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MR. FRATTO: How are you all doing? So we're on our way to sunny Southern California. The President had his normal briefings this morning. Just to give you a heads up, we have a number of congressmen on the flight this morning, just to let you know is Congressmen Dreier, Gallegly, Royce, Congresswoman Harman, Congressmen Schiff, Nunes and McCarthy on the flight with us today.

And this trip -- as you know, we're on our way to Southern California, the President is going to visit Robinson Helicopter Company. This is actually day two of the post-State of the Union follow-up that -- where the President is going out and talking about some of the major themes that he talked about in the State of the Union address Monday night. Yesterday, of course, he was in Baltimore talking about faith-based initiatives and the prison re-entry program.

Today in Southern California at Robinson Helicopter Company he'll be talking about the importance of trade. Tomorrow in Las Vegas he will discuss the global war on terror and discuss FISA reform and the need to get that legislation passed. And then on Friday in Kansas City he will talk about the economy more broadly.

You can expect the President to talk a little bit about the economy today in his remarks, in addition to a very strong message on the need to pass free trade legislation, the FTAs that are currently awaiting action in Congress for Panama, Colombia and South Korea. He'll talk about the need to -- our intention to complete a Doha round this year; that's something that he would like to accomplish.

He will talk about the need for Congress to also quickly pass the economic growth package. I was very pleased to see the strong bipartisan vote that came out of the House of Representatives yesterday. We'd like to see the Senate act quickly to try to get legislation passed that will give the economy the boost that it needs over the next couple quarters. I think you probably saw the preliminary GDP report that came out at 8:30 a.m. Obviously it's a number below 1 percent, as we have been telling you; forecasts are showing that the economy did slow a bit. And I think that seeing that news reported this morning should give impetus to the Senate, in particular, to move quickly to pass legislation and get it to the President's desk so that we can more quickly give the economy the boost that it needs so that we can return to stronger growth and continued job creation.

Let me take just a minute to read a couple of announcements. On Monday the President and Mrs. Bush expressed their sorrow at the death of their friend, Gordon B. Hinckley. They praised Dr. Hinckley's life of service and his leadership as President of the Church of Jesus Christ of Latter-day Saints. Today the President announced that he has asked Secretary of Health and Human Services, Michael Leavitt, to serve as his personal representative at Dr. Hinckley's funeral on February 2, 2008, in Salt Lake City.

And then just very quickly, on Burma, we have taken note that Aung San Suu Kyi has been allowed to meet with officials from her party. We are pleased to have heard from Aung San Suu Kyi, herself. We're disappointed to hear, however, that there has been no progress on a meaningful time-bound dialogue. The regime has refused to offer any time frame for commencement of a dialogue. We once again call on the regime, as called for in the October 11th U.N. Security Council Presidential Statement, to begin a time-bound dialogue with Aung San Suu Kyi and all relevant parties, including ethnic minorities, immediately.

Questions. Read more Comment (0), Email this.

MR. FRATTO: As I understand, the U.S. government has heard from her. I don't know who; I'll try to find out for you. Read more Comment (0), Email this.

MR. FRATTO: I'll see if I can get details on that. Read more Comment (0), Email this.

MR. FRATTO: I would respond as to remind Congressman Hoyer and members of Congress of the incredible benefits to our nation of these free trade agreements, and putting them off has not just an economic cost to the country, but also a cost in our diplomatic and strategic relationships with these countries. As the President said on Monday night at the State of the Union, Colombia is an incredibly important strategic partner in the hemisphere. They're a friend and ally. They're showing great courage -- in particular, President Uribe has shown great courage in dealing with terrorists, and to have economic growth in that country and an excellent relationship with the United States. And the failure to pass Colombia would damage our relationship not only with the Colombians, but would also send a horrible signal to other nations in Latin America that America is turning its back on South America. Read more Comment (0), Email this.

Q Tony, on the stimulus, the President continues to urge the Senate to move quickly, as you said

MR. FRATTO: Well, they keep talking about wanting to move quickly, but then also talking about the consideration of lots of amendments and a package that is significantly different from what just passed in the House with an overwhelming bipartisan vote -- 385 members of Congress voted for the House bill.

There's no question that considering a bill with more and more pieces to it will only delay getting the bill to the President's desk. I think the only thing we can do is help remind them that America is expecting action, and they are expecting it quickly. And the only way for an economic growth package to have the desired impact is to do it quickly. Speed is important. And so maybe -- we'd like to see some leadership that will encourage members to put away some of their pet ideas and think about the bigger picture of getting an economic growth package passed quickly. Read more Comment (0), Email this.

MR. FRATTO: Well, clearly, 30 days wasn't needed. What less than 30 days -- I think the House and the Senate members settled on 15 days, which is a brief time. Congress has had six months to pass this bill. That was a deadline that they imposed on themselves, was six months to pass legislation to send a bill to the President's desk that will be at least long-term, if not permanent authorization for a program that is helping to protect the country and to give the intelligence community the tools they need. We did agree to accommodate them on this request for 15 days. We strongly encourage them to understand their obligation to try to get this done.

I think there is a misconception out there that you can do these extensions and that there's no cost to it, and I want to say very clearly there are significant costs to running a program this way. You do not -- first of all, it's no way to run any kind of program, by continually doing short-term extensions. It is particularly harmful for this program. We have said many times that the intelligence community needs certainty in order to have their programs in place. When you do it with short-term extensions, it makes it very difficult to have the appropriate programs in place to do the intelligence gathering that they need to do. So we want to see Congress work. We hope they use these extra days wisely, and can send a bill to the President's desk. Read more Comment (0), Email this.

MR. FRATTO: He's certainly committed to going out and raising money for the party and Republican candidates, and so you'll see him doing a lot of this. This will be I think a very successful trip in terms of raising money. The President has far more requests for fundraising stops than we can possibly fill, so I know we'll try to find ways to make it work with the President's schedule. But he is certainly committed to making sure that Republican candidates have the resources they need going into this very important election year. Read more Comment (0), Email this.

MR. FRATTO: I'm sorry? Read more Comment (0), Email this.

MR. FRATTO: I think we have -- sometimes we have fundraisers that are open, some -- these are in private residences, I believe. Yes, private residences are closed, and -- I don't know. I don't actually -- never really knew the reason -- (laughter) -- but I'm happy with the practice. (Laughter.) Read more Comment (0), Email this.

MR. FRATTO: Yes. Read more Comment (0), Email this.

MR. FRATTO: No. All for parties. (Laughter.) No. Read more Comment (0), Email this.

MR. JACKSON: In Colorado, Bob Schaffer. In Kansas City, Sam Graves. MR. FRATTO: I'm sorry, Kansas City is? MR. JACKSON: Sam Graves. MR. FRATTO: Sam Graves in Kansas City and -- MR. JACKSON: Bob Schaeffer. MR. FRATTO: -- and Bob Schaeffer in Colorado. The rest are for the party. Read more Comment (0), Email this.

MR. FRATTO: At a private residence. Read more Comment (0), Email this.

MR. FRATTO: I'll find out. Read more Comment (0), Email this.

MR. FRATTO: I can't get into -- obviously it's difficult to talk about operation -- you know, operational activity of the intelligence community. I just want to -- I just think it's very important because I've seen it show up in some reporting, where some voices -- those who were encouraging extensions have left the impression that it's a costless enterprise to just extend the program.

I just want to be very, very clear on this: There are real costs, and it is difficult for the intelligence community to put in place the long-term programs that they need to most effectively gather intelligence. There are costs to it -- and I don't know that I can get into further details than that, but I just want to make that point clear. Read more Comment (0), Email this.

MR. FRATTO: Why do we have members with us? MR. JACKSON: They're House members. Several of them are going to their districts. Read more Comment (0), Email this.

MR. JACKSON: They care about the President's trade agenda. (Laughter.) MR. FRATTO: He was asked why we have House members with us on the plane. I think that some of them will be -- they'll be attending these events, and they're home for the -- they'll be home for the weekend, right? Yes. So they'll be attending events in their home districts -- (inaudible) the events that the President is attending. Read more Comment (0), Email this.

MR. FRATTO: No. I think they'll be participating. Yes, they're participating. Actually, one thing I forgot to mention at the top, Governor Schwarzenegger will be with us; as I think you all know, he'll meet us at the airport, and he'll participate both in the event at Robinson Helicopter and at the fundraiser. Okay? Read more Comment (0), Email this.

MR. FRATTO: That's probably right. Yes, I can't recall a time since then. Does that sound right, Carlton? Yes. Read more Comment (0), Email this.

MR. FRATTO: I know the President -- I don't know if he actually watched the results; he had a dinner last night. I'm sure he was aware of them, and saw the coverage this morning. But he has spoken to this before. He knows the feeling of winning primary elections, and losing them, also. And so he -- you know, I'm sure he has some feelings for all of the candidates who are running in these races.

As he has said, this is going to be a very long campaign. It's a test of each of these individuals. He wishes them the best, and he'll be following. And whoever emerges on the Republican side, he'll be supporting. Okay? Read more Comment (0), Email this.

MR. FRATTO: No, I don't talk about the value of the dollar, but I will talk about the importance of a free trade agreement with Colombia, in terms of -- with Robinson Helicopter. I mean, this is a -- this is a small firm, family-owned firm, that started -- Frank Robinson started this firm. They export to 50 countries around the world. They have an export office and service center in Colombia. So they sell parts.

They will -- in particular, this company will benefit from a free trade agreement; that their tariffs will be lowered, and that's something that will help, again, this U.S. company and other U.S. companies like it be more competitive on the world stage, and be able to create jobs and better paying jobs for Americans back here. Read more Comment (0), Email this.

MR. FRATTO: A dealership and service center. Read more Comment (0), Email this.

MR. FRATTO: Based in Colombia. Okay. Read more Comment (0), Email this.

MR. GILLESPIE: Hi, everybody. Sorry we're a little late. Obviously, we were trying to accommodate folks who came across the security situation and had a little difficulty getting into the perimeter -- especially without hard passes, I guess.

Thanks for making some time today. Obviously, we have the President's final State of the Union this evening. As we have pointed out, and as is accurate, it is not a retrospective speech in any way, shape or form. It is very forward-looking, very action-oriented, and talking about things that need to be done in this Congress and in this election year; ways in which Republicans and Democrats can work together.

And as we did at the end of the last Congress -- and frankly, as we've been doing at the beginning of this year, when it comes to a growth package -- and the fact is the President is, as he has said before, of a mind to sprint to the finish, and the speech reflects that mentality very accurately.

It also talks about his approach to policy and to governing and to what works best for keeping us safe and prosperous as a nation. He talks about the need to trust the American people and empower them, to improve their quality of life and to create jobs and to make informed decisions when it comes to their health care and education and other aspects of their lives. And so it does have a philosophical core to it that does reflect the President's philosophy of government as well, and then has some policies consistent with that.

That's not to say while it has a philosophical core it doesn't identify areas where we can find common ground with a Democratic-led Congress, and there are areas where we believe we can do that, and the President identifies what he thinks are some common ground areas where this Congress and this White House can come together to get some accomplishments done. We have a window of opportunity to do that and look forward to working with leaders on both sides of the aisle, in both chambers of Congress, to pass new policies -- he will lay out some new policies tonight -- and also to move forward with unfinished business that is important that we get done to meet the needs of the American people.

The first part of the State of the Union address tonight is focused on domestic policy. It's about half and half: the first half is domestic and economic policy; the second half is foreign and national security policy. The lion's share of the domestic and economic policy is economic policy, again with an assessment of the current state of play with our economy and the need for us to move a package that spurs growth here in the immediate run and that is temporary.

We do have an agreement that we are optimistic about, that was made with Secretary Paulson and Speaker Pelosi and Republican Leader Boehner in the House. We're going to encourage the Congress to move that quickly; the President will encourage them to move that quickly. The timing is important. Getting it done in a way that doesn't delay it or derail it is very important, because the sooner it gets done, the more impactful it is. And so we feel like this is a very good agreement, it will have the desired effect and Congress should move it forward quickly.

In the long-term, we do believe that the uncertainty that hangs over the economy relative to the existing tax relief is not helpful, and that we need to remove that uncertainty; that we should make the tax relief permanent; that that will have a major impact on continuing to see economic growth to our economy, and job creation. And failing to do so means that 116 million Americans will see their taxes rise by an average of $1,800, and so we should make the tax cuts permanent.

The President also talks about budgeting and his budget, which will -- he will propose to terminate or reduce 151 wasteful or bloated programs; terminating the wasteful ones, reducing the bloating ones. And that would total savings of more than $18 billion -- his budget taking into account the one-time shot in the arm for the economy that we think is necessary right now, would still reach a surplus in 2012, and we believe that is important to keep as a goal, as well.

I know you've seen and heard from us about the earmarks. The President is going to unveil an unprecedented step to curtail earmarks. He talked about earmarks in the last State of the Union, encouraged Congress, cajoled Congress to make changes relative to earmarks, as many of them said they would do during the course of the campaign. That did not happen, and so the President is going to go the additional step this year and say that if Congress does not reduce the level of earmarks by 50 percent in next year's appropriations process, he will veto any bill that does not meet that goal.

And he will issue an executive order tomorrow that will direct the federal government to ignore any future earmarks that are not explicitly voted on by the Congress -- in other words those earmarks that are dropped into -- I think they're generally referred to being "air-dropped" into committee reports, and only referenced in the statutory language. And that executive order would be in effect until -- if and until the President (inaudible). And so that is -- like I said, the discussion of the tax policy and budget will dominate the first part.

But when it comes to economic policy, we see obviously housing and health care and trade and energy in that same area of economic policy. And the President dedicates a lot of dedication to those areas, as well, including on housing, highlighting the HOPE NOW program that is helping a lot of homeowners weather some turbulent times in the housing economy and in the markets, and also calling on Congress to pass reforms and to modernize the Federal Housing Administration.

On health care, he restates his call for Congress to make health care more affordable and more accessible, specifically with the tax code change that he talked about in the last session of Congress, which would make millions of Americans -- make private health insurance available to millions more Americans. He also talks about the need to expand health savings accounts, and confront junk medical lawsuits.

On trade, the President specifically applauds the Congress for moving the Peru Free Trade Agreement, and urges them to move now onto the other three pending agreements -- Colombia, Panama and South Korea -- starting with Colombia, which is a valued friend in our hemisphere, one whose government is confronting violence and terror and needs our support -- and highlights the importance of this, not only in terms of our economic policy, but in terms of our standing in the hemisphere, and curtailing drugs and helping a friend who's fighting terror. So he will focus on that, as well as talk about the need to complete the Doha round to knock down trade barriers.

The President will talk about climate change, and the need to trust in the creative genius of American researchers and entrepreneurs and empower them, to pioneer a new generation of clean energy technology. The energy bill that was passed -- as I referenced -- one of the things I referenced in the last Congress, where we were able to come together and find some common ground -- that energy bill was an important step, but we need to build on it and reduce our dependence on foreign sources of oil.

The President calls on new technologies and funding for new technologies in the federal budget to help with carbon capture for coal power and calls for moving forward with emissions-free nuclear power, and how that's advanced battery technology, among others.

He does talk about the climate change discussions that have been going on and that our administration is engaged in; the international agreement that we hope will slow, stop and eventually reverse the growth of greenhouse gases. Such an agreement will only be effective if all of the major economies are involved and cooperating in that. No economy should be carved out or given a free ride when it comes to reducing greenhouse gases.

On the education front, the President will call on -- reauthorization of No Child Left Behind, and highlight the successes that it has had. It is a bipartisan achievement, and it is working. The fact is that 4th and 8th graders now have the highest math scores on record, as of last year. The gap between minority and white students has closed, to the lowest level ever in the history of the testing.

The President has some concerns about the declining number of faith-based and parochial schools in inner-cities around the country and low-income neighborhoods, and is going to urge Congress to enact a program he calls Pell Grants for Kids. It includes $300 million to provide for alternatives for children who are now trapped in struggling public schools. And he is going to announce the holding of a White House summit to address this phenomenon that's going on in inner-city America, where parochial and other non-public schools are closing their doors, and that's resulting in limited opportunities -- more limited opportunities for children in those areas.

That is a pretty good rundown. Those are new -- obviously the White House summit and the Pell Grants for Kids, two new things that the President is going to raise tonight, along with the earmarks, that I mentioned.

On the foreign policy front, the President is going to highlight Afghanistan and progress there, but also acknowledge that we need to do more and thank Congress for its support for our efforts in Afghanistan; note the adding of 3,200 Marines to ensure that we are successful there, but highlights -- highlight progress with the Afghan people and the Afghan government.

And of course, we'll talk about Iraq as well. Note that the surge is achieving results, that when the State of the Union -- when the President and Congress came together last year, things were clearly very different, and have improved very much in the past year as a result of the success of our commanders and our troops doing a remarkable job in Iraq. Civilian deaths and high-profile terrorist attacks are down. And as a result of that success, we are seeing our troops beginning to return home without being replaced.

And in fact, we will see this year more than 20,000 troops return on that success, and any future reductions will be -- further reductions in troop strength will be based on the same principles of gauging and hearing from the commanders on the ground, gauging success and what can be allowed in terms of making sure that we're meeting our national security objectives while bringing more troops home.

He'll also highlight the fact that that military progress is translating into progress in the political arena in Iraq, with the parliament passing pension law and de-Baathification reform, the government -- central government sharing oil revenues with the provinces. And he will highlight some of those things, and of course, in the process, call on the Congress to fully fund our troops, which has not yet been done.

He will touch on Iran and the threat posed there by the Iranian government; talk to the Iranian people and make clear to the Iranian people that we have no quarrel with them and we respect their traditions, but the Iranian government does need to, in order to rejoin the community of nations, suspend their nuclear enrichment program, come clean about any past activities, and stop the oppression of their people.

And then lastly in that area, I think he will talk about his recent trip to the Middle East and progress that we are seeing and reason that we have hopes for progress when it comes to the definition of a Palestinian state and a peace accord with Israel, a definition of that -- that would be a very successful conclusion to the talks that remain ongoing today.

When it comes to protecting our country, we believe that the Protect America Act, which does allow the government to monitor terrorist communications abroad, is a very important tool that has helped to ensure that we have not been attacked as a nation since -- on our homeland since September 11th, and the President will call on Congress to act now to ensure that this current law does not expire and that we ensure a flow of vital intelligence is not disrupted, and call on liability protection for companies, as was passed in the Senate Select Committee on Intelligence bill; companies who are believed to have assisted in efforts to defend America be provided with liability protection and call on the Congress to move that legislation now.

They knew when they passed the current bill that it was a six-month bill, and they've had six months to figure out how to move it forward. We believe that there's been ample debate and now is the time for action on this bill.

The President will also reiterate calls for enacting the reforms made by the Dole-Shalala commission on wounded warriors. And we have implemented the administrative side of that committee's recommendations, and are in the process of implementing all of those. We would like to see Congress respond similarly, and move the legislative side of the proposals from the commission, get that to the President so that he can sign that into law.

And then he will talk about two new proposals for America's military families who sacrifice greatly in support of keeping the rest of us freer and safer. The President will call on creating new hiring preferences for military spouses across the federal government, and will urge Congress to enact legislation that would allow for those who get the benefit of the G.I. Bill to transfer their unused education benefits to their spouses or their children, which will be a new proposal and we hope that Congress will do so.

The President talks also about the need in the -- and as we wage the war on terror, to help reduce the lack of food and lack of hope that exists in so many areas, that allows for recruitment of young men, particularly, into terrorist activities and mind sets. And so the President will talk about the United States and our efforts to lead when it comes to global compassion. We are leading the fight against global hunger, providing more than half of the world's food aid. The Millennium Challenge is strengthening democracy and transparency in governments abroad, and should be fully funded.

When it comes to emergency food aid, the President is going to call for a shift in current practices, which is to provide food overseas and send food overseas, which is a fine thing to do and good thing to do, but we should also support buying crops overseas from local farmers in the developing world, which will help to break the cycle of hunger and famine by building a better infrastructure in the agricultural sectors of these developing countries.

Because of our efforts, we have cut malaria-related deaths in 15 African countries in half. And the President will urge continued funding for efforts to reduce malaria deaths in Africa. That will also be a focus of his trip next month, as you know. And also, the fact is we are treating more than 1 million people for AIDS, and the President is calling on Congress to double the initial commitment for -- to fight AIDS overseas, by approving $30 billion over the next five years for that purpose.

We will also touch on the faith-based and community initiative, and the work that's going on there, and ask Congress to permanently extend charitable choice, which guarantees equal treatment for faith-based organizations when they compete for federal funds. He will highlight the positive impact that the armies of compassion are having today in the Gulf Coast region, and applaud the resiliency, and reaffirm our support for those rebuilding in the Gulf Coast.

He will also tonight announce that -- to demonstrate how this great American city of New Orleans is rebounding, and is resilient, that the United States will host the North American Leaders' Summit this year in the great city of New Orleans. The summit, obviously with the Prime Minister of Canada, President of Mexico, President of the United States, and their attending delegations, was in -- I know it was in Canada last year, and I think it was in Ottawa, I want to say. Those who were there, it will be in New Orleans this year.

The President will also talk about the need to confirm judicial nominees, an ongoing struggle with this Congress, and why that's important. He will laud the landmark achievement when it comes to stem cell research. And as he says, we must trust in the innovative spirit of medical researchers and empower them to discover new treatments. Toward that end, the President is going to call for funding for the reprogrammed adult skin cells, which have the potential and do act like embryonic stem cells. This is a very ethical and very important new area of stem cell -- or of research, and the President is calling on funding, and will direct the government to fund more research, further research, in that -- following up on that breakthrough.

He will talk about competitiveness, and the need to trust in the skill of our scientists and engineers and empower them to pursue the breakthroughs of tomorrow, and ask for Congress to fully fund the American Competitiveness Initiative.

And lastly, he will highlight -- and this is not in order -- but in the course of the speech, he will highlight the need to address some of the big issues that were -- did not get addressed in this past Congress, or the past session of Congress, including the need to get control of entitlement spending. The President laid out specific proposals in that regard. Congress did not move forward with those, which is the prerogative of Congress. But Congress does have a responsibility to future generations to come up with their own proposals for a bipartisan approach to reign in entitlement spending, or future generations will face very dire consequences.

And the issue of immigration, which continues to be an important issue in our country -- again, the President came forward with some proposals, and that legislation was unable to get passed in the last session of Congress, and we hope that Congress will move forward to address the problem of illegal immigration in our country, and he will highlight steps that we are taking from an administrative perspective to address those problems.

So a mix of new policy proposals, unfinished business, laying out his approach to government -- what he thinks is best, and urging Congress to move forward on some of these important issues, understanding that given the time frame that we are in, that it's not likely they'll move forward with these major reforms in the course of this session of Congress, but as President of the United States feels that it's important that we talk about these issues in the State of the Union. If they want to get a bill done and send it to him, he'd be happy to sign it if it's one that he can sign, if they're so inclined; but we understand that they may not choose to address those two issues in this session.

So thank you for letting me give you a rundown. I hope it was helpful to you. Read more Comment (0), Email this.

Q You talk about a window of opportunity. Realistically speaking, in this political season, how

MR. GILLESPIE: Well, we would hope, obviously, No Child Left Behind would be an area of common ground. It was passed with bipartisan support in the past. We're working with Senator Kennedy and other leaders on the Democratic side to try to get a proposal that would work with them. We have no -- we don't have to weaken No Child Left Behind, we don't have to accept a bad bill, obviously, because it is the law of the land, but we do think that there are some things we've learned in the five years of implementing it that could make it better, and we would to improve it and work with them to do so. So that's an area where we think we could find some common ground.

The Peru Free Trade Agreement was a positive step, as I noted, and we think that Colombia would be another positive step, and that that's something that we could get done together. I would like to think that Pell Grants for Kids may be an area that we could reach out and work with them and find some support for that. And obviously in doing this for the military families -- the Army, by the way, does allow for soldiers to transfer their education benefit to children. We think it should be extended to spouses as well, if it's an unused benefit. And we think that the other branches should do so as well. I would like to think that Congress could work with us on that.

And I would like to think that Congress would work with us on Secretary Shalala's -- the recommendations she and Senator Dole came up with to help our wounded warriors. That's a very positive proposal and would allow for a new system, adapted to a new generation and a new kind of war. And then obviously on the growth package to the -- short-term immediate growth package, that that's an area where we think we can -- Read more Comment (0), Email this.

MR. GILLESPIE: You know, that's obviously a fluid thing, but I would think clearly before the conventions, which means before they go out for the August recess. I suspect that they'll want to move appropriations bills in July, which is the traditional time when Congress tries to move appropriations bills. We would like to work with them on those appropriations bills so that they're bills that we can -- the President can sign. So I would say between tonight and somewhere in the 4th of July-August recess time frame, we'll have some opportunities to get some things done. Read more Comment (0), Email this.

Q Related to that, on timing, (inaudible), what's striking about this year is not only that it's

MR. GILLESPIE: Well, in terms of the President, he is obviously watching, just like the rest of us, with interest. But the fact is, he is focused on moving his ideas and policies and agenda and trying to find some areas where we can reach common ground; a vigorous foreign policy as well.

And so my hope is that as the -- there will be some areas -- and, by the way, this is not the extent of the new policies that the President will propose in the course of this year. There are some other things that are in the works that might have liked to have gotten done in time for the State of the Union, but the policy is not ripened yet internally to unveil. And at the same time, I know that you'll want other things to cover during the course of the year, so we'll roll some of these things out.

But I think that with the politics going on and with the presidential campaign being as heated, maybe I'm naive, but I think that may be to our benefit. That means that the politics doesn't -- it's fine, all the politics playing out over there. We don't necessarily have to do it here between Congress and the executive. Maybe we can agree while all that's going on, and we're all supporting our side over there, but there are some things that we can get done here that can kind of come out of the political thicket and might be in the interest of a Congress that has a need to demonstrate to American voters that they can get some things done and would meet the needs that the President sees. Read more Comment (0), Email this.

Q Can I just ask you one question on Iraq? How generally does the President try to frame the argument

MR. GILLESPIE: Well, I think, clearly, if you look at his language that he has been talking about from the outset, and this evening, wants to make sure, one, I think people do increasingly understand that we are succeeding in Iraq. And that is a change that has taken place as a result of the change in strategy, the surge. But the fact that the American people increasingly see that we're succeeding in Iraq I think makes the American people open to remembering why it is important that we are succeeding in Iraq.

And the fact is that this is the central front in the war on terror. A precipitous withdrawal from Iraq at a time when the government is getting some results and there is some real -- those who are over in Iraq right now see a real interesting political dynamic going on. There's a debate over the provincial laws and the relation between the federal government and the provincial governments that is somewhat reminiscent of a debate we had here in 1789, and it's kind of a fascinating time, and we see real progress being made. And I think the American people will recognize that allowing that progress to continue, and not only allowing it to continue but making sure that it does is in our national security interest.

And so I don't know that it's going to be as heated -- I guess, to a certain extent, what the President would like to do is make it less of a political issue by continuing to be successful there, and for people to remember why it is it's important that we are successful there. Read more Comment (0), Email this.

MR. GILLESPIE: Future earmarks, that's correct. Read more Comment (0), Email this.

MR. GILLESPIE: That's correct. We did look at that, weighed options. The President thought at the end of the day that because he did not signal to Congress that he would veto the bill if it -- everything else we laid out some pretty bright lines, and we were very direct about the $933 billion, no tax increases, no policy riders. And we were -- while we have urged Congress to act on earmarks, and had called on them to do so, and they said they were going to, they did not. But he felt like, and people made the point that, well, that's not fair, that would be blindsiding us; you didn't make that explicitly clear that you would veto legislation.

So he will rectify that tonight, and make explicitly clear that future bills that do not reduce the earmarks by half he will veto. And he will put in place the executive order directing the federal government to ignore all future earmarks that are not voted on by Congress, those that are slipped into committee reports. Read more Comment (0), Email this.

MR. GILLESPIE: No. No. Again, that would be backward-looking, among other things. But the fact is, he is going -- he feels -- entitlement reform and immigration are two very important issues, and while this State of the Union is realistic in understanding the time frame in which we find ourselves and the dynamic of a Congress controlled by the other party, that doesn't mean we shouldn't talk about the problems that confront us and challenge the Congress to address them. And the President feels a responsibility to do so.

Toby. Read more Comment (0), Email this.

Q On the economy, when you say that he's going to talk about the need to spur economic growth, is

MR. GILLESPIE: Well, we consider progress on health care and energy and trade to be economic growth components. When you look at the extent to which the rising cost of health care and rising cost of energy are drags on economic growth and on hiring and investment, we think that's an important thing to highlight.

And the fact is, in terms of trade, trade accounts for a significant portion of our GDP growth right now. I think the last data point I saw for the last quarter was one-and-a-quarter percent of the economic growth was directly attributable to increased trade. So we see those -- that's why I say we see those in the economic bucket. But in terms -- he will talk about specifically the growth package, the spending and making the tax cuts permanent. Read more Comment (0), Email this.

MR. GILLESPIE: It would be -- it sounds to me like you're asking specifically about taxes, and I think when it comes to taxes, promoting -- making the tax relief permanent is the extent of our policy push right now, along with the short-term shot in the arm. There will be other -- I think there may be other economic policies, but I wouldn't want you to think that they may involve the tax area. I don't think they will. Read more Comment (0), Email this.

MR. GILLESPIE: There's actually -- we're going to give you some briefing books that we're going to leave behind, and there's some background on there. That's probably -- I'm probably better off to have you look at what's in writing, than for me to try to characterize it right now. Read more Comment (0), Email this.

Q Anything new on the advanced battery technology, either new funding or anything new on that? And

MR. GILLESPIE: No, he will not be. By the way, I don't think the President is doing -- is going to do any of the -- you know, there's not always the call to the box, the Lenny Skutnik moments. They haven't always been done, and I don't think the President -- Read more Comment (0), Email this.

MR. GILLESPIE: Thank you; it's a trivia question. And so we're actually not -- I don't think the President is going to have any nods to the box. He will talk about things -- and, you know, we are briefing the networks so they know who's in the box and they can cut during certain parts of the speech -- like, Senator Dole and Secretary Shalala are going to be there. So he's not going to highlight that individual.

Battery technology I think is calling on the funding of the advanced battery technology. I don't believe it's new money. Read more Comment (0), Email this.

MR. GILLESPIE: No, I mean, I think that if you look back over the past speeches, I guess last year I wasn't here, but I think they did the state of the economy speech separate -- I'm looking at Scott and some of the -- and so it was kind of broken out. This is a little more traditional in that it's -- like I say, it's about a 50-50 split between the domestic and economic policy and the national security and foreign policy. Read more Comment (0), Email this.

MR. GILLESPIE: Well, the economy, we are dealing right now with concern at kitchen tables across America that we want to address and concern in the housing market. We want to address the effects of that, or possible adverse effects of that on other parts of the economy. So it's not surprising that having just reached an agreement with Speaker Pelosi that we're moving forward on a package that we would highlight that and lead off with that. I do think people have a concern there, and we want to address that right up front.

Sheryl. Read more Comment (0), Email this.

Q Ed, it seems to me that by raising immigration and Social Security that he -- the President is,

MR. GILLESPIE: You know, I don't think that's the case. I think he feels, as the head of our government, that to not talk about entitlements and not talk about immigration would have been irresponsible, regardless of prospects for major reform legislation passing in that window that I'm talking about.

So I think it was more in that vein. And that is a legitimate, tough question, but I'd rather face that question than the legitimate, tough question, how could he give an hour speech and not talk about immigration or Social Security? Read more Comment (0), Email this.

MR. GILLESPIE: I think he's highlighting what he thinks are serious issues and concerns, but it's not like -- well, it's certainly not like immigration hasn't been talked about in the presidential campaign, and I think entitlement reform will be talked about in the presidential campaign as well.

But the President understands that nominees on both parties are going to have their own proposals and ideas on these fronts, and that that's the -- that's where we are in the cycle of things. But I would honestly view this in the prism of this speech tonight and his view that, as President of the United States, to stand before Congress and not mention the need to address the concerns and the problems of immigration and entitlements would have been irresponsible. Read more Comment (0), Email this.

Q If I could just ask one more follow-on to David's question, given that the presidential campaigns

MR. GILLESPIE: The beauty of when you're President of the United States is you get people's attention. And people are going to watch tonight, the American people are going to watch tonight, our allies will be watching tonight, our enemies will be watching tonight. And lots of people will be watching tonight. And like I say, we understand, you know, the window that we're in and that the nominees are going to take the spotlight. And we're comfortable with that. The President has run himself, his father has run. He understands that.

At the same time, we are going to sprint to the finish, and that is the mentality not only of the President, but the people who work for him. And we have business to get done. And we see an opportunity to get business done, to enact policies, to promote an agenda; and we're going to do that. Read more Comment (0), Email this.

Q Ed, to follow up on what Sheryl was asking, the place that the President gets a lot of attention

MR. GILLESPIE: Well, both of them are tough for me to answer. The President is very much in demand on the fundraising front. I think he's got some events coming up later on this week. He and the Vice President both have been vigorously raising money for the party, as part of what he sees to be his responsibility as party leader, and for the nominee. The President -- you know, all that money is going to go to -- well, not "all of it" -- all of it is going to go to help elect the Republican nominee and Republicans for the House and Senate. It's all federal money, as you know, so it will go into federal races.

But he'll continue doing that throughout the course of the year, and I think is a very strong asset to the party in that regard, very much in demand. And I think that will make a big difference, and a positive difference. Read more Comment (0), Email this.

MR. GILLESPIE: The library, I don't know frankly much about. Read more Comment (0), Email this.

Q And one quick question. The EO -- the President has new signing statements to tell the executive

MR. GILLESPIE: I don't know that he had signing statements on earmarks before. Read more Comment (0), Email this.

MR. STANZEL: Signing statements (inaudible) interpretation of laws passed by Congress. I can follow up with you on that. MR. GILLESPIE: Yes, we'll follow up. I don't -- I'm not sure that's the case, Alexis, but I'll check. But this, an executive order directing the government to disregard earmarks that have not been passed by Congress, or signed by the President, you know, will, as of tomorrow, be the effective policy of the federal government; has a full weight of -- Read more Comment (0), Email this.

MR. GILLESPIE: No, it would last until -- remember, when we came in -- some of you may remember -- I wasn't "we" then, but when the current administration came in 2001, there were a number of executive orders that had been issued very late in President Clinton's second term that were on the books, and President Bush had to either repeal or live with. This will be on the books, and will be an executive order that future Presidents will have to repeal or live with. Read more Comment (0), Email this.

MR. GILLESPIE: I'm not saying that. A future President may say that. Read more Comment (0), Email this.

MR. GILLESPIE: I don't know. I don't think -- I think it's -- I've seen it described as unprecedented. One other point -- just so people, by the way, understand about earmarks, you know, if you put a $100 million earmark in on an appropriation bill or on an omnibus bill, and you direct the agencies to disregard it, that doesn't mean the $100 million is not spent, it means it doesn't have to be spent on that earmark. Read more Comment (0), Email this.

MR. GILLESPIE: In the report language, yes. Read more Comment (0), Email this.

MR. GILLESPIE: I just don't know, Alexis, I'm sorry; but we'll get you the answer on that. Read more Comment (0), Email this.

Q Two quick questions. One, on the earmarks: Some of the House Republicans are saying that -- saying

MR. GILLESPIE: I think the 11,700 was the current level, so it would be in the nature of somewhere over 5,000. Read more Comment (0), Email this.

MR. GILLESPIE: Interesting. Well, in terms of the earmarks, I don't know what the number is, but it is not -- we're not taking it to zero. It is 50 percent, which is what he encouraged in the last State of the Union. It is 50 percent from this year's level, which was a reduction over the last level, so it's -- it would come down dramatically. Read more Comment (0), Email this.

MR. GILLESPIE: Well, look, from my perspective, but the fact is you could keep bringing it down. I think that it's -- you know, the other way of looking at it is it's glass half-full/ glass half-empty; it's 5,500 less than it was, or 6,000 less than it was, which is pretty good. In terms of the economic focus, it seems to me, just from the outset, the breakdown of the speech has not changed. It's not like we -- and the President started talking about the State of the Union and getting ready for it before Christmas, and wanted an outline of it for the Middle East trip, which we had, and I think in there it was up front, too. Read more Comment (0), Email this.

MR. GILLESPIE: Yes, that's correct. Read more Comment (0), Email this.

MR. GILLESPIE: It's $300 million, and the "how to" and the qualifications are in the background that we are going to leave with you -- and I think I would trust more than me to characterize it verbally right now. Read more Comment (0), Email this.

Q You highlighted Colombia as one of the areas where Congress and the White House could come together

MR. GILLESPIE: It is the first of the three deals. We would like all three deals. Colombia is the first out of the box, so it is a recognition of the scheduling. Read more Comment (0), Email this.

MR. GILLESPIE: We'd like to get all three. Read more Comment (0), Email this.

MR. GILLESPIE: No, it's $18 billion. Read more Comment (0), Email this.

Q (Inaudible) the stimulus package, when you say you don't want the Senate to delay or derail, I

MR. GILLESPIE: I'm saying this is a carefully worked out agreement, bipartisan in nature, which is rare; that Speaker Pelosi and Chairman Rangel are going to -- Chairman Rangel will move out of committee and Speaker Pelosi will schedule on the floor, Leader Boehner will support, and the President will sign. And they shouldn't -- speed is of the essence, and they shouldn't derail that or run a risk of junking it up. There is plenty of time for other debate on other provisions, economic provisions, that we can have separate and apart from this agreement. But this is a good agreement that will have the effect we need in our economy, and we should move it now. Read more Comment (0), Email this.

MR. GILLESPIE: Well, that's a separate conversation, and we want to keep it a separate conversation. I don't want to rule anything in or out on any of that front right now. We want to keep our focus on what we've agreed to, not on what we don't want to agree to.

John. Read more Comment (0), Email this.

MR. GILLESPIE: I think you'd have to legislate that, but I'll double-check on that. Read more Comment (0), Email this.

MR. GILLESPIE: I don't. I'll have to get your more information on that, I'm sorry. Read more Comment (0), Email this.

Q Yes, on Iran. Will the President (inaudible) new approach dealing with them? I know you mentioned

MR. GILLESPIE: Well, the invitation for dialogue remains on the table if the Iranians are willing to stop enriching, which obviously they contend is for civilian purposes, but it can be converted and could be used for other purposes, and that's the concern.

And so the President will make the case that when you're deploying and developing ballistic missiles of increasing range, and you're enriching uranium when it's been offered to you, that uranium will be provided for a civilian program, and you're oppressing your people and you are supporting Hezbollah and other activities in the Middle East, that you should stop that and rejoin the international community of nations. And so he'll make that point. Read more Comment (0), Email this.

MR. GILLESPIE: There are reasons those in the foreign policy community believe that we're seeing effect from these policies that are positive. Read more Comment (0), Email this.

MR. GILLESPIE: Actually, I ticked off a number of pretty vigorous policy proposals that, if enacted, would have a very important and positive impact on our country.

And so I -- all we're signaling to you is, just so you wouldn't go out and write that the President is unrealistic about the fact that it's an election year and there's a Congress controlled by the other party, that we understand that Social Security reform and immigration reform are not likely to be done, but we think that these very important, very significant pieces of legislation can get done and that we have a window of opportunity to do it. So I guess I was just trying to avoid the other story. But you're free to write this bad story if you like, Rich, go ahead. (Laughter.) Read more Comment (0), Email this.

MR. GILLESPIE: Both. It would be -- so if it's -- if the number is 12,000, it would be 6,000; if the budgetary impact was $10 billion, it would be $5 billion. Read more Comment (0), Email this.

Q And the other thing is, how will the President address -- if he will -- the issue that the Democratic

MR. GILLESPIE: I think there's a lot of misunderstanding about what such an arrangement would entail and what it would be. I think a lot of it is driven by the blogs. And so there's a lot of misinformation.

I think we have to educate members of Congress -- we're in the process of doing that right now, by the way -- on both sides of the aisle, about what exactly it is that's being talked about. That is not out of the ordinary, is not unprecedented, it is very much in our national security interest. It's not permanent bases; entails the Iraqi government inviting us to do some things. And so we're in the process of educating right now. Read more Comment (0), Email this.

MR. GILLESPIE: No, no, no, I think that's a longer-term effort that we've got to engage in. Read more Comment (0), Email this.

MR. GILLESPIE: He does not have -- I don't think North Korea is in there tonight, no. Read more Comment (0), Email this.

MR. GILLESPIE: It's not code for anything. It's just that we think that clean technology is important to advance, that that holds a great prospect for us reducing greenhouse gas emissions over time. We want to encourage that and foster that. And we will talk about the international agreement that's ongoing right now, the discussions -- the Bali, and now Hawaii -- and so we'll touch on all that.

Let me take one more from Mike. Mike. Read more Comment (0), Email this.

MR. GILLESPIE: No, I did not. Read more Comment (0), Email this.

MS. PERINO: Good morning. The President had his normal briefings at 8:00 a.m. At 11:40 a.m. he will have an interview with Ann Compton of ABC Radio -- excuse me, News Radio. At 12:00 p.m. he has the traditional background lunch with television anchors. At 9:00 p.m. he will deliver his final State of the Union address.

One update -- I think that this was announced on the overhead -- Ed Gillespie's briefing for the press, which will be on the record, off camera, will be at 2:30 p.m. today. We were going to try to hold it here, but we have too many interested reporters, so we're going to have to hold it over at 450, so they're asking for you to gather out here on the driveway; final access will be at 2:15 p.m.

A couple thoughts just to get you through this morning, because I know we all have a long day. The President will have one more read through this morning; he had one over the weekend, yesterday afternoon. We'll just do one this -- he'll have one more read through this morning at 10:30 a.m. -- don't think we'll do another one today. The speech is locked down and he feels pretty comfortable with it.

As I had said last week, you will hear the President talk about how we should trust and empower citizens to make decisions on a whole host of issues. He will reaffirm his belief in the power of freedom to improve lives around the world. And as we've indicated, it will reflect his desire to be forward-looking; he will not spend a lot of time rehashing the past seven years. Although I will say that throughout the course of the speech with the first half, as I said, being on domestic policy, the second half really on foreign policy, many of the issues that he will talk about are ones that he has laid out to Congress before, for example, on health care.

The President had new and innovative proposals that he talked about last year, in last year's State of the Union. Many of those are actually part of the healthy debate ongoing right now within the Republican Party, while the candidates hash out their positions through their debates. So you'll see a little bit of that, including the President talking about No Child Left Behind and also talking about energy on the domestic front. And on the foreign policy front he will spend a significant amount of time talking about Iraq and the Middle East peace process.

Let's see, one thing I will let you know -- you probably have already heard, we are confirming this morning that the President in the State of the Union will announce unprecedented steps he's taking to reform and reduce the amount of earmarks. The President will say that if these spending items are worthy, Congress should debate them in the open and hold a public vote. He will state his commitment to veto any spending bill that does not succeed in cutting earmarks in half from 2008 levels, and he will announce that tomorrow -- on Tuesday -- he will issue an executive order directing agencies to ignore any future earmarks included in report language, but not in the legislation, which is traditionally how they end up on the books.

Another item of note: Today the President is going to sign the National Defense Authorization Act. He appreciates the cooperation of both House and Senate leaders to quickly address the concerns raised by the President over the Christmas holiday. Congress passed the legislation swiftly, and that is a very good thing for our troops and the Iraqi people. Read more Comment (0), Email this.

Q So on the earmarks, he said at the end of last year that he was directing OMB to look and see what

MS. PERINO: The President decided that he needed to give the Congress a very clear indication of what he was going to do. Last year he called on Congress to voluntarily cut the number of earmarks in half; they did not do that. The President will not go retrospectively back to the earmarks that were in the omnibus, but he will take this action for 2009 appropriations.

Remember, an executive order remains in place unless a future President decides to rescind it or change it. So we think this is a good, solid action, and it's a good way to do business, in terms of signaling exactly to Congress what you plan to do and then taking further action if they -- since they didn't voluntarily reduce the number of earmarks. Read more Comment (0), Email this.

MS. PERINO: As I said, I -- Read more Comment (0), Email this.

MS. PERINO: We're not going to -- there's no further action on them. Read more Comment (0), Email this.

MS. PERINO: Peter. Read more Comment (0), Email this.

MS. PERINO: Well, if they're going to be in legislative language, that means that they have to be open for all to see, and it means that they would have to be actually voted on. And if Congress makes a decision that peanut storage is meritorious, and it should move forward, and it -- and that's a wise way to spend federal taxpayer dollars, then so be it. And then we'll take -- and if Congress can pass that, then they would. Read more Comment (0), Email this.

MS. PERINO: It's the conference reports that are the problem, as I understand it.

Mark. Read more Comment (0), Email this.

MS. PERINO: The best way to be able to deal with this issue would be for the President to have a line-item veto. He reiterated that in the -- Read more Comment (0), Email this.

MS. PERINO: -- documentary that aired last night on Fox News. I'm sorry? Read more Comment (0), Email this.

MS. PERINO: No, the President doesn't ever give up on anything, but I think that this Congress has not been willing to move forward on that. So what the President can do in order to get a handle on this problem is to reduce them by saying that he will veto -- clearly signaling that he will veto any bill that doesn't cut them in half, and that for the future he's telling -- going to tell the agencies to ignore any future earmarks that aren't voted on.

Olivier. Read more Comment (0), Email this.

MS. PERINO: Well, certainly the President will call on Congress to fully support our troops in Iraq and Afghanistan. And he will explain to the American people how important it is that we continue to work for peace in the Middle East. It's important not only for a more hopeful region, but for the security of our own country. Read more Comment (0), Email this.

MS. PERINO: The President will reiterate what he has recently said when he was in Kuwait -- I couldn't remember where we were -- in Kuwait, that he will listen to his commanders on the ground when it comes to troop levels, that it's critically important that we recognize that we have made the gains that we have because of the surge, and that having too quick of a withdrawal, a precipitous withdrawal would possibly risk those gains. And so the President will look to General Petraeus and Ambassador Crocker for recommendations on troop levels. Read more Comment (0), Email this.

MS. PERINO: Well, there's a few more hours before the speech. If I told you that, and then, like, two hours later you're going to ask me for something additional, something that's new. I don't think you'll hear a lot new on Iraq. But it will be a chance for the President, a year after announcing the surge, to remind people what Iraq looked like a year ago and because of the gains that we've had, even though there are still troubling times ahead and very tough fighting we can expect, there has been a significant decrease in the amount of civilian deaths, in the sectarian violence, and the number of our troops who are being killed.

So there are improvements -- there have been political improvements. The President will talk about that, and he will push the Iraqis to do more. But this is a chance for the President to remind people that it was a bold decision to send more troops into Iraq at a time when things were so dire, and it would be a really bad decision to rashly pull troops out at the moment.

Kathleen, did you have one? Read more Comment (0), Email this.

MS. PERINO: How many versions of the speech? Several. Read more Comment (0), Email this.

MS. PERINO: It's still running at about 40 minutes, without any interruptions. Read more Comment (0), Email this.

MS. PERINO: Forty-five, 46 -- I don't know, it depends on how long the applause is.

Go ahead, John. Read more Comment (0), Email this.

MS. PERINO: Whose decision was it? Well, the President makes those decisions. Was it the -- this is the board that Paul Wolfowitz is now on at the State Department? Read more Comment (0), Email this.

MS. PERINO: Is it a few weeks ago? I think it was at the -- I guess it was at the State Department. That's what we were asked a while ago. But it's a State Department appointment, not a presidential appointment. Read more Comment (0), Email this.

MS. PERINO: But I don't know who at the State Department. I would assume ultimately Secretary Rice. Read more Comment (0), Email this.

MS. PERINO: He actually -- he will mention it, but he's not going -- he's not under any illusions that this Congress is going to actually act on comprehensive immigration reform. He will talk about the importance of politicians dealing with this problem in a way that will keep our borders secure, be aggressive when it comes to interior enforcement, but also realizing that a temporary worker program is something that would be good to help our economy. So you'll hear him talk about that. But he's not going to call on Congress to pass it. He's aware that that's not going to happen this year.

Olivier. Read more Comment (0), Email this.

MS. PERINO: I think that just happened yesterday. I would doubt it, but we'll check.

Go ahead. Read more Comment (0), Email this.

MS. PERINO: No, I think it's -- I can understand why many people, especially those that cover the President in the press could see that the President would approach this as his legacy speech, but no, not at all; this is a very forward-looking speech. The President doesn't spend a lot of time thinking about that. Look, the President thinks his legacy will shake itself out when people look at the record, and history will tell. Read more Comment (0), Email this.

MS. PERINO: It's an important time, yes. This is a time -- the State of the Union is a great tradition in American history, and it is a chance for the President to tell the Congress this is what he'd like to get done -- he or she would like to get done in the coming year. Read more Comment (0), Email this.

MS. PERINO: The what? Read more Comment (0), Email this.

MS. PERINO: Certainly seven years ago -- well, seven years ago, right before September 11th, I think that people would say that the country certainly felt better off. There's been -- once we were confronted with terrorists who would fly jumbo jets into buildings and kill thousands of our citizens in an instant, it created a sense of fear and nervousness about our security. And that's why the President decided to take on the terrorists head on and go on the offense.

And we have done that around the world. We have been successful so far in preventing another attack on our country. But it's not for their lack of trying. And that's another reason why the President -- tonight you'll hear him call on Congress to pass the Foreign Intelligence Surveillance Act reauthorization. They have until Friday to do that, and the President sees no reason why they shouldn't be able to get that done.

Paula. Read more Comment (0), Email this.

MS. PERINO: That falls into the category of unfinished business. The President will ask them to continue to debate it. And even if the Congress -- one of the things that the Congress can do and a President can do is raise up these issues and start a public debate, and the President will call on them to move forward on that. One of the things that would do on some of these health care issues is to at least have a hearing so that people -- so the legislative process can get started. Read more Comment (0), Email this.

MS. PERINO: I don't think there are cyber security issues in the speech, but obviously that's an issue of concern that many agencies across the federal government are dealing with.

Ken. Read more Comment (0), Email this.

MS. PERINO: No, and there is legislative language -- I'm sorry, language from -- let me find it; I have it somewhere -- there's a couple of rulings from the Supreme Court that said report language is not -- I don't have it with me -- can you get that to them? We'll attach it to this transcript and release this transcript. Read more Comment (0), Email this.

MS. PERINO: What do you mean, "directly on point or tangential"? Read more Comment (0), Email this.

MS. PERINO: Here it is. It says the Supreme Court says report language is not legally binding. And here are the two cases: Lincoln versus Vigil -- Read more Comment (0), Email this.

MS. PERINO: And the Cherokee nation versus Leavitt. Because I know you're diligent enough and have all sorts of time today, you will look those up. Read more Comment (0), Email this.

MS. PERINO: Cherokee. Read more Comment (0), Email this.

MS. PERINO: He will talk about the economic growth package and say that we have a chance here at a bipartisan agreement, but it's only going to be effective if it's done quickly. And so he will call on Congress not to delay or do -- well, Congress, and specifically the Senate, not to delay or derail this agreement. Read more Comment (0), Email this.

MS. PERINO: No. And it's pretty clear what the President's position is. That's not in the speech.

Last one, Deb. Read more Comment (0), Email this.

MS. PERINO: No. Again, it's not a speech that looks backward. The President has already increased SUV -- miles-per-gallon standards for SUVs and light trucks twice already in his presidency, and we have a proposal for a third. And then in the State of the Union last year the President talked about it for automobiles, passenger cars. That was finally passed in the energy bill that the President signed in December.

So he'll continue to -- he will say to Congress, we should still continue to work together on energy issues, like renewable energy and nuclear power and clean coal, and the technologies that we've moved forward on, like advance battery technology. But I don't expect him to talk about CAFE standards again.

Okay. Thanks. Read more Comment (0), Email this.

CHAIRMAN CONNAUGHTON: Thank you, and good morning to everyone here in the United States, and I think perhaps good afternoon to those of you from across the Atlantic. This is a background briefing in preparation for the next -- on the record, just to give you some background in preparation for the next major economies meeting, which will take place next Wednesday and Thursday in Honolulu, Hawaii, with the technical meeting that will take place on Tuesday in Honolulu, Hawaii.

We are continuing to work with other countries in developing the new post-2012 energy security and climate change arrangement. And again, as you know, we agreed in Bali that we want to try to complete that work by 2009. And to further remind you -- the President I think laid it out pretty simply in his speech in September -- that it's the work we do this year that makes reaching international agreement in 2009 possible. And that underscores the importance of the major economies process, the aim of which is to focus on a few key areas from the Bali road map where the major economies can make a detailed contribution to be brought into the U.N. negotiations.

So I wish to underline again that the purpose of the major economies meetings is to support the collective effort to negotiate a new international agreement. Some of the areas that we think will be high on the agenda for the major economies to focus on include discussions about a long-term global goal for greenhouse gas reduction that's consistent with economic development objectives, the role of national plans that set mid-term goals to advance the global goal, and sort of a good assessment of the variety of binding market-based and voluntary measures that could be environmentally effective and measurable.

As you know, in Bali, one of the key focal points was, are all the major countries willing to take actions that are measurable, reportable and verifiable? And I think we'll be getting into that discussion a little bit, what that means.

Third, and this is really an innovation in this context, is collaborative technology development and deployment strategies; so not just R&D, but also how you get the technology into the market for key sectors. This was specifically recognized as a new area for discussion in the Bali road map. And the idea here is to, you know, in our view is to focus on the sectors that matter most in terms of their present and future contribution to greenhouse gases.

So for example, low carbon fossil power generation is critical because coal -- power from coal represents more than 50 percent of future emissions; surface transportation; land use and forestry; the other near-zero carbon energy sources such as efficiency, nuclear, wind and solar; and then perhaps some industrial sectors.

An example I gave in my testimony yesterday was the aluminum sector has actually already come together on a shared set of targets for absolute reductions in some of their key emissions, and then for some technology advancement to help with their efficiency. So there's an example of a sector that already is now well organized, and will make specific progress, by the way, on the same targets and the same timetable among developed and developing countries. So I think that's an interesting feature of that.

The fourth element is financing for the adoption of existing clean technologies and the development of new ones. With that, the U.S. and the EU have joined in a new proposal in the WTO to eliminate the tariff and non-tariff barriers on climate- beneficial goods and services. Then we are going to be looking at improved measurement and accounting systems, so we can more effectively track progress. The U.N. has a very good set of methodologies. What we're talking about is enhancing and improving upon those; really building on the substantial work that's now taken place around the globe. And then robust programs to address adaptation, forestry, and technology access for all U.N.-member countries.

To remind you, the President announced this initiative last May, before the G8 meeting. This approach has now been largely endorsed by the G8 leaders in June; by the more than 20 leaders in APEC this past summer; and Ban Ki-moon, the U.N. Secretary General, has expressed his interest and support for this effort, all in recognition that this will help accelerate the discussions and negotiations in the U.N. setting.

I just want to quickly recap for you what's occurred in the last six months, really, in America, as an important contribution domestically to the global effort. The President was pleased to sign an energy bill that he called for, that can largely be described as one of the most important climate -- pieces of climate legislation to have emerged globally. That energy bill has five new mandates: one on vehicle fuel efficiency, which will produce about a 40 percent improvement; the second on alternative fuels, which would produce about -- I think it's 10 percent replacement of gasoline by 2022; the new requirements for appliance efficiency and actually a nearly unrivaled provision with respect to the efficiency of lighting systems.

Along with that came a new legal requirement for the efficiency of federal government operations, which largely adopted an executive order that the President issued last year, which includes a 30 percent improvement in the energy efficiency of federal government operations, and I think it's a 20 percent replacement of our gasoline use with alternative fuels.

The reason why that one is particularly interesting and important, the federal government operations, is the U.S. government is one of the world's largest energy users. In fact, our energy consumption is larger than many countries, many small countries. The U.S. government is also one of the world's largest users of fuel, and so this new directive with respect to federal government operations is a good example of the government itself being able to lead by example, with -- actually with metrics that are quite stringent.

On top of that, you're well aware of our technology programs. Our budget on technology development, research and development, is now approaching $4 billion annually, with the bipartisan support of the Congress. And we are taking advantage of that U.S. investment through a whole series of multilateral technology partnerships with other countries. And I think you'll continue to see further progress across the board, whether it's on transportation or power generation, and within that, biofuels, other alternative fuels, electricity, hydrogen, low-carbon coal, nuclear -- we're really covering the full landscape.

I think our only disappointment this year in the budget was the Congress's zeroing out of the fusion commitment, in which we're -- we're in an international partnership with a handful of other countries on the long-term high-beneficial payoff effort to develop a brand new form of energy for the globe. We are hopeful that, with further discussions with Congress, we can restore that funding, and be a part of this incredibly important task of looking to the future. So I think I'll stop there.

Paula, do you want to contribute in and perhaps mention a little bit on the international partnerships, in particular? UNDER SECRETARY DOBRIANSKY: Thank you, Jim. I just had just a few points I just wanted to make -- to add on to what you said, starting with I think the point mentioned at the outset, that the major economies process is designed to contribute to and advance the U.N. framework convention on climate change negotiations. I think it's important, also, since you took the time to go through the key elements that we are going to be discussing at the major economies meeting, I think it's important to note that in the document itself, of the Bali road map, these six elements, among others, are ones that are addressed, and which we will be very practically addressing the areas that not only are called for and identified, but in which, for example, as you said, the road map calls on parties to develop a shared vision for a long-term global goal. It does call upon developed and developing countries to consider nationally appropriate mitigation actions, and so forth.

And that brings me just to one other piece, which I thought would be worth also mentioning here, is that we agreed in Bali to work toward an agreed outcome at COP15 in Copenhagen, in December 2009. And basically in this time ahead there was agreement to have a body created called the Ad-hoc Working Group on Long-Term Cooperative Action under the Convention. And the areas that you've identified are ones that all countries are being asked to provide submissions into.

So the major economies meeting comes at, I think, a very important time in a very practical way in which it can provide not only a forum for getting into some very key areas, but the areas in which we are all being asked to feed back in to the U.N. framework convention, and to give our respective work programs, if you will.

And finally, I'll just add two last things. One is that I believe the meeting of -- it hasn't been set -- of the Ad-hoc Working Group will be sometime this spring, in either March or April.

In terms of international partnerships, our international partnerships are very significant, very robust. They cover so many different areas, from the Asia-Pacific Partnership on Clean Development and Climate, which involves India, China, among other countries, and in which we're very focused on the issue of power generation and on looking at very specific, time-relevant ways of dealing with energy efficiency; we have the International Partnership for a Hydrogen Economy, which also has been moving forward, and in which we are seeing some very visible manifestations of that, even here in the United States, in terms of where we've been and where we are; the Carbon Sequestration Forum, in which there has been very significant work done in the area of carbon sequestration, and in which our collaboration has been very important. There's been a great deal of interest in this, particularly in Europe, and in our conversations with many of the European countries.

We also have the Methane to Markets Partnership. We also do work in the nuclear area for all the partners in that realm -- the International Thermonuclear Experimental Reactor, in terms of fusion. And finally, let me also add there's also the REEP Initiative, which focuses on energy efficiency, and also renewables. And finally, we have bilateral initiatives with some 17 countries.

So it's been very robust, and there's been a lot of work that's been done, very concrete work done in these areas. Thank you, Jim. CHAIRMAN CONNAUGHTON: Great, thanks. A few that have -- following points. We'll be hosting a world ministerial on renewable energy here in March, here in Washington, D.C., so we're looking forward to that. I would also observe, the energy bill has been estimated -- the one that just passed -- estimated to cut our greenhouse gas emissions by at least 6 billion tons by 2030. I think it was Chairman John Dingell who suggested it could be up to 10 billion tons by 2030. So you'll see a slow of the growth of emissions in those sectors, a stopping and probably then a reversal of emissions in the five categories that I outlined for you. So that's a big deal.

Also, I think only a few of you covered the fact that we reached agreement last year under the Montreal Protocol with key developing countries, that included China and India, on a legally binding, sector-based reduction of HCFCs, which are also potent greenhouse gases. The estimates for the greenhouse gas savings, depending on the substitutes, put it in the range that could equal or exceed the amount of reductions the Kyoto Protocol would deliver through 2012. So just to give you a sense of the scale, we already -- we have a new international agreement in the context of the Montreal Protocol that's going to substantially confront greenhouse gases in a particular sector.

So I think you're seeing a convergence and an emergence of some very practical and specific efforts to tackle greenhouse gases -- some of it producing absolute reductions, some of them slowing down reductions -- I'm sorry, some of them slowing down increases, and some of them advancing technologies. So you see this mix -- this mixed approach, and I think you'll continue to see more of that.

Okay? We're ready for questions; we'll do two in the room, and then two from the phone, and then come back to the room. Read more Comment (0), Email this.

Q The President is making his State of the Union address right before Hawaii. How important will

CHAIRMAN CONNAUGHTON: First, we don't comment on the State of the Union. The President does a pretty good job of telling the world what he thinks for himself. I would observe that over the course of the last year, the President gave two major addresses -- one in May and one in September on climate change and the importance of confronting climate change.

In addition to those two major addresses, the President, in his bilateral meetings and in his multilateral meetings with world leaders, personally gave statements related to our need to improve energy security, and to confront climate change. And I think he did so -- I think the number is eight different times -- with leaders of the -- there's the G8, the APEC leaders, or bilaterals; it could have -- it could be plus or minus one or two.

So this has been very prominent in the President's speechmaking. It's been very prominent on his agenda in public conversations with world leaders. And I would also let you know, in his personal conversations with world leaders, it has been among the items at the top of the agenda for regular conversation. So the world leaders and the President are very, very engaged, and I think you'll see that continued engagement all the way through this year, regardless of setting.

In terms of the outcome of this meeting, we are coming together after Bali to now work specifically on how we can contribute to the U.N. negotiating process. So we have not decided yet what the form of any communication from this particular meeting will be; that will be for the participants to decide. I think we are orienting ourselves, though, at this point for the leaders coming together later this year.

At the last meeting, you saw we produced the Chairman's Summary, and that was really to set the stage for upcoming meetings in Bali. It could be the case that we just go ahead and start our work and a text will ultimately be produced at the time of the leaders' meeting. We may have some intermediate communications in writing. We'll just have to see how that goes. But I would -- as you're working on your expectations, I'd really be looking forward to the leaders' process with maybe a few intermediate things in between. We just don't know that yet. Read more Comment (0), Email this.

Q Are you planning to bring specific proposals to the table here, and if so, what are they? In Bali

CHAIRMAN CONNAUGHTON: We have outlined the areas for discussion. We have a number of ideas that we're going to be sharing, sort of as an opening matter. We know that other countries are bringing some ideas to the table.

There is not a formally or publicly declared set of ideas that I'm aware of from any country other than what you've already seen from Europe and Japan on a long-term goal. So I think these will be iterative discussions, which the initial goal will be to lay out a variety of options without holding any country to a particular proposal. And so I think we're trying to do this in a collaborative way, rather than in the more classic "you bring your number, I bring my number, and we start kicking them around."

So you'll see we have a quite substantial agenda. The aim here is for the leaders to ultimately reconcile differing viewpoints. So we don't want to prejudge that for the leaders. UNDER SECRETARY DOBRIANSKY: May I just add to that? I just wanted to say that, given the timing of the meeting, the meeting comes after Bali, and it will -- it's coming before the first meeting of the Ad-hoc Working Group on Long-term Cooperative Action as part of the U.N. Framework Convention processes. And I think it really affords us to actually use this. And I know, as Jim itemized, we will be using the meeting to look at these different specific areas, the areas in which the Bali road map calls for our looking and defining how we go forward.

So each of us are going to be required to provide submissions into the U.N. process, and I think what you will find is, given the discussion, it's on very specific areas, areas that will make up the foundation for the post-2012 arrangement. So in that sense, I think you're going to see, as we go along, this is a very specific discussion, which will be focusing on specific areas in which I think you can and will see very tangible outcomes. CHAIRMAN CONNAUGHTON: All right, let me take this answer to one more level of detail, just so you have a sense of where we are coming from. The G8 leaders themselves said that they would commit to giving serious consideration to the proposal for a 50 percent reduction by 2050. The non-G8 countries in the MEM have not made that kind of a commitment. They have committed under Bali to a discussion of a long-term goal.

So I think there will be a balance of use in that discussion, but that's what we'll be working from. We've been part of the G8 process, and we've got a lot of questions about the 50 percent proposal, in terms of feasibility. And we've raised a lot of those just very technical and economic issues, and that's what we have to talk through. Other countries have been very resistant to have any kind of a conversation about this at all. So we have a broad bandwidth of perspectives on that.

On national plans, the U.S. actually is -- has leapt ahead with the passage of the energy bill last year, and with the implementation measures we're now putting in place with the 2005 energy bill. So actually going into Hawaii, and then shortly after Hawaii, when we have our new budget, I think you'll see a lot of very consequential and specific proposals from the United States, many of which will be public early as specific things we'd like to do.

We already have -- so, for example, we have a clearly defined objective on vehicle fuel efficiency through the mid-term now. We have a clearly defined national mandatory objective on alternative fuels that runs through the mid part of the 2020s. We have the efficiency mandates, all of which run us through the mid-term. So that legislation contains the mandatory side of commitments in a big portion of our emission-producing sectors.

In addition, as you know, we are working on the clean technology fund. Stay tuned for what we'll be saying with respect to that. And we're working with some other countries to build out what that's going to be. So I think the broader -- the bigger announcement will come later, but at least the U.S. thinking on this, you'll hear from us shortly about that.

And then the EU proposal, jointly with the United States on tariff barrier elimination, is very specific. We're calling for essentially an immediate elimination of tariffs on about 40 goods and services that the World Bank has identified as being most beneficial in terms of addressing greenhouse gases, and then a much longer list of 180 or more that would be negotiated over a longer term, in the context of the WTO as well. So very specific. And I can point you to any of these particular items -- none of this was on the table a year ago.

So I'm trying to think if I left -- and then I think -- watch for our budget on issues related to adaptation and forestry as well. We'll have some program ideas identified there. We hope that by doing this, other countries can calibrate off of some of our ideas, and we can begin to get specific discussions about shared efforts.

Okay, let's go to the phone. Operator, please. Read more Comment (0), Email this.

CHAIRMAN CONNAUGHTON: Yes, I can. Read more Comment (0), Email this.

Q Hi, this is a question for you. I was covering the Senate Foreign Relations Committee meeting

CHAIRMAN CONNAUGHTON: No, you can't get a yes or no answer, because there is no bill that's advanced sufficiently in the congressional process for us to weigh in yet. So until activities on the Hill progress further, we don't really have a vehicle to comment on.

We are providing substantial technical assistance and technical analysis of the various bills, both the energy information administration and the EPA -- and outside third-parties, not governmental, are providing us substantial input into that.

So we are constructively engaged. I have been in regular conversations with the members of the House who are looking at this set of ideas. We have not had significant engagement with the Senate yet. There really hasn't been as much outreach on the Senate side yet, but we do look forward to continuing the conversation, as I indicated yesterday.

I should highlight though, we just signed a bill that has two market-based mandates -- one with respect to cars, one with respect to fuels. It has two technology-based mandates, with respect to efficiency, and with -- of appliances, and with respect to efficiency of lighting systems. And then, of course, the mandate for federal government operations, which is a management mandate.

And so I do wish to continue to underline that this administration has not only called for but the President has signed legislation imposing mandatory, mid-term outcomes that will reduce our greenhouse gases. The other feature that I highlighted at the hearing yesterday was because we now have those five new mandates, and then you have the state mandates on renewable power, and the state mandates on building efficiency, as the Congress looks at new climate legislation it's going to have to take into account now the existence of these other mandatory pieces of legislation, most of which were not in place in 2000 when this conversation began. And so a big piece of the congressional conversation is a little bit outdated, and needs to be brought up to date, so that we are taking rational policy action. Read more Comment (0), Email this.

Q Got it. Quick follow-up just on the specifics -- the meeting in Honolulu, you mentioned that one

CHAIRMAN CONNAUGHTON: Sure. There's renewable energy technologies, efficiency products, like industrial motors -- would be two good examples. We think we should probably add to the list some of the lower-carbon fossil technologies. These are more expensive, and tariff elimination would help the sales -- two-way sales, actually, between -- among countries.

I would observe right now in America we have a -- our two-way balance of trade on these technologies is, we sell about $15 billion worth of these technologies, and we purchase from overseas about $18 billion. So we purchase more than we sell. So this is a two-way benefit. The World Bank has estimated that with the elimination of tariffs, global trade in lower-carbon technologies could increase by up to 14 percent per year. So we are talking about a very easy thing to do, that should have been done years ago, that could produce massive economic benefits, massive productivity benefits, and massive greenhouse gas reduction benefits. Read more Comment (0), Email this.

CHAIRMAN CONNAUGHTON: Good, thank you. Read more Comment (0), Email this.

Q Good. You mentioned the budget. Is there any plans in the works to, I guess, combine some of

CHAIRMAN CONNAUGHTON: I think we'll communicate our views on the budget when we're ready to communicate our views on the budget. By way of background though, for everyone around the room, in the course of the last two years, there's been a very intensive effort with MIT, a group at MIT, a group at the Electric Power Research Institute, and then some of the international sort of technical development bodies, to frame up what they think it will take for us to accelerate the effort to prove the concept of lower-carbon coal technology.

And so just as a bit of a teaser, I would say that we have taken on board a lot of those recommendations -- some of them are slightly different, so we've had to try to work our way through that -- taken on board those recommendations, because we do believe that one of the most important things the world community must do together is do what we can to prove that concept of lower-carbon coal power generation technology, and to do so as quickly as is feasible. This will take some time, but we shouldn't be waiting 50 years or 60 years to see if this is a good concept.

That's just by way of background. Read more Comment (0), Email this.

Q I guess as a follow-up to that, if carbon capture and storage is not fully proven, in terms of

CHAIRMAN CONNAUGHTON: I can't comment on that at this time, because you're working through about three or four levels of "ifs." I do want to observe that because emissions from coal will account for more than 50 percent of future emissions, we have to figure this out quickly. If we cannot find a commercially feasible approach during this research and demonstration period, then the world is going to have to make some pretty aggressive decisions on ramping up nuclear energy, ramping up renewable energy, and it makes the imperative of alternative fuels even greater.

We need all of that now to begin with, but if we can't prove the coal concept, we'll need even more. And right now, if you look around the globe, the rate of commitment to new nuclear is nowhere close to what it needs to be, even if you assume that we'll deal with the coal situation. The rate of uptake of renewables is encouraging, but again, renewables are a more limited opportunity; they will not provide the core base load power that we need, but they're certainly a great and increasing percentage of the supplementary power that many areas can benefit from. And we just need to confront that reality.

I don't know how many of you've seen my gigaton chart. If you haven't, I'll get it to you, and be able to talk to you specifically about that. But if you're talking about any kind of an ambitious, long-term goal, we need more than 25 gigatons of reductions. One gigaton is quadrupling the amount of renewable power we have on the globe today. One gigaton is 270 coal-fired power plants, with zero emissions. And we're trying to work, over the course of the coming years, to build a handful of these things with lower emissions, not zero emissions.

Just to give you a sense, doubling the amount of nuclear power generation on the globe gets you three gigatons -- doubling. So that's going from 400 facilities to 800 facilities globally. And we are not on that trajectory right now at all -- and we need 25 gigatons, as I've indicated. So this is the kind of conversation we're going to be having in the major economies process, if -- look at the real, hard facts and see what the level of global activity is. Simply stating goals is inadequate to the task. In fact, in my view more important is the bottom-up structures of cooperation, and the bottom-up program development that will make the ramp-up that we need possible. Read more Comment (0), Email this.

Q The European Union unveiled its vision this week for climate change. Have you any comments on

CHAIRMAN CONNAUGHTON: Three elements to your question. So, first, when you look at the plan that was announced by Europe, what is remarkable to me is how similar many of its aspects are to what's being done in America and Japan and the other major developed countries. They're looking at specific objectives when it comes to renewable power, looking at specific objectives when it comes to efficiency of power generation, specific objectives on biofuels. It's the commonality that I find most striking, rather than the differences.

I would observe that some of the goals that the European Union have announced -- for example, for biofuels -- are less ambitious than the goal that America has just adopted. There are other goals, for example, on renewable power, that Europe has adopted that are more ambitious than the current portfolio in America. So this is just an example that we need to tailor our solutions to different national circumstances.

I think it is unfortunate but understandable that nuclear was omitted. I think that reflects a decision that there are some member states that are not comfortable with nuclear, although most are, and I think I see that really as a reflection that that's really going to be a matter for each individual member state to decide.

What I find interesting about that is that's kind of similar to the position that we've taken here in America, that when it comes to renewable power mandates, we think it's best for each state to decide for itself what the right mix should be, because it's tougher to set a nationwide objective that would be fair.

So there's another example of commonality of approach. The EU adopted a devolution approach, but the member states decide on nuclear, which is akin to the approach we preferred for renewable power mandates.

Finally, on the issue of trade barriers, the most constructive way forward is for the major countries of the world to focus on technology innovation and trade liberalization to get the technologies into the marketplace.

Trade barriers are not the answer, because all they do is create litigation and delay, conflict and confrontation. This is a shared effort. We need to respect the needs, especially of major developing countries, to lift their people out of poverty, and bring the kind of welfare and quality of life that we enjoy in America and Europe to their people. And so I think we are much better off removing barriers to trade, removing barriers to innovation, and accelerating the market uptake of these goods and services, rather than creating these threats.

The administration is firmly supportive of open trade, and acceleration of innovation as the way forward. I think there's a divide in our Congress on that point. And I think it's very important to know that there is a -- the administration has a different view than some in our Congress, and the views of some in our Congress that echo some of the statements coming out of Europe are not shared by this President or his administration. Read more Comment (0), Email this.

Q The American culture, they have very different concerns from -- in terms of (inaudible) developing

CHAIRMAN CONNAUGHTON: There is a strong consensus and recognition of the hard work of the developing countries to find ways to feed their people, lift them out of poverty, and provide new opportunity -- and that is well understood and well accepted. We are in a new place, especially among the major economies today, though, than we were 25 years ago when many of these positions were originally taken.

China, India, Brazil, South Africa, and Mexico have dynamic and wealthy economic sectors, whose growth is predicated on new investments in technology and infrastructure. That is markedly different than areas of these countries which are still highly impoverished. And so we have to begin to look at our problem in its many perspectives.

So for example, you know, China is holding massive amounts of foreign reserves that go to core investment. And so one of the questions we will have, working with China, is how can we seed deployment of these massive amounts of resources toward the purchase of new generation technologies?

We know that all countries are willing to make these investments because right now, if you look at China or India or Brazil, they are investing in state-of-the-art telecommunication systems. And they're doing it with their own investment, and using -- building their own capacity to do that, with good support from developed countries. One can hope and expect the same kind of outcome when it comes to clean energy systems. So we are prepared to help, but also, the major developing countries are in a good position to leap ahead, as well.

Now I want to draw a sharp distinction then between the lesser developing countries and the small island developing states. Their core issue is gaining access to more energy of all kinds, and affordable energy. Their CO2 footprint is tiny, and will remain so. So I think with respect to those countries, we need to focus on greater access to technology of all kinds, and as affordable as possible.

So I hope you see from my remarks we need to look at this from three different baskets. There's countries that are -- there's a lot of wealth in the energy side of a lot of countries, and there's a lot of poverty in the energy side, with respect to the smaller countries, and we need to be quite sophisticated in how we think about this as we set up future arrangements. UNDER SECRETARY DOBRIANSKY: Jim, if I may just jump in on this point, if I can. And that is to say that our approach, as I think you've indicated, has been very much an integrated approach, and one in which we look at the importance of energy access, energy security, looking at the needs not only in urban areas, but especially in rural areas, and how countries produce and consume energy. But you have, particularly in the major emerging economies, you have the challenge of dealing with the need for energy access, particularly in rural areas.

The approach that we have had, through such international partnerships like the Asia Pacific Partnership, is grounded on looking at access to energy, looking at the growth of a country's economy, and how you do that, and how you apply your economic assets to environmental stewardship. We see all of these three points interrelated, and I think Jim's response to you underscores that. I had just wanted to reiterate it.

I also had wanted to mention that I, unfortunately, have to jump off. So back to you, and just thank you. CHAIRMAN CONNAUGHTON: Great, thanks, Paula. I guess I really do want to underscore this point, that the wealthy parts of our countries can afford new technology, and the poorer parts have a harder time -- and that's really where we need to begin to draw the lines.

It is also the case, very different today than 25 years ago, there is a lot of technological know-how in the major emerging countries. China has some of the smartest innovators in the world, who themselves are developing new technologies, developing intellectual property that they want to see respected and valued in the global marketplace. And so the conversation is changing in real terms, although the public policy conversation hasn't quite caught up with that. And I think that's going to be something that you should all be exploring in the coming -- in the next couple of years, that shift.

One of the best indicators of that is the one I gave you, which is we buy $18 billion a year from overseas, and we sell $15 billion a year. That itself tells you of the dynamism of this new clean energy technology market. And so it does not -- it's no longer a one-way equation. It's clearly a two-way equation, and we need to make the most of that. Read more Comment (0), Email this.

Q Jim, a couple of things which I know are going to be very big subjects over the next couple of

CHAIRMAN CONNAUGHTON: Wow, you gave me everything. Let's see. Let me start first on the baseline question. That's something for all of you to watch. I'm a pragmatist, so I care about how we're actually doing from year to year. And I find that the baseline discussion to be a unfortunate distraction because it's so artificial. And so -- you know, I could give you all the stories of why 1990 so unfairly advantages some countries and so unfairly disadvantages other countries simply by quirk of history and timing.

And so I think it would be useful to move out of the philosophy of negotiating a baseline to your personal country advantage, and moving into the philosophy of what is the rate of accelerated improvement in each area that we can make, over what period of time. So I'd much rather see a forward-looking set of commitments rather than a sort of backward, anchored set of commitments.

Of course, you need to be able to compare, but we also need to be much more sophisticated in our points of comparison. China and India have raised a very important issue, that we need to understand sort of energy intensity, or CO intensity, in terms of population. But it's equally important to understand CO2 intensity in terms of energy use.

And so both matter, but both tell you different things. In a country like China, where there's a lot of people who don't have access to energy, you actually want more energy per capita. But in the areas of China that are massive energy consumers, their intensity is much, much worse than countries like the United States and countries of Europe. And so you need to be able to compare both because -- and China has recognized this, which I applaud; they've got a big push on efficiency, recognizing the difference in their rate of efficiency from some of the major developed countries, and we're working to help them with that. I think it's just great.

So on that whole point about baseline, you all should pay close attention to it because we need to move beyond the gaming of this and have very practical, forward-looking discussions.

Now, your other question was on -- let me -- Read more Comment (0), Email this.

CHAIRMAN CONNAUGHTON: Let me talk about CDM, because it can be understood in the context of this new international clean energy fund we're talking about.

The International Energy Administration Agency has estimated that $20 trillion is going to be spent on energy and associated services and systems between now and 2030. I think last year the CDM was somewhere upwards of $3 billion euros -- maybe a little bit more than that. So you have to evaluate $3 billion euros, $4 billion euros against the $20 trillion that's going to be spent in this sect, in this category. So CDM is an important, useful way of providing assistance between countries; but it is not and cannot and won't be the only way. And that was recognized in Bali.

So when you look at the section in the Bali road map on finance, there was global consensus that we need to look at all of the financing streams, of which CDM is one part. That's very important, because even as we develop the New International Clean Energy Technology Fund, which will be substantial, and a really nice complement to those who are using the CDM mechanism, we still have a much more substantial private sector finance stream that we have to understand and find ways to orient in a market economically sensible way.

So all of this becomes important. And again, I hope all of you will challenge -- the participants in the discussion, challenge the participants to look at the whole picture, not just individual slices of the picture. The same is true in adaptation. Adaptation -- you'll hear a lot of discussion of an adaptation fund, just like you'll hear discussion of a forestry fund. But any of these individual funds is a fraction of the scale of the problem that we're trying to tackle.

So it is inadequate to deal with those funds alone. They're very important, but looking alone we can't count ourselves successful by only having these individual funds. It's how we deploy those funds, how we leverage the private structure and the infrastructure investments and affect good, progressive thinking on the part of political leaders, within their sovereign contexts, that will provide lasting success. Read more Comment (0), Email this.

MS. PERINO: Hello. A little bit of a longer opening, since we're doing a combo gaggle and briefing since the President is traveling today, so bear with me. And in this opening I will give you the preview that I promised yesterday about the State of the Union.

First of all, he taped the radio address. The President discusses the need to pass legislation to strengthen our ability to monitor terrorist communications, which is set to expire February 1st. And he also discusses a bipartisan agreement on an economic growth package and calls for swift passage to deliver tax relief to hardworking Americans.

At 8:00 a.m. his normal briefings. At 10:50 a.m. he will leave on Marine One and head out to West Virginia, where he will make remarks to the 2008 Congress of Tomorrow luncheon. He will come back at 3:20 p.m. and will have, I think, a read-through session of the State of the Union speech this afternoon.

A couple of announcements regarding travel. Next week the President will go to Baltimore, Maryland, where he will visit the Jericho Program. And following the visit the President will make a statement on faith-based and community initiatives. Read more Comment (0), Email this.

MS. PERINO: Tuesday. On Wednesday the President departs for the West Coast, where he will make stops in California, Nevada, Colorado and then come back -- on his way back to D.C. he will stop in Missouri. On the trip the President will promote his trade and economy agenda and make some Republican Party stops. He returns to Washington on Friday, so more details on that to come.

A statement about the bombing in Beirut this morning. We strongly condemn the terrorist bombing in Beirut today that killed a police captain and many other Lebanese. This bombing is an attack on* [by] those who seek to undermine Lebanon's institutions and democratic processes and to delay further the selection of a new Lebanese President. President Bush will continue to stand with the Lebanese people as they strive for security and freedom.

For the State of the Union: the President is heading into the final stretch of preparation for his eighth and final State of the Union address to a joint session of Congress and to his fellow citizens. The State of the Union is a wonderful American tradition; it shapes the public policy debate for the coming year and the President is looking forward to delivering it on Monday night.

The speech is focused on the future; it is not a review of the first seven years of his time as President. It will reflect the President's mind set that he is going to sprint to the finish, as you have all heard him say before. His address will advocate his philosophy of trusting Americans, empowering them to make good and wise decisions, especially when it comes to keeping more of their hard-earned money, rather than sending it to Washington.

It will identify potential areas of agreement with a Democratic Congress. And these areas of common ground include new policy proposals with realistic chances of enactment this year.

The speech also highlights unfinished business that should be priorities for Democrats in Congress eager to demonstrate to voters back home that they are able to get things done, such as the economic growth package and making sure our intelligence professionals have the tools they need to do the job to protect us. These two issues are currently on the front burner waiting for congressional action.

The President will mention policies that can be implemented through executive or administrative action without congressional involvement. He will highlight recent successes in Iraq and the troops that are returning home without replacement as a result of that success.

He will call on Congress to make sure that our troops have what they need, when they need it, for the mission they've been asked to do. He will also express his commitment to continuing to improve the quality of life for our military families, and reiterate the call for Congress to implement the proposals put forward by the Dole-Shalala Commission on Wounded Warriors.

On the foreign policy front, he will discuss how an agreement between Palestinians and Israelis would help foster peace in the Middle East, and that peace is now a real possibility. And he'll say that America must continue to support those around the world who oppose terrorism and promote freedom; doing so will make America safer.

Building a more hopeful world also entails leading the fight against global hunger and fighting AIDS, which must remain a priority for our country. Yesterday he said he's -- he said that he's put all of his soul and all of his might into being President, and that this year will be no exception.

I have one final comment outside of the State of the Union. And I actually -- I noted it is not his eighth State of the Union; it is his seventh State of the Union in his eighth year, -- I saw that you were questioning that, and you are right.

In last night's GOP debate in Florida, one of the moderators incorrectly stated that a Bush administration official has reservations about the use of faith of one of the candidates. To be clear, the comment was from a former official, not a current one. And as you've all heard countless times from the President, we are staying studiously out of the 2008 commentary game. You've also heard the President say that he believes his faith is an important part of who he is and helps him keep perspective while confronting the challenges of the office. We live in a wonderful world where -- in a nation, actually, where people can express their religion freely. And voters in this country will make their decisions about candidates they want to vote for based on the principles that they have, and as you've heard the President say, those principles are often formed by a person's faith. Read more Comment (0), Email this.

MS. PERINO: It was somebody who doesn't work here anymore. (Laughter.) Read more Comment (0), Email this.

MS. PERINO: No. Read more Comment (0), Email this.

MS. PERINO: The President will reiterate what he said before, which is that he believes that the best way for a Commander-in-Chief to conduct a war is to listen to his commanders on the ground. And he will reiterate that that's what he will do when it comes to Iraq. Read more Comment (0), Email this.

MS. PERINO: We're going to hear a report from General Petraeus to the Congress; we'll hear a report from General Petraeus this spring. And he will listen to what General Petraeus thinks is the best thing that we should so, and then make decisions from there. Clearly we've had some success in Iraq lately. There's a lot more work to do. It's a dangerous place. We still have a serious al Qaeda problem, as we saw yesterday with the bombings in Mosul -- I'm sorry, the day before yesterday in Mosul. But you also saw Prime Minister Maliki today coming out and saying that they are going to take aggressive and decisive action against al Qaeda in that area.

So the President will talk about Iraq. It's not a huge chunk of the speech, but he'll spend a significant amount of time talking about it. After all, we do have hundreds of thousands of troops there. Read more Comment (0), Email this.

MS. PERINO: Sure. There will be a transcript, and then we can get you one. Read more Comment (0), Email this.

MS. PERINO: It's always a secret who is going to be in the House gallery, but I haven't seen him on any lists. Read more Comment (0), Email this.

Q Dana, the Senate has shown some inclination to make some changes in the stimulus package. Harry

MS. PERINO: Well, Secretary Paulson is leading those negotiations. Let me put it this way: We believe this is a very good, bipartisan compromise, and it would be unfortunate if the Senate did anything to slow it down or blow it up. The package is effective, it's balanced; the President says it's the right size and it will give the economy the boost that it needs, but only if it arrives on time. And the longer it takes to get the money out to people, then the less impact it will have.

Right now there is a need for speed when it comes to this economic growth package. And Americans are expecting action now. Imagine all across America yesterday evening, and then this morning, if they're looking at their newspapers or watching their newscasts, they see that the President -- the administration and House -- and the House, in a bipartisan way, were able to come together and have an agreement.

We should not do anything that takes us back into the partisan wrangling. It would be interesting to find out what it is about an agreement that Nancy Pelosi and Charlie Rangel like that they can't support from the Senate Democrat side. Now there might be things that they want to do in addition to that, but that could -- there's a lot of legislating that could be done over the next year.

And so if this agreement gets derailed in the Senate, the workers and the businesspeople who are expecting this relief are not going to get it in time, or possibly not in time for it to have the effect that we would like it to have. As the President said yesterday, the time is now. We need swift action. And on specific questions regarding ones that you mentioned -- unemployment insurance or food stamps -- Secretary Paulson will be talking with the Senate.

But remember, tax bills always start in the House. Now we've got an agreement with the House, and the President thinks that the Senate would be wise to go ahead and take that and run with it.

Matt. Read more Comment (0), Email this.

Q Dana, you've stated that the President has called the package the right size. Does that mean that

MS. PERINO: Well, again, when asked this question before I've actually, on the Hill, not seen other -- higher numbers floated. But Secretary Paulson will have those negotiations and see. I'm certainly not closing any doors, but the President thinks that $150 billion is the right amount. Read more Comment (0), Email this.

MS. PERINO: The President was satisfied that in a negotiation you give some and you take some, and that we have a good agreement. Read more Comment (0), Email this.

MS. PERINO: Well, I'm not going to detail out Secretary Paulson's negotiations. But there was a compromise, so that's what we have.

Did you have one, Bill? Read more Comment (0), Email this.

MS. PERINO: He should turn in his expense accounts -- that way he could get his -- Read more Comment (0), Email this.

MS. PERINO: All of us would like those (inaudible). Go ahead. Read more Comment (0), Email this.

MS. PERINO: I think it is -- this President would not have taken the advice of his economic advisors to, first of all, agree to do an economic growth package, and secondly, to agree to what Secretary Paulson was able to work out if he didn't think it was going to be effective.

This is for -- the President called it an insurance policy. That's how he sees it this morning. There's no change over the past eight hours. And we want to see quick congressional action.

Mark. Read more Comment (0), Email this.

MS. PERINO: Sure. Read more Comment (0), Email this.

MS. PERINO: Well, let's step back. No one should take my short preview here about the State of the Union to be all-inclusive of everything that is in the speech. As I mentioned yesterday, Social Security and immigration are two huge issues confronting the American people. The President showed very bold leadership in putting out very detailed policies. This Congress has either been unable or unwilling to get anything done.

It is unrealistic to expect that this Congress is going to take on such big problems this year. They haven't been willing to do it in the past several years; there's no reason to think that they would do it this year. Remember, 2007 was labeled the "do-nothing Congress." Hopefully in 2008, there are some things that we can get done. But I don't think that anyone believes that this Congress would actually take on immigration or Social Security. That's not to say that those two issues aren't mentioned in the speech. Read more Comment (0), Email this.

MS. PERINO: Not really. He was -- I talked to him a little bit about that yesterday. When you work at the White House, as you all know, you get here and there is just so much to do, and there's not a lot of time for contemplation or reflection. And so he said that he doesn't know what it's going to be like when he gets up to the podium -- will he be washed over with feeling about this being the last State of the Union? He doesn't think that will happen. He does feel that he's given his all the first seven years, and that in this eighth year, that 12 months is a long time to be able to get a lot of things done. The great thing about the State of the Union is that it can really set the stage and the agenda for the next 12 months, and that's what he plans to do on Monday.

Paula. Read more Comment (0), Email this.

Q Normally in the State of the Union the President will list all the things that he can do, or believes

MS. PERINO: Well, Paula, I haven't read every State of the Union given since our nation -- since those speeches started, but, look, there are many things that we are doing. We've talked about how -- and on the housing front, the President asked for Congress to work on housing way back -- April 2006 is when he first asked Congress to modernize the Federal Housing Administration. They hadn't done that. And on August 31st of this year he asked for several measures for Congress to take up on housing. They didn't do that.

So on a parallel track while waiting for Congress to get off their duffs and do something about it, the President decided to ask his advisors, what can we do here from the executive branch? The executive branch has a role to play in government, and in the State of the Union it is perfectly appropriate for the President to bring up issues that he plans to try to get done on behalf of the American people. Some of those things we're doing in conjunction with Congress. Some of them complement to Congress in the things that we can do from an administrative perspective, including housing. So that's why it's in the speech. Read more Comment (0), Email this.

MS. PERINO: No, 1 percent of GDP was what the President thought would be robust enough in order to have an impact. Read more Comment (0), Email this.

MS. PERINO: I don't think anyone has drawn those exact parallels, Paula. Look, we can talk more in detail about the growth package a little bit later.

David. Go ahead, David. Read more Comment (0), Email this.

MS. PERINO: I don't know what economists are predicting. And as I said, I don't make those predictions. We foresee economic growth in the future. We want the economic stimulus package as an insurance policy to make sure that in the short term we don't have any downturn in the economy.

David. Read more Comment (0), Email this.

MS. PERINO: Let us have a little bit of news. There's still three-and-a-half days left before the speech. Read more Comment (0), Email this.

MS. PERINO: I've given -- the President, yesterday in his interview with USA Today, and today I've given a lot more than we have in the past. Read more Comment (0), Email this.

MS. PERINO: No. He will be asking Congress to make good on that proposal that he had right before the G8.

Ann. Read more Comment (0), Email this.

MS. PERINO: Absolutely. The President will be talking about tax cuts, that his cuts that were put in place in 2003 need to be made permanent, absolutely. Read more Comment (0), Email this.

Q Dana, there seem to be some Americans, when looking at the stimulus package, say how does a government

MS. PERINO: Well, remember, over the past several years, after we had the tax cuts of 2003, the past couple of years we've had record revenues coming into the Treasury because the economy was doing very well. So what the President wants to do is make sure the economy remains strong, so that we can continue to get this country on a path to balance by 2012. We'll have the budget out on February 4th. The President believes it's important that we continue to have a growing economy. There was a risk of a downturn. The President said, along with the members of Congress, let's move forward and try to get a stimulus package, so that we can avert that. And we do see a short-term increase in the deficit, but we think that will be overcome by the economic growth that we'll benefit from. Read more Comment (0), Email this.

MS. PERINO: I think that this President would say that Americans are over-taxed, absolutely.

Laurent. Read more Comment (0), Email this.

MS. PERINO: I don't have that for sure. I couldn't put it past them, but I can't say that for sure. Read more Comment (0), Email this.

SECRETARY PAULSON: Let me just make a few comments, and then we'll take your questions. First of all, I very much thank the President for his leadership. Last Thursday, when we talked with the congressional leaders, he made the point that this is a compelling issue, it's of the utmost importance to the American people, and bipartisan cooperation is key, putting out principles, working with leaders that shared the same principles at the outset were able to come to an important agreement.

Now the work is far from over, and, as far as I'm concerned, on this package it's not going to be over until it's enacted, until we get the checks out to the American people. And, again, there's a lot that I have on my plate as we look at the capital markets and watch things carefully in this economy.

Let me -- okay, I'll take your questions. Read more Comment (0), Email this.

SECRETARY PAULSON: Well, let me deal with the first question first, and say this is something I spent a lot of time on since we began thinking about this. And I think people will be pleasantly surprised, as we've worked with the IRS, we're going to do things that we weren't able to do in the past and move more quickly. So in my judgment, within 60 days of enactment, with just the caveat that for about a two-week period beginning in the middle of April, there's a very heavy load, a lot of payments going out of Treasury, and so that's got to be the priority. But with that as a caveat, within roughly 60 days, more or less, we will be able to begin making payments; some electronic, some by check. And then, again, looking at something like 117 million people, I believe that we can get the lion's share of these payments done in something under 10 weeks from the time we start mailing them.

Now, in terms of the economy, remember what I said -- and I have not changed my view on this -- the economic growth, there's no doubt it slowed, and it slowed rather markedly at year end. But in my judgment, it's going to continue to grow at a slower pace in here. But the risks are clearly to the downside, and given the facts that the risks are to the downside, it's too much of a cost to wait. And so what we're attempting to do here is to take quick action to provide a boost to the U.S. economy. And, again, I think what's going to help us here is that we have a program which is simple -- we knew if it was going to be complex it was going to be hard to move quickly. So we have something that's simple, broad-based, that's going to be effective because it's focusing on the consumer and focusing on getting business, making investments quickly, speeding that up, hiring people. So you're focused on those two, and it's going to be temporary.

So, again, this is not going to get in the way or sidetrack the efforts to do important long-term things or get in the way of efforts to balance the budget. So it's simple, it's going to be fast, if we can continue to work to get it through Congress quickly. Read more Comment (0), Email this.

Q Secretary Paulson, Senate Democrats have made it clear that they want to add more to this package

SECRETARY PAULSON: I never speculate as to what may or may not happen or what's the deal breaker. Let me step back and remind everybody that, first in the meeting on Thursday and then in the meeting we had on Tuesday that set the stage for this -- and that was a bicameral meeting, so we had the leaders of the Senate and the House. And both Harry Reid and Mitch McConnell took the lead in saying, this is too important, we need to move quickly -- so start in the House, work on a bipartisan basis, and we're very supportive of this; this is our will, okay? So we've done that.

Now, I recognize the Senate has an important role to play. I continue to believe the principles we have here are the right principles. This agreement reflects those principles. I will be up later today talking with Max Baucus and Chuck Grassley in talking about this. And we know that the Senate is very important and they're going to go through their own deliberations.

But, again, I think the American people are not going to have a lot of patience for taking time. And I think the House has set a standard, and it's a very important standard, and the American people -- we owe the American people speed, and we owe them a package that's going to work.

And that's the other thing that's key here. In the past, you've seen "different stimulus bills" where there are parts of it that really are going to have very little to do with stimulus or very little to do with making a difference in this year. And so the House has been disciplined, it set a high standard, and I'm looking forward to working with the Senate. Read more Comment (0), Email this.

SECRETARY PAULSON: Again, I'm not going to speculate. I think what we've got is great. I'm very open, as is everyone, to working with the Senate. But again, right after we've completed something that we think is effective and is going to work -- and again, I appreciate the leadership of the Senate, (inaudible) Reid and McConnell making this possible. If they hadn't said, go work with the Senate, and said, we want to be part of this process early on, it would be very difficult to get where we are as quickly. Read more Comment (0), Email this.

Q Secretary Paulson, can you just explain why you don't want to extend the unemployment insurance

SECRETARY PAULSON: We have unemployment insurance, and unemployment insurance kicks in when it's needed. Okay, this is -- what this bill is, this proposal, which is going to very quickly become legislation and very quickly going to be passed by the House, this is aimed at providing benefits to working families, and it's clearly going to be stimulus. And that was a very important test -- and at businesses. We wanted to keep it simple, and that's where the focus is. And I'd say nothing other than that. Read more Comment (0), Email this.

SECRETARY PAULSON: Listen, I'm focused on this bill now. And there are going to be a number of policy priorities. We all have policy priorities, but the beauty of this is everyone agreed that for the good of the country, we're going to put those on a different track. This is on the fast-track. And let's get this done, and then let's think about other priorities. Read more Comment (0), Email this.

SECRETARY PAULSON: Well, again, this is -- remember, this is Congress, this is the House, okay? This is not just President Bush. This is, we all agreed that the size -- and quickly came together on this. The President said, I think this should be big enough to be meaningful. He thought it should be $150 billion, and the House agreed. And that number was picked because it's enough to make a difference in an economy as big as ours, and not so big that it's going to jeopardize some of our long-term goals like balancing the budget.

Yes. Read more Comment (0), Email this.

SECRETARY PAULSON: I said -- listen, what I said was, from the date of enactment, okay, getting legislation enacted, okay. Now, I've heard some optimistic people talk about enactment by the President's Day recess in February, mid-February. And what you heard me say was, we've been able to -- as we've thought this through, think through some very innovative processes we can put in place to do things that will be unprecedented by the Treasury if they could move and start getting payments out within 60 days of enactment. Read more Comment (0), Email this.

SECRETARY PAULSON: And then I said that there's going to be -- when we look at the 60 days, that there's going to be a period in the middle of -- two weeks in the middle of April when it's going to be difficult to have there be business as usual, because there's just a big load of payments that need to be made then, and that's got to be the top priority. But I think that again, if all works well, as fast as at least I can hope for, that we would be talking about starting to get checks out in May. Read more Comment (0), Email this.

SECRETARY PAULSON: Well, I would say this: This will get is -- when the checks get out, they'll make a difference right away. This is -- these are aimed at people who are going to be spending the money, and so this will make a difference right away. And, again, let me just make this point -- some of you heard me make it the other day: I spend a reasonable amount of time talking to economists who say, why in the world, at a time when our economy was growing at 5 percent in the third quarter, and we're -- it's clear it's slowing down, but you and a number of other people are -- have the view that in all likelihood we're going to continue to grow at a slower level, why are you acting now?

So what we're doing -- now, again, this is not a precise instrument, but we're doing something again which I think is pretty novel. When you look at how quickly the President started focusing on this, right after the new year, before he took off for the Middle East, he said to the country: We're considering stimulus. And I think the economy is -- long-term fundamentals are very healthy, that I believe we're going to continue to grow, but that the risks are on the downside, and I care so much about this economy I don't want to take those risks.

So, again, I think this is as quick as you will see anyone move with a stimulus package. Could it be quicker? Yes. Do I wish it were passed today and we could be mailing out the checks tomorrow? Yes. But we're going to move this as quickly as we can. The first thing is we've got to get it enacted, because until it's enacted, then we can't start the -- start working to get the checks out. Read more Comment (0), Email this.

SECRETARY PAULSON: I never get anybody -- I'll go with the back, and then I'll go to you. Read more Comment (0), Email this.

SECRETARY PAULSON: No. All I could say is that this -- there is no tax increase with this. The Democrats have waived their PAYGO rules -- Read more Comment (0), Email this.

SECRETARY PAULSON: No. This will not -- that will not affect it. It will affect a number of filers, and it will reflect -- it would affect their returns. But it won't have an appreciable effect on this situation. Again, I tried to be -- 60 days, more or less, recognizing we've got this difficult period in April, and we're going to move very quickly. Read more Comment (0), Email this.

Q You just spoke about the spirit of cooperation last Thursday, when you talked to the senators,

SECRETARY PAULSON: Again, I've got great respect for Senator Reid, because, remember, he set the stage for this. He was right there in the front. He was the first one to say, I defer to the House; take the lead. I'm going to continue to make the case here that we don't -- what we need is we need something that's going to be quick and be effective. And again, I don't know what he has in mind, but almost every spending program I've looked at, every infrastructure spending, doesn't meet the test of making a difference quickly, okay?

So the test we want to do, and what was so productive about the discussions in the House -- and I would say this: The Speaker and the Leader, both Nancy Pelosi and John Boehner, were incredibly disciplined, because there were all kinds of ideas that came in. And, you know, this thing could easily look like a Christmas tree. I made a joke when I was here last that Christmastime is long past, and we need something that's simple. And so it's easy. There are all kinds of ideas, but if you hold it up and you say, is this stimulus; how quick is this going to be; how quick will the money get out there this year -- I think if we can keep that discipline in the Senate, and I'm optimistic we'll be able to. Thank you. Read more Comment (0), Email this.

SECRETARY PAULSON: Yes, well, let me start by saying that what we don't have in this is a -- any program that would involve major government funds and would do things that would slow down the correction process in the housing market. So by and large -- and I'm going to talk about the housing in a minute -- by and large what this does is says, the biggest risk to the U.S. economy is housing, but rather than trying to distort that market, what we're going to do is do something which provides a boost to the overall economy to help cushion the impact of what's going on in housing.

Now let me talk about housing and what's in this. But to begin with, I want to step back and say that a very big initiative that we're driving is the HOPE NOW Alliance and avoiding preventable foreclosures and market failures; and there's these 108 million mortgages where their interest rates are going to be reset -- ARMs -- over the next two years. And I am quite optimistic that the program that has been put in place by the entire industry is going to lead to many modifications and fast-tracking these modifications in avoiding foreclosures. And even in the fourth quarter, the number of actions, modifications that were taken more quickly tripled versus the third quarter, and so I think that's going to make a difference.

Now, putting that aside, there are two things in this House package. One is the FHA modernization and, remember, we've got legislation passed by the Senate, passed by the House, and it's in conference. We need that legislation done. That's -- so that's part of this, and that's going to help on the -- with sub-prime mortgages, and that will be helpful.

The other thing is something which I've got to confess that, although I understand it, I didn't support it. We all -- when people talked about everybody didn't get everything they wanted -- and I guarantee you some people got a few things they didn't want -- so when you looked at the -- what there is, is, with regard to the GSEs, in this bill will be a provision that raises the conforming loan-limit. So that's for jumbo mortgages, for the GSEs, for a temporary period of time, and this will be until December 31 -- so a temporary period of time. And both the House -- and I very much, I know how committed Barney Frank is to say this will not get in the way of GSE reform. And I really commend Chairman Chris Dodd for making a similar statement about working on GSE reform, because it's essential.

Now, just so you know my view on that, my view -- and I was very clear on this throughout the side, but I got run down by a bipartisan steamroller -- I mean, Republicans and Democrats reunited on this, because I have said -- and I think I was one of the first people to say it would be very helpful to raise the loan limit for the GSEs for a temporary period of time, given what's going on in that market. It will be very helpful. But I -- longer term, of course, that flies in the face of their affordable housing mission, and I saw no reason why we couldn't get it as part of GSE reform legislation, because I think we need reform legislation, and I was somewhat skeptical that without this, we wouldn't get the reform. So now I've got to be an optimist and work for the reform, and look at the good that will come as a result of this.

But any event -- yes, in the back. Read more Comment (0), Email this.

Q Mr. Secretary, what do you have in this package anything for the small businesses? They are in

SECRETARY PAULSON: Well, here's the small businesses -- I would say there's many -- small businesses are doing pretty well in this country right now, and they've benefited greatly by the rate reductions. Eighty percent of the small businesses in this country pay taxes at flow-through small businesses at the top two rates, and so that's been a help.

But to get to your question with small businesses, there are two parts to this. One is -- on the business -- one is 50 percent bonus depreciation, and of course, that helps all businesses, small businesses also. And then section 179 -- and this deals with expensing, and it -- by and large, what you're really talking about is small businesses there. And what we've done is we've raised the cap to allow expensing for larger projects. And so that will be very helpful to small businesses. So I'm glad you asked the question. Read more Comment (0), Email this.

MS. PERINO: First, a note for Connie Lawn, who is celebrating 40 years in the business. And she brought treats for everybody in our office, which you're welcome to partake in. (Applause.) Yea for Connie.

The President is currently meeting with the U.S. -- some representatives from the U.S. Conference of Mayors. They have their meeting this week in Washington, D.C., so the President is meeting with them, talking to them about free trade agreements and about the economy. And you'll have his pool remarks in a little bit. I sort of waited to see if I could wait for him, because he's usually running early, but it didn't work, so I'm a little bit late. I apologize for that. Read more Comment (0), Email this.

MS. PERINO: Well, the Senate has had six months in order to work on this bill. In the letter that he wrote to the President today he said they'd been working diligently on it. I did see yesterday that he was going to move forward and push the bill -- try to push the bill through the Senate this week. They have 10 days -- or about nine days now until the bill expires, until the law expires. And we would like to see him be able to try to get this done. He's already said he's going to try to get it through the Senate, and then the House can pick it up. Read more Comment (0), Email this.

MS. PERINO: FISA? Read more Comment (0), Email this.

MS. PERINO: Well, look, there's been six months to hash out the differences. Actually, we've been -- there's been a whole year-and-a-half worth of hashing out the differences on this bill. And there was a robust debate, a hardy debate back in August, when we got the bill that we have now. We did not think it was wise to put a six-month sunset on this bill at the time.

Over the next six months the Senate Intelligence Committee passed a bipartisan measure that could -- that we think is supportable. We have one thing that we could -- one part of it that we disagree with in terms of one of the amendments -- I think the Wyden amendment is the one we've identified. But we do believe that the Senate Intelligence bill represents a bipartisan solution to this, and that's what is on the Senate floor. And we believe that the Senate should be able to work through this, and we're hopeful that they'll be able to get it done this week, as he said he wanted to do. Read more Comment (0), Email this.

MS. PERINO: Well, I think that we should wait and see, and we're hopeful that they can get it done this week. Read more Comment (0), Email this.

MS. PERINO: I haven't heard him say he'd filibuster, although I guess he had said that back when he was on a campaign trail, as well. So maybe he has re-upped that commitment. Look, we think that there can be debate on the Senate floor, that this is not a debate that's just been taking place the past couple of days. They've had debate since August and, prior to that, about a year's worth of debate about this bill. So there's been plenty of time for everyone to have their say.

And the Senate Intelligence Committee has a bill that they reported out in a bipartisan fashion; it was 13 to 2. We can support that provision with some minor changes, and we'd like to see them get it done this week. And then it can go to -- and then it can -- and then that bill can presumably be sent over to the House, and they can pass it next week, because we have about nine days until the deadline expires. Read more Comment (0), Email this.

MS. PERINO: Yes. Read more Comment (0), Email this.

MS. PERINO: Yes. Read more Comment (0), Email this.

MS. PERINO: The economy? Okay. Read more Comment (0), Email this.

MS. PERINO: Well, I don't know how they come to their -- all of the numbers at CBO. It's a little bit -- math is not my strong suit. But they certainly have said something that we said back in July, which is we think that there will be an increase in the deficit, a small one. And the details of what we think in terms of deficit projections will be out in full on February 4th once our budget comes out. What's important to note is that we believe that that short-term increase in the deficit will be because of the consensus that the leaders agree with that there -- we should have a economic stimulus package.

We're going to be working towards that. But at the same time, the President is going to continue to urge spending restraint so that we can make sure that it's temporary and we can get back on track so we can continue to have the benefits of the increased tax revenues that we've enjoyed over the past few years stemming from the President's tax cuts in 2003.

The other thing I would point is that CBO announced today that they are not forecasting a recession. The administration economists are not forecasting a recession, but what you do have consensus on is that we need to have a short-term shot in the arm for the economy so that we can avoid a potential downturn. Read more Comment (0), Email this.

MS. PERINO: I think we're still on track to get a balanced budget by 2012. Read more Comment (0), Email this.

MS. PERINO: Sorry, who is this? Read more Comment (0), Email this.

MS. PERINO: I'm sorry, he's saying this about housing? Read more Comment (0), Email this.

Q Let me finish, let me finish. Rahm Emanuel is also having a press conference right now, blasting

MS. PERINO: Sure. And it's so typical of how many people work in Washington, and quite unfortunate. And I think it's really ironic, if that is an accurate quote -- and I have not seen the comments -- that they would have done more on housing or they would have acted more quickly. It was this President who, on August 31st, put forward a package, asking Congress to act on it; they did nothing. And for the past year and a half, we've asked for modernization of the Federal Housing Administration; they've done nothing. And another Senator that was just mentioned, who had been out on the campaign trail, hadn't even been able to hold committee votes. And so I find it really ironic that they would suggest that this President hasn't tried to do enough on housing, because we have.

Not only have we acted through the administration and through our executive branch powers, trying to pick up the slack where Congress hasn't worked on the important work of the American people, but also Treasury Secretary Paulson and Secretary Jackson at HUD both worked together so that they could create a private sector initiative in order to help people who are facing foreclosure.

So we have done our part on housing. We're trying to do more, and we want to work with Congress to get it done. The President is committed to working in a bipartisan fashion. And I would hope that those individuals would take a step back and realize that we have an opportunity to get something done on behalf of the American people. But if they want to go down that road and not work with the administration, the label of the "do-nothing Congress" could stick in 2008 as it did in 2007. Read more Comment (0), Email this.

MS. PERINO: I certainly -- everything that I heard from Secretary Paulson and from the President and from the leaders yesterday is that there is a lot of commitment to working together. It was nothing but a very good meeting yesterday, amicable and substantive, both on the economy and on the Middle East. And that was from -- in a bipartisan fashion.

Go ahead, Caren. Read more Comment (0), Email this.

Q On the budget outlook, you released figures in December that, even at that time, were viewed as

MS. PERINO: I don't know of any plans to renew -- redo numbers. But I'm sure that CEA Chairman Eddie Lazear is on top of things, as is Secretary Paulson. The budget is going to come out on February 4th. But I would also note that -- you've said that -- there might be many economists who are forecasting a recession; there's lots of people saying lots of different things about the economy. There's no shortage of people opining on the issue. What I mentioned is that CBO and the White House and the administration are not forecasting a recession, but we are facing economic slowdown, which is why we want to have the package that we are looking for. So if there's going to be an update in terms of the numbers, we can let you know. Read more Comment (0), Email this.

MS. PERINO: It is a slowdown, for sure. Read more Comment (0), Email this.

MS. PERINO: I'm not blaming anyone. But what I am saying is anyone who is suggesting that this President should have done more on housing should not be saying that if it is, in fact, the Congress who hasn't acted at all. That's my point. I'm not blaming this on anybody.

Go ahead, Paula. Read more Comment (0), Email this.

MS. PERINO: I'll refer you to OMB. The budget comes out in about a week and they'll have details for you. Read more Comment (0), Email this.

MS. PERINO: What I said yesterday remains true today, which is we are not closing any doors, and I'm going to let Secretary Paulson have those discussions in private because that's the best way to have a negotiation. Read more Comment (0), Email this.

MS. PERINO: Sure. The President gave them quite a lengthy debriefing as to what he heard and what he saw on his trip. He certainly talked about foreign investment and the concern for some of the countries -- most of the countries that he talked to that America might not be open for business, for foreign investment. So the President talked to them about that.

He talked to them a lot about Israel and the Palestinian Territories, and about his conversations with Prime Minister Olmert and President Abbas and why he feels optimistic.

He talked to them a lot about how he heard in the region people's concern about Iran. And he said that we remain committed to making sure that we solve this issue diplomatically, and that, as you see, with the P5-plus-1, that the world continues to agree that Iran should not have a nuclear weapon.

And then there was some back-and-forth in regards to that. They talked about the price of oil. And the President did say he had brought up the price of oil with the leaders that he met with. So it was a good discussion, a good back-and-forth. Read more Comment (0), Email this.

MS. PERINO: Well, not -- he didn't say so specifically. Certainly, he will be looking to make sure that there is nothing that tries to close off the doors to foreign investment. And that's true not just in the -- for the Middle Eastern region, but around the world. And one of the things the President is doing right now is talking to the mayors who are in town about the importance of free trade agreements. Right now we're looking at Colombia, South Korea and Panama. And when the President came in, I believe that there were three free trade agreements on the books; now we have agreements with 14 countries. So he's going to continue to try to push for that.

Also, the President had heard a concern about visa policies and immigration policies. And the President is going to just make sure that we're being thoughtful as we think through the balance of what we have to do in this country. We want people to be able to come in and visit our country, and study in our country, and do business in our country -- and at the same time, we have to make sure that we are protecting our citizens. So those are the things we'll be looking for.

Connie. Read more Comment (0), Email this.

MS. PERINO: Say that again? Read more Comment (0), Email this.

MS. PERINO: I think I would disagree. Well, it's true that Israel has helped alleviate some of the blockade problems, but the situation on the border with Egypt and Gaza is quite serious today, and we are very concerned about it. We have been in touch with those parties, including many in the Egyptian government. The State Department has made those connections, and so I'd refer you to them.

Our focus right now should be on restoring the situation. And we note that the genesis of this problem is something I've mentioned over the past couple of days, which is Hamas sending in -- sending over to Israel about -- upwards of 150 rockets a day that are landing in their territory. And so Israel is defending itself. And we think the situation is quite serious and not alleviated at all. Read more Comment (0), Email this.

MS. PERINO: As you know, we've had a policy of not talking with Hamas.

Go ahead, Les. Read more Comment (0), Email this.

MS. PERINO: That's one of the things that -- the issue of borders and security and settlements is going to be on the agenda when Prime Minister Olmert and President Abbas sit down to work out and negotiate all the details. So I'll decline to comment until they work it out. Read more Comment (0), Email this.

MS. PERINO: They're going to work that out, and we'll see what they come up with. Read more Comment (0), Email this.

Q All right. Second, Agency French Presse reports that Iran has reported that Russia has delivered

MS. PERINO: The President welcomed the idea that President Putin had, which is to help provide Iran with civil nuclear power so that they could have that power and have that access, but not be able to enrich. And Russia stands by us on that, as well. So the President did support that move. He does believe that all countries have a right to have civil nuclear power. Read more Comment (0), Email this.

MS. PERINO: I think we'll have to see, because that group is going to provide the President with some recommendations, and from that it could be that they would recommend some legislative changes. It's too early to say.

Go ahead, Goyal. Read more Comment (0), Email this.

MS. PERINO: I haven't heard that, but I'll check. Read more Comment (0), Email this.

Q And second, as far as the Vice President's speech this morning at the Heritage Foundation, he called

MS. PERINO: We're finding terrorists around the world. That's been obvious since 9/11 -- something we're having to confront. Read more Comment (0), Email this.

MS. PERINO: Absolutely.

Nadia, go ahead. Read more Comment (0), Email this.

MS. PERINO: Absolutely. We're very concerned not just for Israel and their concerns about their security, but also we want to prevent, as well -- and Prime Minister Olmert says he wants to prevent a humanitarian crisis there in Gaza. The blame for this problem can be laid squarely at the feet of Hamas. But we are going to continue to work with the Israelis and the Palestinians -- meaning Prime Minister Olmert and President Abbas -- so that we can make sure that the Palestinians know that they can have hope and they can have a state, and they have a choice to make on who they want to follow. Read more Comment (0), Email this.

Q Can I follow on that just for a second? While President Bush was in the Middle East, Secretary

MS. PERINO: Well, that's not true, James. He did talk to President Mubarak -- not in the press availability, you don't have everything -- Read more Comment (0), Email this.

MS. PERINO: Well, the President did discuss with President Mubarak the need to make sure that Hamas does not have the ability to smuggle in weapons and money into and out of Gaza. And they did have that discussion. Read more Comment (0), Email this.