President Obama and Vice President Biden Address National Governors Association

The Vice President:
Thank you very much. I’m Joe Biden — I’m
Jill Biden’s husband — (laughter) — which is how I’m getting
to be known around here. You’re about to — we decided to
bring in the second team now to talk to you all. (laughter) Folks, welcome back
to the White House. And for those of you who — this
is your first visit as governor, welcome and congratulations
on your elections. You know, over the last two
years the new governors — the older governors will tell you,
or at least the ones who’ve been around for two years, will tell
you they probably got tired of hearing from me. I was on the phone with
you all so often during the Recovery Act. I know none of you liked
the Recovery Act much. (laughter) But I just want to start off by
thanking the governors who’ve been here for the last two
years for the way in which you implemented it. I just wanted to give
you a little fact. There were over 75,000
individual projects that went on in your states and
a total of 250,000 awards, meaning a check had to be cut
to 250,000 different entities. And a group of IGs and outside
examiners pointed out there’s less than 1/100th of
1 percent of fraud in the entire operation. And that’s because of you. That’s because of all of you. (applause) And it’s because of the mayors. The new governors, although
there’s no Recovery Act, there will a be continued
relationship between the federal and state and local government,
and we plan on trying to use that as a template as to how
to move forward so we save taxpayers money. The recovery is underway,
although I’m sure a lot of you, having to cut your
budgets, don’t feel it. It’s a very difficult
time for you all. And I just want you to know that
I think we probably can all agree on the major initiatives. We may have a different
prioritization, but we all know we have
to do something about the long-term debt. We all know that we have to
do something about preparing ourselves to compete in the
future in terms of education, innovation and infrastructure. But I want to remind you all
that — I know you all know but sometimes our constituents, you
look at some of the polling, they think we’ve already
lost the future to China. They think we’ve already
lost the future to India. They already think we are
behind the eight ball. We are still better positioned
than any country in the world — any country in the
world — to own the 21st century economically. Our GDP is bigger
than that of China, Japan and Germany combined. We’re in a situation where here
in the United States of America the median income
is close to $50,000. In China, it’s $4,500. We wish them better. But just to put
this in perspective, it’s important to know
where we stand now, the platform from
which we now operate, and why if we do the right
things we have an overwhelming prospect — an overwhelming
prospect — of not only recovery here in the United States
but leading the world in the 21st century. The man I’m about to introduce
to you shares your view. Americans have never settled
for number two — literally. This is not hyperbole. It’s not one of these
chauvinistic things. We want other
nations to do well. We’ll do better if they do well. But we are not — we not
— prepared, nor are you, to settle for being
number two in anything. And so, folks, that’s why we’ve
laid out — the President has laid out in his State of
the Union speech the need for us to innovate. We have the most innovative
economy in the world. We have the freest of
free-enterprise systems. We know what we’re doing. We want to unleash the
free-enterprise system. We also know that we cannot
rank tied with five nations for number nine in the world in the
percentage of people we graduate from our universities. It’s not acceptable. It’s simply not acceptable. That’s why by 2020,
we will, in fact, be once again leading the
world as we did in the past. That is a goal, a
goal we will meet. As my wife you just heard from,
a community college teacher, would say, any nation that
out-educates us is going to out-compete us. It’s as simple and
as basic as that. And thirdly, we cannot have a
20th century infrastructure for the 21st century — a 20th
century infrastructure, as all of you know, that in
fact is already in some areas teetering on needing
major, major repairs. And by infrastructure, we not
only mean ports, road, airports; we also mean modern
infrastructure from broadband to the new changes that are going
to have to take place for what reason — to make American
business more competitive, to make American employees
more hire-able, if you will. There’s no such word,
but able to be hired. (laughter) But the neighborhood I come from
people understand what I say. (laughter) And so, folks, look, I just want
to introduce you to the guy who — as I said, we’ll
disagree in the details, but I’m sure you share this
man’s view, there is no — no, no, no — acceptable rationale
for America being anything other than number one in the world. Ladies and gentlemen,
the President of the United States of America. (applause) The President:
Thank you. Thank you. Thank you, everybody. Please, have a seat. Have a seat. Thank you very much. Thank you. Thank you, everybody. Please have a seat. Thank you so much. Well, thank you, Joe. Thank you to the members of my
Cabinet and my administration who are here. Thank you, Governor Gregoire
and Governor Heineman, for your outstanding leadership. And I also want to
acknowledge Ray Scheppach. Where’s Ray? There he is — who’s been NGA’s
executive director for 28 years, and this is his final meeting. So, Ray, thank you for your
extraordinary service. (applause) Thank you. (applause) So I hope everybody
had fun last night. I know that you had a
wonderful time listening to Michelle and Jill. Joe’s main function is to
provide a buffer between me and them so that I don’t have
to follow them immediately — (laughter) — because they are really good
and care deeply about what’s happening with
military families. I hope today, all of you, feel
free to make yourselves at home. For those of you with a
particular interest in the next election, I don’t
mean that literally. (laughter) We meet at a moment when all of
us — Democrats and Republicans, leaders at the national and the
state levels — face some very big challenges. Our country has come through a
long and wrenching recession. And as we recover, the question
we’re going to have to answer is: Where will the
new jobs come from? What will the new sources
of economic growth be? And how can we make sure that
the American Dream remains a reality into the 21st century? Now, in the short term, we came
together here in Washington at the end of last year and enacted
tax cuts that are already making Americans’ paychecks bigger and
are allowing businesses to write off major investments. These are tax cuts and changes
in the tax credit system that are going to spur job
creation and economic growth, and I’m proud that Democrats and
Republicans worked with each other to get it done. In the long term, however,
we need to address a set of economic challenges
that, frankly, the housing bubble
largely papered over for almost a decade. We now live in a world that’s
more connected and more competitive than ever before. When each of you tries to bring
new jobs and industries to your state, you’re not just
competing with each other, but you’re competing with China,
you’re competing with India, you’re competing with Brazil,
you’re competing with countries all around the world. And that means that we as a
nation need to make sure that we are the best place on
Earth to do business. We need a skilled and
educated workforce, a commitment to cutting-edge
research and technology, and a fast and reliable
transportation and communications network. That’s how we’re going to
bring new jobs to America, and that’s how we’re
going to win the future. Making these necessary
investments would be hard at any time. But it’s that much harder at a
time when resources are scarce. After living through a decade
of deficits and a historic recession that made them worse,
we can’t afford to kick the can down the road any longer. So the budget debate that we’re
having is going to be critical here in Washington. And so far, most of it’s been
focused almost entirely on how much of annual domestic spending
— what in the parlance we call domestic discretionary spending
— that we should cut. There’s no doubt that cuts in
discretionary spending have to be a part of the answer
for deficit reduction. And that’s why, as a start, I’ve
proposed a five-year spending freeze that will reduce our
deficits by $400 billion. The budget that I sent to
Congress cuts or eliminates more than 200 federal programs. And it reforms dozens of others,
from health care to homeland security to education, so that
rather than throwing money at programs with no accountability
or measured results, we’re committed to funding
only those things that work. All told, the budget cuts I’ve
proposed will bring annual domestic spending to its lowest
share of the economy since Dwight Eisenhower. Let me repeat that. Under my budget, if
it were to be adopted, domestic discretionary spending
would be lower as a percentage of GDP than it was under the
nine previous administrations, including under Ronald Reagan’s. But we know that this
kind of spending, domestic discretionary spending,
which has been the focus of complaints about out-of-control
federal spending, makes up only about 12
percent of the entire budget. If we truly want to get
our deficit under control, then we’re going to have to cut
excessive spending wherever it exists — in defense spending —
and I have to say that Bob Gates has been as good a steward of
taxpayer dollars when it comes to the Pentagon as just
about anybody out there, but we’re going to have to do
more — in health care spending, on programs like
Medicare and Medicaid, and in spending through
tax breaks and loopholes. That’s going to be a tough
conversation to have, but it’s one we need to have,
and it’s one I expect to have with congressional leaders
in the weeks to come. Those of you who are in this
room obviously are on the front lines of this budget debate. As the Recovery Act funds that
saw through many states over the last two years are phasing out
— and it is undeniable that the Recovery Act helped every single
state represented in this room manage your budgets, whether you
admit it or not — you face some very tough choices at this point
on everything from schools to prisons to pensions. I also know that many of you are
making decisions regarding your public workforces, and I know
how difficult that can be. I recently froze the salaries of
federal employees for two years. It wasn’t something
that I wanted to do, but I did it because of the
very tough fiscal situation that we’re in. So I believe that everybody
should be prepared to give up something in order to solve
our budget challenges, and I think most public
servants agree with that. Democrats and Republicans
agree with that. In fact, many public employees
in your respective states have already agreed to cuts. But let me also say this: I
don’t think it does anybody any good when public employees are
denigrated or vilified or their rights are infringed upon. We need to attract the best and
the brightest to public service. These times demand it. We’re not going to attract the
best teachers for our kids, for example, if they only
make a fraction of what other professionals make. We’re not going to convince the
bravest Americans to put their lives on the line as police
officers or firefighters if we don’t properly
reward that bravery. So, yes, we need a conversation
about pensions and Medicare and Medicaid and other promises
that we’ve made as a nation. And those will be
tough conversations, but necessary conservations. As we make these decisions
about our budget going forward, though, I believe that everyone
should be at the table and that the concept of shared
sacrifice should prevail. If all the pain is borne by
only one group — whether it’s workers, or seniors, or the poor
— while the wealthiest among us get to keep or get
more tax breaks, we’re not doing the right thing. I think that’s something that
Democrats and Republicans should be able to agree on. Now, as we begin to get
our budgets under control, the other thing we can’t
do is sacrifice our future. Even as we cut back on those
things that don’t add to growth or opportunity for our people,
we have to keep investing in those things that are absolutely
necessary to America’s success — education, innovation,
infrastructure. On education, our approach has
been to partner with you — to offer more flexibility in
exchange for better standards; to lift the cap on
charter schools; to spur reform not by
imposing it from Washington, but by asking you to come up
with some of the best ways for your states to succeed. That was the idea behind Race
to the Top: You show us the best plans for reform;
we’ll show you the money. We’re also working with you and
with Congress to fix No Child Left Behind with a focus on
reform, responsibility and, most importantly, results. And we’re trying to give states
and schools more flexibility to reward good teachers and stop
making excuses for bad teachers, because we know that the single
most important factor in a child’s success other than their
parents is the man or woman at the front of the classroom. And I had a chance
to see this recently. I went over to Parkville
Middle School in Maryland, where engineering is now
the most popular subject, mainly thanks to some
outstanding teachers who have inspired students to
focus on their math and their science skills. So we know teachers
can make a difference, and we want to help you
have the very best teachers in the classroom. We also have to invest in
innovation — in American research and technology, in
the work of our scientists and engineers, and in sparking the
creativity and imagination of our people. Now, a lot of this obviously
is done in the private sector. But as much as the private
sector is the principal driver of innovation it’s often
hesitant to invest in the unknown, especially when it
comes to basic research. Historically, that’s been
a federal responsibility. It’s how we ended up with
things like the computer chip and the GPS. It’s how we ended up
with the Internet. It’s also how a lot of your
states are already attracting jobs and industries
of the future. I went to Wisconsin, for
example, a few weeks ago, and I visited a small-town
company called Orion that’s putting hundreds of people
to work manufacturing energy-efficient lights
in a once-darkened plant. They benefited from
federal research. In Ohio and Pennsylvania, thanks
in part to federal grants, I saw universities and
businesses joining together to make America a world
leader in biotechnology and in clean energy. And if you have any doubt about
the importance of this federal investment in research
and development, I would suggest that you talk to
the cutting-edge businesses in your own states. They will tell you that if we
want the next big breakthrough, the next big industry to be
an American breakthrough, an American industry, then
we can’t sacrifice these investments in research
and technology. The third way that we need to
invest is in our infrastructure — everything from new roads and
bridges to high-speed rail and high-speed Internet — projects
that create hundreds of thousands of
private sector jobs. And I know that in
some of your states, infrastructure projects
have garnered controversy. Sometimes they’ve gotten caught
up in partisan politics. This hasn’t traditionally
been a partisan issue. Lincoln laid the rails during
the course of a civil war. Eisenhower built the
Interstate Highway System. Both parties have always
believed that America should have the best of everything. We don’t have third-rate
airports and third-rate bridges and third-rate highways. That’s not who we are. We shouldn’t start
going down that path. New companies are going
to seek out the fastest, most reliable ways to
move people, goods, and information — whether
they’re in Chicago or they’re in Shanghai. And I want them to be
here, in the United States. So to those who say that we
can’t afford to make investments in infrastructure, I say we
can’t afford not to make investments in infrastructure. We always have had the
best infrastructure. The notion that somehow we’d
give up that leadership at this critical juncture in our
history makes no sense. Just ask the folks that
I met up in Marquette, Michigan — I was talking
to Rick Snyder about this — up in the Upper Peninsula. This is a town of 20,000 people
far away from the hustle and bustle of places like
Detroit or Grand Rapids. But because of the wireless
infrastructure that they have set up, they’ve now got —
the local department store, third generation family-owned
department store, has been able to hook up with
the university and have access to wireless, and they are now
selling two-thirds of their goods online. They’re one of the 5,000 fastest
growing companies in America — up in the Upper Peninsula
because the infrastructure was in place to allow
them to succeed. And you’ve got kids in
schoolhouses in even more remote areas who are able
to plug in to lectures and science fairs anywhere
in America because of the infrastructure that was set up. That’s a smart investment
for every state to make. And the federal government wants
to be your partner in making those investments. These are the kinds of
investments that pay huge economic dividends in
terms of jobs and growth. They are the fundamentals that
allow some states to weather economic storms
better than others. They’re the fundamentals that
will make some states better positioned to win the
future than others. These investments are not just
critical for your state’s success; they’re critical
for America’s success. And I want to be a partner in
helping you make that happen. Which brings me to the final
topic that’s going to help determine our ability
to win the future, and that’s getting control
of our health care costs. Now, I am aware that I have not
convinced everybody here to be a member of the Affordable
Care Act fan club. But surely we can agree that
for decades, our governments, our families, our businesses
watched as health costs ate up more and more of
their bottom line. There’s no disputing that. That didn’t just
happen last year. It didn’t just
happen two years ago. It’s been going
on for years now. We also know that the biggest
driver of the federal debt is Medicare costs. Nothing else comes close. We could implement every
cut that the House of Representatives right now has
proposed and it would not make a dent in our long-term budget,
wouldn’t make a dent in our long-term deficits —
because of healthcare costs. We know it’s one of the
biggest strains in your state budgets — Medicaid. And for years, politicians of
both parties promised one thing: real reform. Everybody talked about it. Well, we’ve decided to finally
do something about it — to create a structure that would
preserve our system of private health insurance; would protect
our consumers from the worst abuses of insurance companies;
would create competition and lower costs by putting
in place new exchanges, run by the states, where
Americans could pool together to increase their purchasing power
and select from various plans to choose what’s best for them —
the same way that members of Congress do, the same way that
those who are lucky enough to work for big employers do. And the fact is, that the
Affordable Care Act has done more to rein in rising costs,
make sure everyone can buy insurance, and attack the
federal deficit than we’ve seen in years. And that’s not just my opinion;
that’s the opinion of the Congressional Budget Office —
nonpartisan — the same one that puts out numbers that when
it’s handy to go after me, people trot out and say,
boy, these are — look at these numbers. So they’re saying we’re saving a
trillion bucks because of this act on our health care costs. Otherwise, we’d be a trillion
dollars more in the red. That’s something that we should
build on, not break down. Now, that doesn’t mean that
the job of health care reform is complete. We still have to
implement the law, and we have to implement it in a
smart and non-bureaucratic way. I know that many of you have
asked for flexibility for your states under this law. In fact, I agree
with Mitt Romney, who recently said he’s proud of
what he accomplished on health care in Massachusetts and
supports giving states the power to determine their
own health care solutions. He’s right. Alabama is not going to have
exactly the same needs as Massachusetts or
California or North Dakota. We believe in that flexibility. So right now, under the law,
under the Affordable Care Act, Massachusetts and Utah already
operate exchanges of their own that are very different —
operate them in their own way. And we made sure that
the law allowed that. The same applies
for other requests, like choosing benefit rules that
meet the needs of your citizens, or allowing for
consumer-driven plans and health savings accounts. And this recognition that states
need flexibility to tailor their approach to their unique needs
is why part of the law says that, beginning in 2017, if you
can come up with a better system for your state to provide
coverage of the same quality and affordability as the
Affordable Care Act, you can take that route instead. That portion of the law has
not been remarked on much. It says by 2017, if you have
a better way of doing it, help yourself, go
ahead, take that route. Now, some folks have said,
well, that’s not soon enough. So a few weeks ago, Oregon
Senator Ron Wyden, a Democrat, and Massachusetts Senator
Scott Brown, a Republican, and Louisiana Senator
Mary Landrieu, they proposed legislation that
would accelerate that provision. So it would allow states to
apply for such a waiver by 2014 instead of 2017. I think that’s a
reasonable proposal. I support it. It will give you
flexibility more quickly, while still guaranteeing
the American people reform. If your state can create a plan
that covers as many people as affordably and comprehensively
as the Affordable Care Act does — without increasing the
deficit — you can implement that plan. And we’ll work
with you to do it. I’ve said before, I don’t
believe that any single party has a monopoly on good ideas. And I will go to bat
for whatever works, no matter who or
where it comes from. I also share your concern
about Medicaid costs. I know this has been a topic of
significant conversation over the last couple of days. We know that over half of all
Medicaid costs come from just 5 percent of enrollees, many
of whom are what’s called dual eligibles — seniors in Medicare
as well as in Medicaid. The Affordable Care Act helps
address this by changing the incentives for providers so
that they start adopting best practices that will
work to reduce cost while improving quality. But we understand the
pressure you’re under. We understand that
we’ve got to do more. So today — and I mentioned this
to Christine last night — I’m asking you to name a bipartisan
group of governors to work with Secretary Sebelius on ways to
lower costs and improve the quality of care for
these Americans. And if you can come up with more
ways to reduce Medicaid costs while still providing quality
care to those who need it I will support those proposals as well. So here’s the bottom line. Once fully implemented, I’m
convinced the Affordable Care Act will do what it was
designed it to do — cut costs, cover everybody, end the
worst abuses in the insurance industry, and bring down
our long-term deficits. I am not open to re-fighting the
battles of the last two years, or undoing the progress
that we’ve made. But I am willing to work with
anyone — anybody in this room, Democrat or Republican,
governors or member of Congress — to make this law even better;
to make care even better; to make it more affordable
and fix what needs fixing. You see, part of the genius
of our Founders was the establishment of a federal
system in which each of our states serves as a laboratory
for our democracy. Through this process, some of
the best state ideas became some of America’s best ideas. So whether it’s through
Race to the Top, or improving the
Affordable Care Act, or reforming the way that we
approach social programs by ensuring that spending
is tied to success, our approach has been to give
you the flexibility that you need to find your own
innovative ways forward. In fact, this week I’m issuing
a Presidential Memorandum that instructs all government
agencies to follow this flexible approach wherever
the law allows. But even as we preserve the
freedom and diversity that is at the heart of federalism, let’s
remember that we are one nation. We are one people. Our economy is national. Our fates are intertwined. Today, we’re not
competing with each other; we’re competing with other
countries that are hungry to win new jobs, hungry
to win new industries. I’m confident we will win this
competition as long as we’re fighting it together. And I know that,
whatever our differences, you share that goal. So you’ve got a partner in the
White House to make this happen. And I hope that this becomes
the start of a productive and serious conversation going
forward — one that I want to start by answering
some of your questions. So thank you very much. (applause) Thank you.

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