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For Immediate Release
Office of the Press Secretary
December 5, 2008

Press Briefing by Deputy Press Secretary Scott Stanzel
James S. Brady Press Briefing Room

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12:03 P.M. EST

MR. STANZEL: Good afternoon, everyone. I have a couple announcements, and then I'll get to your questions.

The President recorded his weekly radio address this morning. In his radio address he discusses the two agreements with Iraq -- the strategic framework agreement and the status of forces agreement -- that were approved by the presidency council in Iraq this week. The agreements will solidify Iraq's democratic gains, affirm its sovereignty, and put relations -- puts relations with the U.S. on a strong and steady footing. So you will see the transcript of that later today.

Then this evening the President will make remarks at the Saban Forum. We've already provided those -- the remarks as prepared -- to you this morning, where he will highlight the administration's foreign policy accomplishments in the Middle East and his vision for the future of the region. So those were just released to you a few hours ago.

And with that, I will take your questions. Deb, if you have one.

Q Yes, I have one. We were a little confused about when the President said that as long as the money -- the companies pay back the taxpayers for whatever money is given to them -- that doesn't go along, in my mind, with the $25 billion idea that's already been earmarked for the energy efficiency -- I don't get that. So is he saying that if they do something else, that's a precondition, or --

MR. STANZEL: No, no. What the President was talking about is, is what we've long said, is that before Congress there is a bipartisan plan to provide assistance. The vehicle for that is the already existing section 136 program from the Department of Energy that Congress has already appropriated the money for. We have indicated that they should modify that program. There's a bipartisan proposal to do that. We think that is the proposal that would receive bipartisan support and could get to the President's desk so they can make some quick changes to that so they can receive those monies in the form of a loan.

Q And that's the part that would have to be paid back, right?

MR. STANZEL: Correct, correct.

Q Okay. Okay, I get it.

MR. STANZEL: Jeremy.

Q Where is the administration on calls from Democrats on Capitol Hill for some sort of short-term and long-term stimulus effort, especially in light of the job numbers this morning?

MR. STANZEL: Well, we are always evaluating ideas. But what our focus is right now is implementing the programs that we have in front of us to address the root causes of this economic downturn -- and the root causes being the housing market, of course, and the freezing of the credit markets.

So we are very focused on implementing that program. But we're also focused on getting assistance to the automakers. We think that they are a very critical part of this economy. We've been listening intently to the testimony by the leaders from the auto companies this week, and we think that Congress should move forward with, as I indicated to Deb, that bipartisan plan that we think could get support.

We have heard the next administration talk very clearly that they plan to focus on a stimulus, and that is something that we expect to happen in the next administration.

Q When you say that you're focused on implementing the programs that you have, and -- presumably that includes the financial rescue package --


Q -- passed in October, or signed into law in October. Where are you all in the evaluation of accessing that final $350 billion tranche?

MR. STANZEL: That's a decision that the Secretary of Treasury has said he will make. He will continually evaluate where they are in terms of implementing the program. If he decides that those funds are needed, that is a request that he won't be shy about making to Congress.

Q But that hasn't been made -- that recommendation hasn't been made to the President?

MR. STANZEL: That hasn't been made at this point, that's correct.


Q Scott, asking about housing and plans to stabilize the housing market. I was warned yesterday that the plan was getting a lot of ink yesterday, which had to do with perhaps getting 30-year fixed mortgage rates down to 4.5 percent; that that may be a little premature to think about, is something that's -- it wasn't cooked yet.


Q Is it any closer to being cooked today?

MR. STANZEL: Well, I'm not the chef -- (laughter) -- so I would refer you to the folks who have put together those ideas. But we are always evaluating those plans and, as I think Dana indicated yesterday, you know, there are lot of ideas out there and we're going to weigh them all, weigh the pros and cons. But at this point, what we're focused on is the FHASecure program; we have the HOPE NOW program -- 3.2 million families have been helped through those programs. But we're always looking to new ideas, but nothing to announce at this point.


Q Scott, the news stories today indicate that the Chinese are concerned that everything we've done here to stabilize the economy so far has failed, and they're urging us to take steps to protect their investments. Has the President heard from Taiwan and the Japanese, big investors in the U.S., along the same lines? I mean, are we starting to see this fear spreading overseas to our big investors?

MR. STANZEL: Well, I don't think we necessarily need to hear from others to understand what is going on in the economy. We saw the job numbers that the President spoke about today, which are tremendously disappointing. And we have for a long time seen those storm clouds on the horizon, going back to the beginning of last year when we worked with Congress to implement a stimulus program, and then in September when we acted very quickly and swiftly to work with Congress to address the problems in the financial markets.

As other leaders in the administration have noted today, prior to September, the job losses earlier this year were about 82,000 jobs per month. In the last three months, they've been about 420,000 jobs per month. That just shows you the direct linkage between the financial markets and the real economy, and we're very concerned about that.

Just a couple weeks ago, President Bush gathered with leaders from the top 20 economies around the world to talk about what we can do to take action together, coordinated action when that's possible. Different actions will be -- suit different economies and their needs. We'll have to evaluate those and we talked about need for reform, and they came up with 47, I believe, different action ideas that they would take going forward into those next meetings. So we're very concerned and we understand that the problems in the financial markets are having a real impact not just here, but really around the world.

Go ahead.

Q The job numbers clearly -- you described them as tremendously disappointing, even more so than people had expected. How do those numbers -- how did they shape decision-making when it comes to a possible bailout? I mean, they had to have at least given the administration some pause when thinking about a possible compromise using TARP funds to bail out the Big Three?

MR. STANZEL: Well, what we've seen is that, like I said, the financial markets is having a big impact on the rest of the economy. These job losses today were tremendously disappointing; 6.7 percent unemployment is too high, it's far too high in our view. And this has a real impact on families who are struggling to pay their mortgages, struggling to make ends meet. So we're very concerned about that.

But what we have is a program that has been passed by Congress to address the financial markets. We believe that is the root cause of the problems in our economy, so we should maintain those resources for that reason so we can have an impact on the rest of the economy by fixing the credit markets.

We also are very concerned about what's going on with the auto companies, and that's why we think that Congress could modify the plan that they've already passed and the money that they've already approved for those automakers in a way that will swiftly get resources to them in a way that will help them be viable, help them be competitive.

Just this week we have heard from the auto companies about their plans for restructuring. We are still evaluating those plans. We're still listening to what they have to say. But in order to become viable in the long term, they're going to have to consider a lot of different things, and those things include labor and management costs, legacy costs, debt structure, their dealer networks, their ability to utilize their capacity, fuel efficiency standards, their product plans in the future.

So these are all very complicated issues that they're testifying about today that we will evaluate. But they have to demonstrate, as the President noted, that they have a plan to become viable and be competitive in the future so they -- so using taxpayer resources makes sense. Until they do that, we don't know -- it's incumbent upon them, I guess I would say, to demonstrate that.

Q But just to follow up on that, what would constitute a demonstration of that? You have the proposals in front of you. Is there anything you could hear -- what are you waiting for --

MR. STANZEL: Well, we're in the process right now. I mean, we're evaluating those programs -- or their proposals. Congress is hearing from them directly. We do have a lot of questions. The experts -- whether it's the CEA or the NEC or throughout the administration -- are evaluating their plans. We're working with Congress about them, talking with members of Congress.

So it's an ongoing process, but it's one that's important. It's important to the people who not only work in the auto industry, but to the rest of the economy. And we're very interested in how they are going to change to become competitive in the future.


Q What about the idea being floated by some in Congress, basically government-controlled restructuring of the car companies with an oversight board looking over, or maybe someone appointed by the President? Would the President go for that?

MR. STANZEL: Well, that is an idea that has been floated. We do not want any firm to fail. It's our view that we should want all firms to be successful. And that's why we've talked about reformulating that section 136 program to provide access to resources quickly.

These ideas will be certainly considered. There's a lot of discussions going on in Congress right now. But our focus has been and remains on that section 136 program.

Q What about maybe a short-term bridge loan, just something to keep GM and Chrysler solvent for the next 60-90 days?

MR. STANZEL: We'll have to see what proposals come about. But we think that there is a plan to get them resources quickly, and that is the section 136 plan, that money has already been appropriated for.

Yes, Jim.

Q Can I clarify something? You said that the stimulus -- you're going to wait for the next -- the next administration will handle the stimulus.

MR. STANZEL: Our focus right now is implementing the programs that we have before us, yes.

Q And forgive me, I'm not the sharpest tool in the shed here -- I'm trying to figure out, is that the first time you all have said that?

MR. STANZEL: No, I don't believe so. I'm quite certain that it's not. But we have talked about our focus right now is implementing the programs to address the problems in the financial markets, to implement that, you know, for the past couple months, developing those regulations for the -- program for the auto companies. That has been our focus. And Congress hasn't indicated that they would move forward on a stimulus right now. But our focus is on implementing those programs. And the second -- the next administration has indicated that their first order of business will be a stimulus.

Q Does that reflect some sort of understanding that there are things you're just not going to get done left in this administration?

MR. STANZEL: Well, we have 45 days to go, and as evidenced by the magnitude of the issues that this President is dealing with, he is going to sprint to the finish. But there will be some things that we won't be able to address.


Q Scott, switching gears on you a little bit, with the President's speech tonight, has President Bush put the Israelis and the Palestinians on the road to living peacefully side by side, two states?

MR. STANZEL: Well, I think we have come a long way in the past eight years. You have a much broader recognition in the Middle East about the need for a two-state solution. You have the Annapolis process that brought together leaders from many Arab nations in the Middle East to recognize that a dialogue between the Palestinians and the Israelis to develop a two-state solution -- two states living side by side in peace -- is very critical. So I think you'll hear the President tonight talk about the policies that he's implemented across the broader Middle East and how the negotiations between the Israelis and the Palestinians have been substantial. They haven't maybe made it as far as we had wanted this year, but they have been substantial and they've laid the foundation for talks to continue in the future.

Yes, go ahead, Victoria.

Q Do you think that the heads of the auto companies should be replaced?

MR. STANZEL: Those are decisions that their boards will have to make as part of restructuring if that makes sense for them. That's not something that we would weigh in on.


Q Scott, you said a couple questions ago in answer, you said we saw these storm clouds coming, speaking of the economy. Now, you saw these storm clouds coming. Was it this administration's responsibility to navigate through successfully or to go around it in some kind of way? I mean, if you've seen this coming.

MR. STANZEL: Well, we have seen the storm clouds gathering. And I think you can take a look back, take a step back, and think about all of the challenges that this President has faced since taking office. The President inherited a recession, an economy that had been dealt serious blows by the dot-com bust, the corporate scandals that we saw. We were hit with the terrible attacks of 9/11 and two wars following that. We had the largest natural disasters in a hundred years. Those are all challenges that this President has faced. And more recently, we've dealt with the severe downturn in the housing market.

But you go back to the beginning of the administration, we were urging Congress to take action on an independent regulator and make modifications to Fannie Mae and Freddie Mac because of the concerns that we had there. We called last August for those reforms. We thought they were urgent. It took Congress about a year to get around to doing those reforms. So we have long sounded the bell in terms of the dangers to this economy from the problems that we've seen.

Beginning of last year, we put in place in a bipartisan fashion a stimulus plan that we believe provided some help -- boost to the economy, but the challenges have been great this year, that's for sure.

Q The President finally said -- first time at a podium -- that we are in a recession. This administration had been saying for months, from the very beginning of 2008, that we weren't. Who --

MR. STANZEL: No, that's not correct. That --

Q You said that --

MR. STANZEL: -- what we had said is that is a determination that's made by the National Bureau of Economic Research. And as you know, they made that determination this week.

Q Yes.

MR. STANZEL: So we are in a recession.

Q But wouldn't you think that some of your economists, your economic advisors would have seen this to be able to say, wait a minute, Mr. President, we are in a recession. Maybe -- yes, you're supposed to have two consecutive -- traditional markers -- two consecutive --

MR. STANZEL: And a lot of other factors.

Q Yes, but I mean, wouldn't you say that your economists, your Council of Economic Advisors, would have been able to come to you and say, look, there is a situation here.

MR. STANZEL: They have. They have. That's why, like I said, that's why at the end of last year we went to Congress and worked with them on a stimulus plan. That is why we called for the major reforms for Fannie Mae and Freddie Mac, for the government -- for the GSEs.

Q Did they ever tell you the word "recession"? Did they tell you, we are in a recession, months prior to this official report?

MR. STANZEL: Like we've said, that is a determination that's made by the National Bureau of Economic Research. What's less important than a term that you ascribe to it is what is actually going on, and that is, many people are hurting. We have seen problems in the financial markets. We have small businesses that are struggling because of the credit crunch. And what's more important is what we're doing to fix those problems. And we believe we're taking aggressive action to make sure that we can return this economy to growth and -- so small businesses can start hiring, families can start buying products, and the economy will start moving again.


Q Chairman Bernanke yesterday said that you need to be acting more aggressively in averting housing foreclosures, that the existing programs by themselves are not enough. So why does the White House feel that what you're doing is enough?

MR. STANZEL: Well, we have -- like I indicated, we have the FHASecure program. We have HOPE NOW -- helped 3.2 million homeowners avoid foreclosure. We have also made some recent modifications to the FHASecure program, so that will help more people who are on the periphery of -- in danger of foreclosure -- help them prevent that. So the -- also you've seen mortgage rates come down, which will address some of the issues in the housing market. So we continue to evaluate ideas, but we think that those programs have been very helpful.

Q And with respect to the stimulus package, there has been criticism that, given that the root cause of this problem is stabilizing the housing market and credit market, that that program aimed at sparking consumer spending actually only caused consumer spending to increase, say, in September, five months afterwards. And after that consumption burst, the economy growth didn't happen. So is it accurate to say that that actually worked?

MR. STANZEL: That is another one of those "but for" questions. What situation -- but for what we did, what would the situation be like now?

So had we not taken that action, there would have been less growth. There would have been less spending in the first and second quarters of this year, after -- or second and third quarters of this year, after that -- those stimulus checks went out. We think that they had a real impact, and I think that you would find people who would say that they did have an impact.

Now, whether every single dollar of those stimulus checks was spent, no, it wasn't. Some people chose to save that money. Some people chose to use it differently. Some people chose to invest it. Some people chose to go out and buy a new flat-panel TV with it. Everybody is going to make their own choice about how they use their own money, but we think it had an impact on the economy.


Q Scott, when you enter a laundry list of things that the President had to deal with, it sounds like you're claiming victimhood, that the administration has had nothing to do with the blowup of our economy. Is that what you're trying to say, or do you admit that --

MR. STANZEL: I said nothing of the sort. It is a statement of fact that those are the challenges that this President has faced. We have faced the largest terrorist attack on our economy ever. We have faced the largest natural disaster in the last hundred years. We have faced the largest crisis in our financial markets in a hundred years. That's statement of fact.

The President has taken on those big challenges and taken swift action to address them. So I don't think you can dispute any one of those facts, that they're -- they simply happened.

Q But what did the President do that contributed to the current economic blowup? Nothing?

MR. STANZEL: Well, the President has been working to address the economic situation for years. The President, I will remind you, put in place tax relief when he inherited a recession at the beginning of his first term. He put in place tax relief, the largest tax relief in a generation, that spurred 52 straight months of job growth. That is a record. That's a statement of fact, as well.

The President has put in place policies to try to get our economy moving and try to make sure that people who want to find a job can find a job. So the President has worked hard to make sure that we can take action to keep our economy moving, but many of these problems that we have seen -- in the financial markets, in the housing markets -- are many, many years in the making.


Q Two questions. One, there is a cry throughout India as far as the terrorist attacks in Mumbai, and also cry here. Yesterday at the American University, Americans and Indians and Jews all got together, because Americans were the victims. My question is that only Westerners, especially Americans and Jews, Israelis, and British were the target of those terrorist attacks -- so what are we doing now?

MR. STANZEL: Well, as you've seen this week, the Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, as well as Secretary of State, Condoleezza Rice, have been traveling in the region to express our solidarity with the people of India, who have been victims of this attack, as you noted.

There are other, many other countries' citizens who were impacted by this attack. We think it's important to understand everything that occurred, to investigate fully what happened. And we have, working with our partners in India and in Pakistan, countries like us that have seen the real negative impact and the threat of terrorism over the years, we have to work together to make sure that we take on and tackle those challenges and confront the terrorists where they are.

Q And second, according to The Washington Post, and New York Times, and also Indian and American intelligence officials, now there is a clear (inaudible) of Pakistan link -- at least two groups in Pakistan. Don't you think India has a right or should strike out those terrorists inside Pakistan?

MR. STANZEL: I will let the assessments about what took place just last week, in terms of the terrorist attack in Mumbai, will let the experts in the intelligence community talk about those linkages. We have always said that countries have the right to protect their citizens, and they should. What we are seeing now is we want to see cooperation by all the parties involved to make sure that we understand what happened last week.

Q I had one on the economy, please.

MR. STANZEL: Yes, sure.

Q Quick one. Small businesses are also the victims of this, what's going on in the market today. What do you think message President has for them today, because they are going down, and down, and down, and they are the ones who are creating jobs, and now they are --

MR. STANZEL: Well, small businesses create 75 percent of the new jobs that are created in this economy, so making sure that we create an environment where they can flourish is very important. That is why addressing the credit crisis is so critical. In order to get that credit flowing so they can take out the loans, so they can expand, so they can hire new employees, that is a critical aspect of making sure that this economy can get back on a more sound footing.

Yes, go ahead.

Q A question about Zimbabwe.


Q Secretary of State Condoleezza Rice has said that Robert Mugabe should step down from office. Recently, Desmond Tutu said that should happen with military force if he won't go voluntarily. Is that a policy the United States would support?

MR. STANZEL: I haven't seen Bishop Tutu's comments, but certainly Secretary Rice, I believe it was earlier today, made very clear that it is time for him to go. And so that is -- I can look into that, and see if we've had a chance to review his comments fully, though.

Go ahead.

Q The Congressional Budget Office is saying actually, that the retooling loans -- the energy loans, they're really only worth about $7.5 billion up front, but there is supposed to be $25 billion over several years. So that even if that money was loaned to the automakers, it will only be worth $7.5 million up front, which is not enough to even to get Chrysler and GM maybe to the end of the year. Would the administration be agreeable to the idea of using, perhaps, the TARP money to bridge the gap?

MR. STANZEL: Well, I think that in terms of making changes to the section 136 program, that is something that maybe members of Congress would look at, as well, in terms of the modifications to that section 136 program, because they have appropriated money for it.

But in making the changes to the criteria, keeping that viability standard in there, but making the changes in terms of what it was initially purposed for, which was the retooling so they can make more fuel-efficient vehicles -- that may be an issue that they would look at.

Q As you know that the North Korean leader Kim Jong-il is a serious health problem. In case Kim Jong-il collapse, does the United States any contingency plan?

MR. STANZEL: In the case that he does?

Q Yes.

MR. STANZEL: That's a hypothetical. I'm sure that our folks throughout the administration have thought about what would happen in the future. But I don't have anything for you on that point.

Q Thank you, Scott.

MR. STANZEL: Thank you.

END 12:30 P.M. EST