President Obama on Taxes, Government Spending, and Keeping America Competitive


President Obama at the Wall Street Journal CEO Council, November 19th, 2013.

"I always look forward to an opportunity to speak to some of our top businesses across the country who are hiring people, investing in America, making the economy run," President Barack Obama began a talk on Tuesday for the Wall Street Journal CEO Council at the Four Seasons hotel in Washington, D.C.

Here's my partial transcription from his talk, lightly edited for clarity. (Click here for part 1.)

On the tax code: The good news is that both my administration and republicans have talked about corporate tax reform. We put forward a very specific set of proposals that would lower the corporate tax rate, broaden the base, close some loopholes.

In terms of international companies and competitiveness, what we've said is, rather than a bunch of tangled laws that incentivize folks to keep money overseas, let's have a modest, but clear, global minimum tax. Get rid of some of the huge fluctuations that people experience. It will save companies money, make them more competitive, and allow some people to bring back money [from overseas].

The one thing I would caution is, people like the idea of corporate tax reform in theory, but in practice, if you want to make corporate tax reform deficit-neutral, you actually have to close some loopholes. And people like the idea of a simplified tax system until it's their particular loophole that's about to get closed.

On government spending and deficits: What we know is that our fiscal problems are not short-term deficits. Our discretionary budget, that portion of the federal budget that isn't defense or the entitlement programs, is at its smallest level since Dwight Eisenhower. We are not lavishly spending on a whole bunch of social programs out there. And a lot of these programs have become more efficient and pretty effective.

We spent a lot on defense from 2001 to 2011, but we are stabilizing, and the Pentagon, working with me, has come up with plans that allow us to meet our security needs while still bringing down some of the costs of defense, particularly after having ended the war in Iraq and on the brink of ending the war in Afghanistan.

When we talk about our deficit and debt problems, it is almost entirely health care costs. You eliminate the delta -- the difference between what we spend on health care and what every other country spends on health care -- and that's our long-term debt. If we're able to bend the cost curve, we help solve the problem. Now, one way to do that is just to make health care cheaper overall. That is the best way to do it, and that's what we've been doing through some of the measures in the Affordable Care Act.

On competition: We've got some international CEOs here today, and I think they'll confirm this: When I travel, what's striking to me is people around the world think we've got a really good hand. Just take energy. They say America is poised to change our geopolitics entirely because of the advances we've made in oil production and natural gas production. It means manufacturing here is much more attractive than it used to be. That's a huge competitive advantage.

We've got the most productive workers in the world. And our workers have become more and more productive, and a lot of companies look at that and say, "We wish we had workers who were able to operate the way these folks do."

Sometimes we get worried that we're losing track and the sky is falling. Back in the 1980s, Japan was about to take over, and then China, and obviously, before that, the Soviet Union. We usually come out OK because we change and adapt.

On the debt ceiling and government shutdown: Our system is set up like a loaded gun. Once people thought we can get leverage on policy disputes by threatening default -- that was an extraordinarily dangerous precedent. It's a principle that I had to adhere to, not just for me but for the next president, that you're not going to be able to threaten the entire world economy because you disagree with me about a health care bill.

I'd like to believe that the republicans recognize that was not a good strategy, and we're probably better off with a system where threat is not there on a perpetual basis. I don't foresee what we saw in October being repeated in January.

But the broader point is one that I think all of us have to take to heart. We have to be able to disagree on policy issues without resorting to the kinds of extreme tactics that end up hurting all of us.

Frankly, the American people agree with that. They don't expect us to march in lockstep. There's a reason why we've got two parties in this country. They do expect that we are constantly thinking about how are we making sure they can find a job that pays well, that their kids can go to college and afford it, that we are growing and competitive, that, you know, we are dealing with our fiscal position in a sensible way. If we keep them in mind consistently, then I think we're going to be successful.

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