frankly, 
didn't do a very good job of it. You know, war brings out a lot of 
heated rhetoric and a lot of emotion; I fully understand that. I know 
that's the case. But surely we can do a better job in Washington of 
treating each other with respect. I don't want to be a self-serving 
fellow, but I have never used my position as President to personally 
denigrate somebody.
    And so that's something--I'm not going to miss it at all. I'm 
disappointed in how--the words that came out of people's mouth, and I'm 
very disappointed of how the process has treated some of my friends. I'm 
disappointed in the judicial process, for example, where our nominees 
just got held out there forever. Never had a chance to get a hearing, 
and yet all kinds of stuff were occasionally floated on them about their 
reputations. It's going to be hard to attract good people to the 
political process if people show up and feel like

[[Page 1560]]

that their integrity or decency will be, you know, challenged at every 
turn. There's nothing wrong with challenging policy. There is something 
wrong with tearing people down for the--trying to help somebody else 
gain politically.

    And I won't miss--I'll miss a lot. As I told you, I'll miss being 
the Commander in Chief. I'll miss the people I've worked with in the 
White House. We have a--I tell people, some days happy, some days not so 
happy--every day is joyous. And that's a true statement. I'm working 
with some awesome people, and I love them dearly and will miss seeing 
them every morning. But since I'll be an e-mailer again, I'm sure I'll 
be able to--[laughter]--stay in touch.

    Mr. DeMuth. President Bush, I--permit me to thank you for coming 
over here and for these very deep reflections. I'd also like to impose 
my thanks and that of my colleagues to you for your great service to 
America----

    The President. Thank you.

    Mr. DeMuth. ----and for your steadiness of purpose and your 
tremendous optimism and idealism and serenity of mind, which has been 
just astonishing to behold.

    The President. Thank you, sir.

    Mr. DeMuth. And I know that these will not be your last words, and I 
know that we all look forward to welcoming you back to AEI as Citizen 
Bush early and often.

    The President. Thank you, sir. Thanks for letting me come by. God 
bless.

Note: The President spoke at 10:44 a.m. at the Renaissance Mayflower 
Hotel. In his remarks, he referred to Christopher DeMuth, president, 
American Enterprise Insititute; Leon Kass, former Chairman, President's 
Council on Bioethics; former Secretary of State George P. Shultz; former 
Secretary of Defense Donald H. Rumsfeld; President Mahmud Ahmadi-nejad 
of Iran; President Dmitry Medvedev of Russia; and former Rep. Bruce 
Alger of Texas. The Office of the Press Secretary also released a 
Spanish language transcript of these remarks. A portion of these remarks 
could not be verified because the tape was incomplete.