rning, february 15th, 2011. captioning funded by cbs welcome to "the early show" here on a tuesday morning. i'm chris wragge. >> i'm erica hill. a beautiful day outside. a lot of people, though, focused on what is happening inside the next few days. >> the attention right now on washington. the president unveiling his new budget. republicans taking aim. but the bigger questions are what does it mean for the people at home, their tax dollars and how much will be spent and how much more money is back in people's pockets, if any. >> we begin in washington with the results of a brand-new cbs poll. let's take a look at those numbers. 48% of americans now saying they approve of how president obama is handling his job. that is a dip of 1% from last month. can you see there on the screen, 41% disapprove. those are two key numbers. but there are several more we need to get to this morning. senior white house correspondent bill plante has more this morning specifically on that

looming battle over the president's 2012 budget plan. bill, good morning. >> reporter: good morning to you, erica. our cbs news poll shows americans are pessimistic about the economic recovery. 57% say they don't feel a recession is over or that recovery is under way. but the president's budget sees the glass as half full and based, in part on assumptions that the economy will continue to get better, although it still calls for some sacrifice. >> if we're going to walk the walk, these kind of cuts will be necessary. >> reporter: one solution most americans oppose increasing their taxes. our cbs news poll found 59% won't accept that as a budget deficit fix. mr. obama is suggesting some tax hikes, including an end to both the bush era tax cuts for the healthy and for mortgage breaks now given to the top two brackets. the cuts to trim the 3.7 trillion dollar budget don't end

there. they includes a maybe department initiative that trains older workers and subtracting 300 million from urban development grants and increasing health care premiums for military retirees and their families and cutting infrastructure improvement for low income neighborhoods. the poll finds people believe it's important to cut back on spending and 49% expect to feel some pain by cutting programs that directly affect them. but the president's proposal isn't all about cuts. he does call for some additional spending. 4.3 billion to improve teacher quality. 2.2 billion to be restored to the food stamp program. and $500,000 on green energy research. republicans dismiss the president's budget as worse than useless, claiming it doesn't go far enough to reduce the deficit. >> it would be better doing nothing than if we would actually pass this budget for the sake of our economy and for the sake of our future and for the sake of jobs. >> reporter: the white house response is to give that kind of a pass. as one official said to me, look, we're not trying to get

into an argument here, we are trying to start a conversation. >> cbs' bill plante at the white house, thanks. joining us from capitol hill to continue this conversation is republican senator jeff sessions who is a ranking member of the budget committee. good to have you with us this morning. >> thank you. >> the reviews are in. "the washington post" calling president obama the punter in chief for not making difficult choices on meaningful deficit reductions republican are the republicans to deliver the tough news that the americans may ultimately have to hear? >> i think they have and i think the candidates in this past election went to the american people and said we agree with you. we think this government is spending too much and running up too much debt. and they had a big victory. candidate after candidate ran on that. so i don't think it's so politically difficult to do the right thing as some might say in town and if we get serious, i've looked at the numbers. we can make huge progress. this budget does not.

virtually every editorial page in america was similar to the ones you just mentioned. >> well, in terms of getting serious, it seems everyone would agree at this point that what needs to be on the table are entitlement programs, specifically medicare and social security and we heard 49% of americans expect to have some sort of program cut from which they benefit. so are those things, in fact, do americans have to prepare to retire later and lose benefits? >> well, they don't have to prepare to lose significant benefits. if we start now, and if we do the right thing today and work together, we can reform social security and medicare which is over half of our budget correct and make some real progress there to put them on a sustainable path. but i have to say we should not ignore the discretionary spending. that has surged 24% in the last two years under president obama. it needs to come down. it can come down. program after program have had

unprecedented increases and i'm not counting the stimulus that was on top of that. so if you cut a -- just, as an example, if you would take one time cut of a hundred billion dollars on sdraediscretionary spending over ten years it's a savings and much more can be done that. >> i want to bring you back to one point you just made. we can do the right thing if we work together. do you believe there can be bipartisan on this issue? i want to get to specifics when it comes to entitlement spending. can you work that out together? >> well, we can, but it's pretty -- not a good atmosphere here when mr. daley, the new chief of staff at the white house, talked to the republicans a week or so ago saying where is the beef? where is your cuts? like we don't want any cuts. but as soon as you produce them, we are going to attack you.

harry reid even said a 30 billion dollar cut that the house was proposing at one point is unacceptable. so this is not a good situation. i'm really worried about it, but like senator conrad, a chairman of the budget committee that i work with, i think he is open to some improvement in our situation. so maybe we can. we've got to try to work together. you're exactly right. >> and perhaps an opportunity to set that tone then. senator jeff sessions, thanks for your time this morning, sir. >> thank you. we have heard some information on the president's plan. you've heard from the republicans now. . when you take away the politics here, let's look at the economic reality for you, the american taxpayer. because that will offer you yet another view. and here with that angle is cbs news business and economics correspondent rebecca jarvis who joins us from washington this morning. it seems we keep coming back to the glaring emission in the budget which are those entitlement programs. can progress be made without

those cuts? >> reporter: well, i mean, the quick answer is no. the answer that you got from president obama's own deficit reduction commission, the commission that he tasked to come up with a way to reduce the deficit and reduce spending overall was that we need to look at these entitlement programs from social security to medicare. we have to rein in spending on those programs. otherwise, the budget, overall, is going to continue to grow and we will continue to see deficits growing into the future. so, frankly, when you look at the very people who the president tasked with figuring out how to solve this problem and what they say needs to be done, they say you need to look at medicare and you need to look at social security and that is still the big elephant in the room and hasn't been addressed here. >> what are the other big question marks as you look through this? >> reporter: well, when you look at this plan, any model, any look at the future has to make assumptions about what is going to happen in the future. and one of those big question marks is the future growth of the united states and our economy. and what you see in this plan, in the proposal for the

president's budget, is that the growth assumptions are pretty aggressive. they are very optimistic about the state of our future and, in fact, they are more optimistic about our future growth than even the congressional budget office, which is a nonpartisan office which looks at how fast the economy is going to grow. well, this budget actually assumes that the economy is going to grow faster. in addition to that, it looks at joblessness in this country and it assumes that unemployment is going to drop faster than many economists are expecting and on top of that it expects that inflation will stay constant, below 2%. those are aggressive projections for the future and if those don't turn out to be the case, well, then we won't get the kind of savings that the plan anticipates. 61 billion of this 1.1 trillion in savings are unspecified and mystery cuts right now. when you think about what the future of this plan will hold, while there is probably going to be a lot of gamesmanship and in that whole negotiating process

that 650 billion dollar number is really probably going to turn into a moving target. a big question mark of what actually ends up getting cut. >> rebecca, thanks. now to the growing unrest in the middle east. according to a new cbs news poll, most americans agree with the way the president handle the crisis in egypt. 22% don't. the revolution in egypt sparked a new wave of protests across the region. terry mccarthy is for us in cairo with the latest from there this morning. good morning, terry. >> reporter: good morning, chris. the protests the top of president hosni mubarak and ripping through the midwest with demonstrations in iran and bahrain and iran. the streets are calm in cairo as the focus shifts from demonstrations to negotiations. the military convened a panel to discuss changing the constitution to facilitate free elections in six months' time

and mubarak is thought to be in sharm el sheikh amongst rumors his health has taken a turn for the worse. meanwhile, the shock waves from the top men of mubarak's 30-year rule has energized protests in iran. captured in this cell phone video from yesterday. the protesters chanted whether cairo or tehran, death to the oppressors. they dough faced posters of the supreme leader ayatollah and were met with tear gas from the police and iranian lawmakers called for the death penalty for leaders who organized the protests and fearful of a repeat of the mass demonstrations that followed presidential elections in iran in 2009. ba ran, home to the u.s. home fifth fleet one man killed today at a funeral for a protester. another day of clashes between security forces and demonstrators. in yemen this morning, more demonstrators rallied against the president saleh who sent

thousands of supporters on the street to try to stop him. it is anybody's guess whether these protests will topple any more governments in the region in the short term, but in the longer term, it's quite clear, the fall of hosni mubarak has changed the middle east forever. chris? >> cbs' terry mccarthy in cairo for us, thank you. cbs news national security joins us now from washington, juan zarate. the uprising we have seen spreading to iran like you sue a few seconds ago. does this regime in iran referab resemble any of the cracks in egypt did. >> they are feeling the wave of what came from egypt but round two of the protests in iran we are seeing. uprising of the green movement in december of 2009 and really what you have now is the breathing of new life into that movement, given the egyptian protests and the toppling of mubarak and egyptian support for

the protests and given legitimacy for folks to come on to the streets in tehran. i think you're seeing round two of the protests in iran which is quite significant. >> let's talk more about the response. how do you feel the iranian's government response differ from the egypt's government? >> absolutely. i think what we saw after the protests in 2009 the iranian regime was willing to be brutal and ruthless. they jailed, killed, executed protests. they shut down the internet and kicked out journalists. i think what they are hoping for there won't be much international attention to what is happening and that they can snuff out the rebirth of this movement. so i expect iranian government to be willing to spill the blood of its own citizens as it has in the past and be more ruthless than the egyptian government. >> obama administration took a wait and see approach with the egyptian procedure. do you see a similar approach? >> i don't think so.

i think the administration was being criticized being too muted when the iran protests first started. i think they will take a different tact here. they can support the protesters for freedom and opposing a regime that is unfriendly to the united states and human rights abuser and supporter of terrorism. the administration you're going to see be more vocal in this case and you've seen secretary clinton speak out on behalf of the protesters. >> thank you, juan. good talking with you. >> likewise, chris. >> all eyes continue to be fix inside that region. >> we will continue to monitor as it goes from region-to-region. >> that it will. jeff glor is standing by at the news desk with other headlines of the day. >> good morning to you at home. house voted to extend three key provisions of the patriot act for ten months until this december and roving wiretaps and government access to business records and surveillance of

foreign suspects in this country not necessarily tied to terror groups. 26 republicans voted against the measure last week and the bill now moves to the senate. italian prime minister silvio berlusconi will face trial following a sex scandal. a judge in ma lawn this morning handed down that indictment. berlusconi is accused of paying for sex with a 17-year-old girl and trying to cover it up. in on sunday thousands of women protesters protested against berlusco berlusconi. the energy department says the nationwide average for a gallon of regular hit $3.14 a record for february. general motors says it's government-backed turnaround went so well it's handsing out bonuses. most of gm's 48,000 blue collar workers will get about $4,000. the total for all gm employees will top $400 million. we're getting a new close-up

pictures of a comet this morning from nasa. the photo beamed from the stardust spacecraft which launched in 1999. it flew within a hundred miles of temple one and scientists want to see how temple one has changed since another spacecraft

thanks so much. that is your latest weather. good morning. >> good morning to you. nice to see you. >> nice to see you. ahead this morning, the number of people who became ill after attending a party at the playboy mansion sky rockets to 170. so why are health officials now concerned it could go even

higher. beating the tax man. only two months till tax day. we will show you how to get the most of your returns when we come back. this is "the early show" on cbs. [ people screaming ] [ tires screech ] ♪ [ tires screech ] ♪ [ man screams ] [ man on radio ] l.a., the end is near. ♪ [ male announcer ] without all-wheel drive, it's the end of the world. with dodge all-wheel drive, it's just snow. ♪ with dodge all-wheel drive, it's just snow. the best device for everything you love to read editors' choice. best dedicated ereader. magazines look spectacular. fantastic device. touch the future of reading at barnes and noble. nookcolor.

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just ahead, the playboy mansion is legendary. some people look at it for different reasons than others. but a lot of people when they were invited to a party there recently said of course i want to go. who wouldn't. except after the party was over that's when the trouble set in. >> we'll go live to hugh hefner's house in los angeles for the very latest on an outbreak of disease that has sickened 170 people and the number could go even higher. we'll talk that over when we come back. this is "the early show" here on cbs. >> narrator: this portion of e "the early show" span sord onso

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it's 7:25. time for news headlines from cbs 5. i'm sydnie kohara. environmentalists plan to be outside chevron headquarters in san ramon later this morning celebrating a court victory. a judge in ecuador ruled that chevron must pay more than $9 billion because of toxins dumped in the country by texaco which chevron later bought. chevron will appeal and won't pay. it looks like bart will get $130 million from the federal government for its new line to san jose. the money recommended by the federal transit administration would go for tracks and new stations in milpitas and the berryessa neighborhood. and another laser attacks on a aircraft in the south by. chopper 5 flying over san jose when somebody shined a green laser into the cockpit. police on the ground weren't able to find the suspect. the bay area is one of the worst in the country for such laser attacks.

traffic and a look at this wet weather around the bay area in just a moment. stay with us. ,,,,,,

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from the incline out towards the "s" curve. so looking at about 20 minutes to get on the span. 880 a through silicon valley slow and go, 880/237, speeds improve past zanker road. in the south bay slow out of downtown san jose. it didn't take long. usually around 7:15 it starts to back up. word of a new accident southbound 280 at sneath lane. we'll have more details coming up. here's jim with a check of your forecast. >> rain showers are tapering off here this morning in advance of the next frontal system that's headed our way. we are starting to see some of the moisture moving at us from the north creeping into the ukaih area. that will continue to cross into the bay area through this afternoon into tomorrow morning. we'll look for winds to pick up as rain becomes heavy at times into the wee hours of the morning and temperatures drop into the mid-50s for daytime highs tomorrow scattered showers through the end of the week. ,,,,,,,,

welcome back to "the early show" here on a tuesday morning. central park, parts of the city here in new york looking great. yesterday was about 58 here in new york city. >> we got rid of a lot of snow. >> today it will be 32. welcome back to "the early show." >> we have a loot t to get to. health officials looking for 700 people who all attended an event at the playboy mansion. of those 700, 170 so far have fallen ill to a mysterious ailment. officials at this point are really concerned the number could rise dramatically. we'll have the latest on the outbreak that has officials scrambling just to contain it. >> but first, here is jeff glor

at the news desk with a look at this morning's top stories. good morning, everyone. on capitol hill this morning the administration will explain and defend its $3.7 trillion budget for next year. that budget includes tax hikes and a spending freeze. critics contend it doesn't do enough to cut into the record deficit. according to a just released cbs news poll, 49% of those asked think it will be necessary to cut programs that directly affect them in order to lower the deficit. overseas clashes between police and protesters in iran continue. there is a security clamp down this morning. tens of thousands of anti-government demonstrators clashed with police yesterday. at least one was killed. in bahrain, a funeral of a protester sparked another deadly clash. demonstrators are calling for greater political freedoms this. and the capital of yemen this morning, thousands of protesters marched for a fifth straight day. they are demanding the departure

of their leader who says he won't run for another term, but his term doesn't expire until 2013. american major general richard mills is quoted saying that coalition force mis-afghanistmis in afghanistan have beaten the taliban insurgency in helmand province. he says they have lost

health officials in southern california are scrambling this morning to contain an outbreak of an illness that has already infected over 170 people, all of whom intended an event at the playboy mansion. ben tracy is outside the mansion this morning with the very latest. ben, good morning.

>> reporter: good morning. just on the other side of this gate here, that is the playboy mansion and as you mentioned, authorities are still trying to track down all the people who were at a party here up a can elf weeks ago because they believe hugh hefner's house could be the epicenter of an outbreak of a rare disease. it was a lavish fund-raiser at a legendary location. 750 were invited to the party. >> who hasn't wanted to go to hugh hefner's playboy mansion. >> reporter: but within 48 hours of the february 3rd event, dozens fell ill with extreme flu-like symptom, cough, fever, chills and respiratory infections, symptoms that wouldn't go away. >> i'm very fatigued. it wiped me out very quickly. >> i could hardly lift my head up. but i was up and down the whole night with night sweats and coughing and choking. >> reporter: the los angeles county department of health is investigating the playboy

mansion but has not yet identified it as the source of the outbreak. they do suspect the illness is a mild form of leengionnaires' disease. >> a whole bunch of people get sick and this includes you a clue it's other than just the flu being passed from person to person. >> i have this terrible cough. >> reporter: barbara neu and her husband, howard, haven't been able to kick the illness. at first they blamed cold weather pool side rngs but now they believe the culprit was the fog machine. >> you could seat fog in the air and it was constantly blowing and everybody was sitting right will in it. >> reporter: another reason the health department is so focused on the mansion is they say that so far the disease has not spread beyond any of the people who were here. we are told that playboy is cooperating with the investigation. erica? >> ben, thanks. and joining us how is dr. jennifer ashton. good to have you with us. so ben talked a little bit about

the fact that this is sort of a milder form of leenlg near's disease. and potential fatal. >> when so many people get sick in such a short period of time that were all in the same area, they really have to look for a unifying feature. this sounds like a history lesson, but it really refers to a bacteria called legionella bacteria and it typically calls per respiratory infections that could be fatal. in the case of pontiacs disease, it would a much more milder form usually self limited. >> and we heard from ben about how it spread, but give us a better idea of why these people could have been at risk. >> this bacteria is found in soil, but it's also found in wet moist environments. so that could be hot tubs, large ventilation or air conditioning systems. even shower heads. so it's very easily transmitted through respiratory drop receipts or in the air, not spread person to person, so not

direct contact, but anytime you're inhaling the same air system, this is something that's on the top of the list. >> and it grows when that water -- >> exactly. >> and that's why we haven't seen it spread. >> correct. >> what are some of the symptoms? >> they usually will start 24 to 48 hours after exposure, but you can see anything from headaches to muscle aches to chills, high fever, usually over 104 degrees. milder form like pontiac's, disease, you might have milder forms, but they usually come on really strong and typical upper respiratory symptoms. >> what's the treat? >> the less severe form usually runs its course, doesn't require any treatment. leengionnaires' disease, antibiotic, sometimes hospitalization to help support your breathing. >> hopefully they will get in touch with all those people there 37. >>. >> absolutely. just two months until the

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in "moneywatch," getting the most from your tax return. we're two months to the day from that dreaded date, april 15th, and there are all sorts of new rules and codes. so here to help maximize your return is carmen wong you will live author of "the real cost of living." good to see you morning. new rules. 18,000 pages worth of new rules, so let's talk about the biggest tax credit that it's out will. >> the biggest ones have to do with your home and it's both the existing home buyers tax credit. >> the biggest ones have to do with your home and it's both the existing home buyers tax credit. >> the biggest ones have to do with your home and it's both th. >> the biggest ones have to do with your home and it's both the existing home buyers tax credit. >> the biggest ones have to do with your home and it's both the existing home buyers tax credit 10% of the cost of your home, and for first time cost #$,000. and these are credits, not deductions. this actually cuts your tax bill directly.

>> any additional deductions? >> also energy efficient appliances, energy improvements, anything from heat to go air conditioning. you can go to energy star.gov to make sure your appliances qualify. up to 30% of what you spend and the max is $1500. a great credit. >> let's talk about the biggest mistakes people make according to the irs. there's billions of dollars out there unaccounted for. >> the biggest mistake is social security numbers. we still do not enter our social security numbers correctly. so you have to make sure that is correct. your return won't go through. also filing status. if you prepare your full tax return as married filing jointly but you check off the box that says married filing separately, you can believe there will be a big delay in terms of getting your refund. >> you and you can about one of the big problems being social security numbers. this are thousands who don't even spell their names correctly. you really do have to -- it sounds ridiculous, but you have

to really -- >> and also your dependent. so if you're a family, make sure their names are correct and their social security numbers and that they're matched correctly on the form. >> final mistake that people make after they've filled out all the fors, they have it all done correctly. >> here is the thing. direct deposit. you got to make sure that you have the correct deposit newspapers correct so that you can get your refund or else it's going to be delayed quite a bit. and don't forget to sign your form. this is a really big one here. we do a lot of things electronically. you need your pin, as well. so hopefully you've put it someplace safe. and if not, you can use your adjusted gross income from 2008. >> and when you look at all these new tax laws, 18,000 pages, i know there's a lot of le legal quooe ees there, how much difficult is the process?

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there is a historic match-up taking place. on one side, the super computer. on the other, xo super smart humans. >> they're trying to see just how intelligent computers have become. betty nguyen has the story. >> this is jeopardy. >> reporter: on monday night, famous jeopardy champions ken

jennings, who won a record 74 games and the bigger money winner took on a new type of competitor. >> this is watson. >> reporter: an ibm super computer named watson. watson is a met work of computers filled with so much info, it would take a human 250,000 years to read.work of cs filled with so much info, it would take a human 250,000 years to read. but can he quickly answer jeopardy's classic backwards questions? right off the bat, the answer was yes. >> watson. you are right. >> reporter: watson sprinted to an early lead. mastering everything from literature to beatles trivia. >> who is jude. >> yes. >> reporter: he was beating the famous champs by an arm and a leg. >> what is leg. >> reporter: but things took a

turn for the worse. in the second half of the round, the computer froze. >> watson. >> what is 1920s. >> no. ken said that. >> reporter: watson gave up his lead. and by the end of round one, man and machine were in a dead tie. betty nguyen, cbs news, new york. >> part of the problem is that watson doesn't know how to guess. you're getting a good chuck kell out-one. >> i can't even figure out my phone, so this thing is really -- this is really -- >> that's rue. you were having a little trouble with it yet. >> at one point you want to look at the computer and say are you on? >> we'll have more on the "early show" ahead. all the new tech products you need. and they're all looking for the same thing. ♪

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it's 7:55. time for news headlines from cbs 5. i'm frank mallicoat. the berkeley city council will vote today on whether to invite former guantanomo bay prisoners to live in their city. berkeley is looking to offer a home to two of the 38 detainees who have been cleared of wrongdoing. they would live with local families and nonprofit would help them find work. san jose is looking to replace its street lights with l.e.d. lights. the public will weigh in at a meeting tonight before the city council takes a vote. the l.e.d. lights could cut the city's annual energy bill in half. and president obama is coming to the bay area this week to sell his new budget. the president is scheduled to meet thursday evening with tech industry leaders and then spend the night here. the new budget plan includes money for research and development, education and clean energy. we have your traffic and

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good morning. president obama is about to hold his first solo news conference of the year the first in fact since just before christmas. and it's the first since the egyptian revolution toppled president mubarak last friday. on the domestic front, the president plans to open the question-and-answer session with a statement on money matters. he will be promoting the budget plan he sent congress yesterday. it calls for $3.7 trillion in spending next

year. the president will be speaking this morning from the eisenhower executive office building next to the white house. tough road ahead with the budget basically democrats and republicans. >> this budget may be covering it but it's more a political document than an economic document and nobody expects that budget to be enacted. it is really the starting point for a huge and furious did he wait on taxe spending. who is going to prevail here? the tee partiers or the white house who wants to continue spending on some investments. >> is a compromise possible? some people are privately saying

yes. >> some people saying privately yes and other saying the government will end up shutting down. i hear the cameras clicking and must mean he is here. >> here is the president. >> good morning, everybody. please have a seat. i figured that i'd give jay one more taste of freedom before we lock him in a room with all of you. so i'm here to do a little downfield blocking for him. before i take a few questions, let me say a few words about the budget we put out yesterday. just like every family in america, the federal government has to do two things at once. it has to live within its means, while still investing in the future. if you're a family trying to cut back, you might skip going out to dinner. you might put off a vacation, but you wouldn't want to sacrifice saving for our kids' college education or making key repairs in your house. so you cut back on what you

can't afford to focus on what you can't do without. and that is what we have done with this year's budget. when i took office i pledged to cut the deficit in half by the end of my first term. our budget meets that pledge and puts us on a path to pay for what we spend by the middle of the decade. as a start, it freezes domestic discretionary spending over the next five years, which would cut the deficit by more than $400 billion over the next decade and bring annual domestic spending to its lowest share of the economy since twit eisenhower. now some of the savings will come through less waste and more efficiency. to take just one example, we will give -- we will save billions of dollars by getting rid of 14,000 office buildings, lots, and government-owned properties that we no longer need. and make special interests are

not larding up legislation with special projects i've pledged to veto any bills that contain earmarks. still, even as we cut waste and inefficiency, this budget freeze will also require us to make some tough choices. it will mean freezing the salaries of hard-working federal employees for the next two years. it will mean cutting things i care about deeply like community action programs for low income communities. and we have some conservation programs that are going to be scaled back. these are all programs that i wouldn't be cutting if we were in a better fiscal situation, but we're not. we also know that cutting annual domestic spending won't be alone to meet our long-term fiscal challenges. that's what the bipartisan fiscal commission concluded and it's what i've concluded and why i'm eager to tackle excessive spending wherever we find it in domestic spending, but also in defense spending, health care

spending, and spending that is embedded in the tax code. some of this spending we have begun to tackle in this budget. like the $78 billion that secretary gates identified in defense cuts. but to get where we need to go, we have to do more. we will have to bring down health care costs further, including in programs like medicare and medicaid which are the single biggest contributor to our long-term deficits. i believe we should strength social security for future generations and i think we can do that without slashing benefits and putting current retirees at risk and i'm willing to work with everybody on capitol hill to simplify the individual tax code for all americans. all of these steps are going to be difficult. and that is why all of them will require democrats, independents, and republicans to work together. i recognize that there are going to be plenty of arguments in the months to come. and everybody is going to have to give a little bit.

but when it comes to difficult choices about our budget and our priorities, we have found common ground before. ronald reagan and tip o'neill came together to save social security. bill clinton and the republican congress eventually found a way to settle their differences and balance the budget. and many democrats and republicans in congress today came together in december to pass a tax cut that has made americans' paychecks a little bigger this year and will spur on additional economic growth this year. so i believe we can find this common ground but we're going to have on work and we open the american people a government that lives within its means, while still investing in our future, in areas like aegs and innovation and infrastructure that will help us attract business and jobs in our shores. this will drive the debate in the comes months and i believe how america will win the future in the coming years. with that, let me take a few questions and i'm going to start

off with ben filler of ap. >> thank you very much, mr. president. you've been talking a lot about the need for tough choices in your budget. but your plan does not address the long-term crushing costs of social security, medicare or medicaid. the real drivers of long-term debt. can you explain that? where is your leadership on that issue? when are we going to see your plan and if i may, sir, on the foreign front, the uprising in egypt has helped prompt protests in bahrain and yemen and iran. how do you balance your push for freedom in those places against the instability that could really endanger u.s. interests? >> on the budget, what my budget does is to put forward some tough choices, some significant spending cuts so that by the middle of this decade our annual spending will match our annual revenues. we will not be adding more to

the national debt. so to use a -- sort of an analogy that families are familiar with, we're not going to be running up the credit card any more. that's important and that is hard to do. but it's necessary to do and i think the american people understand that. at the same time, we're going to be making some key investments in places like education and science and technology, research and development, that the american people understand is required to win the future. so what we have done is we've taken a scapel to the discretionary budget rather than a machete. i said in the state of the union and i'll repeat, that side of the ledger only accounts for about 12% of our budget. so we have got a whole bunch of other stuff that we're going to have to do, including dealing with entitlements. now, you talked about social security, medicare and medicaid. the truth is social security is

not the huge contributor to the deficit that the other two entitlements are. i'm confident we can get social security done in the same way that ronald reagan and tip o'neill were able to get it done by parties coming together and making some modest adjustments. i think we can avoid slashing benefits and i think we can make it stable and stronger for not only this generation but for the next generation. medicare and medicaid are huge problems because health care costs are rising even as the population is getting older. what i've said is that i am prepared to work with democrats and republicans to start dealing with that in a serious way. we made a down payment on that with health care reform last year. that is part of what health care reform was about. the projected deficits are going to be about $250 billion lower over the next ten years than they otherwise would be because of health care reform and a

trillion dollars lower than otherwise would have been if we hadn't done health care for the following decade but we still have to do more. what i've said is that if you look at the history of how these deals get done, typically, it's not because there's an obama plan out there. it's because democrats and republicans are both committed to tackling this issue in a serious way. and so what we have done is we have been very specific in terms of how to stabilize the discretionary budget, how to make sure we are not adding additional debt by 2015, and then let's together, democrats and republicans, tackle these long-term problems in a way that i think will ensure our fiscal health and, at the same time, ensure we are making investments in the future. [ inaudible question ] >> we are going to be in discussions over the next

several months. i mean, this is going to be a negotiation process. and the key thing that i think the american people want to see is that all sides are serious about it and all sides are willing to give a little bit and that there is a genuine spirit of compromise a is opposed to people in scoring political points. we did that in december during the lame duck on the tax cut issue. both sides had to give. and, you know, there were folks in my party who were not happy and folks in the republican party who were not happy. and my suspicion is that we're going to be able to do the same thing if we have that same attitude with respect to entitlements. but the thing i want to emphasize is nobody is more mindful than me that entitlements are going to be a key part of this issue, as is tax reform. i want to simplify rates. and i want to, at the same time, make sure that, you know, we

have the same amount of money coming in is going out. those are big, tough negotiations and i suspect there will be a lot of ups and downs in the months to come before we finally get to that solution. just as a lot of people were skeptical about us being able to deal with the tax cuts that we did in december, but we he ended up getting it done, i'm confident we can get this done as well. with respect to the situation in the middle east, obviously, there's still a lot of work to be done in egypt itself. but what we have seen so far is positive. the military council that is in charge has reaffirmed its treaties with countries like israel and international treaties. it has met with the opposition and the opposition has felt that it is serious about moving towards fair and free elections. egypt is going to require help in building democratic institutions and also in strengthening the economy that has taken a hit as a consequence

of what happened. but, so far at least, we're seeing the right signals. coming out of egypt. there are ramifications throughout the region, though. and i think my administration's approach is the approach that jibes with how most americans think about this region, which is that each country is different, each country has its own traditions. america can't dictate how they run their societies, but there are certain universal principals that we adhere to. one of them is we don't believe in violence as a way of -- and coercion as a way of maintaining control. so we think it's very important in all of the protests we are seeing in -- throughout the region, that governments respond to peaceful protesters peacefully. the second principle that we

believe in strongly is in the right to express your opinions and the freedom of speech and the freedom of assembly that allows people to share their grievances with the government and to express themselves in ways that, hopefully, will, over time, meet their -- meet their needs. and so, you know, we have sent a strong message to our allies in the region saying let's look at egypt's example. as opposed to iran's example. you know, i find it ironic you have the iranian regime pretending to celebrate what happened in egypt when, in fact, they have acted in direct contrast to what happened in egypt by gunning down and beating people who were trying to express themselves peacefully in iran. and i also think that an important lesson -- i mentioned this last week, that we can draw from this is real change in

these societies is not going to happen because of terrorism. it's not going to happen because you go around killing innocent. it will happen because people come together and apply moral force to a situation. that's what garners international support, that is what garners internal support. that is how you bring about lasting change. patricia ingersly? >> mr. president -- thank you, mr. president. getting back to the unrest in the middle east and north africa, what concerns do you have about instability, especially in saudi arabia, as the demonstrations spread? do you see -- foresee any effect on oil prices and talking about iran, can you comment about the unrest there more? what is your message to the iranian people in light of there was some criticism that your administration didn't speak out

strongly enough after their last -- the demonstrations in iran after their elections. excuse me. >> that's okay. well, first of all, on iran. we were clear then and we are clear now that what has been true in egypt should be true in iran, which is that people should be able to express their opinions and their grievances and seek a more responsive government. what has been different is the iranian government's response which is to shoot people and beat people and arrest people. and, you know, my hope and expectation is that we're going to continue to see the people of iran have the courage to be able to express their yearning for greater freedoms and a more representative government.

understanding that america cannot ultimately dictate what happens inside of iran any more than it could inside of egypt. ultimately, these are sovereign countries that are going to have to make their own decisions. what we can do is lend moral support to those who are seeking a better life for themselves. obviously, we're concerned about stability throughout the region. each country is different. the message that we have sent even before the demonstrations in egypt has been to friend and foe alike that the world is changing, that you have a young vibrant generation within the middle east that is looking for greater opportunity and that if you are governing these countries, you've got to get out

ahead of change. you can't be behind the curve. and so, you know, i think that the thing that will actually achieve stability in that region is if young people, if ordinary folks end up feeling that there are pathways for them to feed their families, get a decent job, get an education, aspire to a better life. and the more steps these governments are taking to provide these avenues for mobility and opportunity, the more stable these countries are. you can't maintain power through coercion. at some level, in any society, there has to be consent and that is particularly true in this new era where people can communic e communicate, not just through

some centralized government or a state-run tv, but they can get on a smartphone or a twitter account and mobilize hundreds of thousands of people. you know, my belief is that as a consequence of what is happening in tunisia and egypt, governments in that region are starting to understand this. and my hope is that they can operate in a way that is responsive to this hunger for change, but always do so in a way that doesn't lead to violence. chip reid? >> thank you, mr. president. actually, i have to get my glasses out to read these notes here. >> aw, that is a bad sign there, chip! >> a little fine print in the budget, mr. president. you said that this budget is not going to add to the credit card as of about the middle of the decade, and as robert gibbs

might say, i'm not a budget expert and i'm not an economist, but if you could just explain to me how you can say that when, if you look on one page, page 171, which i'm sure you've head, it is the central page in this, the deficits go from $1.1 trillion to 786 billion and go down to 607 billion in 2015 and by 2021 it's an 147 billion and the total over the ten years, the total debt is 7.2 trillion dollars on top of the 14 trillion we already have. how can you say we're living within our means? >> here -- let me be clear on what i'm saying. because i'm not suggesting we don't have to do more. we still have all of this accumulated debt as a consequence of the recession and as a consequence of a series of decisions that were made over the last decade. we have piled up, we have racked

up a whole bunch of debt and there is a lot of interest on that debt. so in the same way if you've got a credit card and you've got a big balance, you may not be adding to principle. you've still got all of that interest you've got to pay. well, we've got a big problem in terms of accumulated interest that we're paying and that is why we're going to have to whittle down further the debt that has already been accumulated so that is problem number one. problem number two, we already talked about, which is rising health care costs and programs like medicaid and medicare are going to, once you get past this decade, you're going to start zooming up again as a consequence of the population getting older and health care costs going up more rapidly than incomes and wages and revenues are going up so you've got those two big problems. what we have done is try to take this in stages. what we say in our budget is

let's get control of our discretionary budget to make sure that whatever it is that we're spending on an annual basis, we're also taking in a similar amount, all right? that is step number one. step number two is going make -- is going to be how do we make sure that we're taking on these long-term drivers and how do we start whittling down the debt? and that is going to require entitlement reform and it's going to require tax reform. and in order to accomplish those two things, we're going have to have a spirit of cooperation between democrats and republicans. and i think that is possible. i think that is what the american people are looking for. but what i think is important to do is not discount the tough choices that are required just to stabilize the situation. it doesn't solve it. but it stabilize it and if we can get that done, that starts

introducing this concept of us being able to, in a serious way, cooperate to meet this fiscal challenge and that will lay the predicate for us being able to solve some of these big problems over the course of the next couple of years as well. so, again, i just want to repeat, the first step in this budget is to make sure that we're stabilizing the current situation. second step is going to be to make sure that we're taking on some of these long-term drivers. but we've got to get control of the short-term deficit as well and people are going to be looking us for that and the choices that we have made are some pretty tough choices, which is why i think you've been seeing some grumblings not just from the other party, but also from my own party about some of the decisions that we have made. chuck todd?

>> i'm a little too wired up. thank you, mr. president. everything you've talked about, tax reform, the entitlement reform, two parties coming together, just happened in december. >> right. >> in your fiscal commission. you had a majority consensus to do all of this. it's now been shelved. it seems that you've not taken -- i guess my question is what was the point of the fiscal commission if you have this moment where you had tom coburn, your conservative presented in the united states senate, sign on to this deal. judd gregg was also on this thing. you had dick durbin, your good friend from illinois. democrats. everything you just described and the answer to chip and the answer to ben just happened. why not grab it? >> well, the notion that it's been shelved, i think, is incorrect. it still provides a framework for part of the challenge. you guys are pretty impatient in this town. if something doesn't happen today, then the assumption is

it's just not going to happen. all right? i've had this conversation for the last two years about every single issue that we worked on. whether it was health care on or don't ask, don't tell, on egypt, right? we've had this monumental change over the last three weeks. well, why did it take three weeks? so i think that there is a tendency for us to assume that if it didn't happen today, it's not going to happen. well, the fiscal commission put out a framework. i agree with much of the framework. i disagree with some of the framework. it is true it got 11 votes and that was a positive sign. what is also true is, for example, is that the chairman of the house republican budgeteers didn't sign on. he's got a little bit of juice when it comes to trying to get an eventual budget done so he

has got concerns so i have to have a conversation with him. what would he like to see happen? i'm going to have to have a conversation with those democrats who didn't vote for him. there are some issues in there that, as a matter of principle, i don't agree with. where i think they didn't go far enough or they went too far. so this is going to be a process in which each side, both -- in both chambers of congress, go back and forth and start trying to whittle their differences down until we are arrive at something that has an actual chance of passage. and that is my goal. i mean, my goal here is to actually solve the problem. it's not to get a good headline on the first day. my goal is that a year from now or two years from now, people

look back and say, you know what? we actually started making progress on this issue. [ inaudible question ] >> you first. no, you first. everybody says -- >> but -- but -- >> nobody wants to talk about it. >> this was the same criticism people had right after the midterm election. if you had pulled the press room and the conventional wisdom in washington after the midterm, the assumption was there is no way we were going to end up getting a tax deal that got the majority of both the democrats and the republicans. it was impossible. right? and we got it done. so this is not a matter of you go first or i go first. this is a matter of everybody having a serious conversation about where we want to go, and then, ultimately, getting in that boat at the same time, so it doesn't tip over. i think that can happen.

julie anna goldman? there you are. >> thank you, mr. president. your budget relies on revenue from tax increases to multinational corporations that ship jobs overseas and on increases on oil and gas industry. you've been calling on this for years. if you couldn't get it through a democratic congress, why do you think you'll be able to get it through now? and, also, doesn't it blunt your push for a deficit neutral corporate tax reform? >> well, i continue to believe i'm right. so we're going to try again. i think what's different is everybody says now they are really serious about the deficit. well, if you're really serious about the deficit, not just spending, but you're serious about the deficit overall, then part of what you have to look at is unjustifiable spending through the tax code. through tax breaks that do not make us more competitive, do not create jobs here in the united

states of america. and two examples you cite, i think most economists would look at it and they would say these aren't contributing to our long-term economic growth and if they are not, why are we letting some folks pay lower taxes than other folks who are creating jobs here in the united states and are investing? why are we not investing in the energy sources of the future? just the ones in the past? particularly if the energy sources of the past are highly profitable right now and don't need a tax break. so i think what may have changed is if we are going to get serious about deficit reduction and debt reduction, then we've got to look at all of the sources of deficit and debt. we can't be, you know, just trying to pick and choose and getting 100%. the same is true for democrats.

i mean, there's some -- there's some provisions in this budget that are hard for me to take. you've got cities around the country and states around the country that are having a tremendously difficult time trying to balance their own budgets because of fallen revenue, they have got greater demands because folks have lost their jobs, the housing market is still in a tough way in a lot of these places. and, yet, part of what this budget says is we're going to reduce community development block grants by 10%. that's not something i like to do, but -- and if it would come up a year ago or two years ago, i would have said no. under these new circumstances, i'm saying yes to that. and so my expectation is that everybody is going to have to make those same sorts of compromises. now, with respect to corporate tax reform, the whole concept of

corporate tax reform is to simplify, eliminate loopholes, treat everybody fairly. that is entirely consistent with saying, for example, that we shouldn't provide special treatment to the oil industry when they have been making huge profits and can afford to further invest in their companies without special tax breaks that are different from what somebody else gets. [ inaudible question ] >> well, what is absolutely true is that it's going to be difficult to achieve serious corporate tax reform if the formula is lower our tax rates and let us keep all of our special loopholes. if that is the formula, then we're not going to get it done. i wouldn't -- i wouldn't sign such a bill and i don't think the american people would sign such a bill. if you're a small business person out on main street and you're paying your taxes, and

you find out that you've got some big company with billions of dollars and far-flung businesses all across the world and they are paying a fraction of what you're paying in taxes, you know, you would be pretty irritated. and riflely ghtfully so. the idea is let's lower everybody's rates so american businesses are competitive with businesses around the world and to make sure is doesn't add to our deficit make sure the special interest loopholes that a lot of lob why werists have been working very hard on to get into the tax code, let's get rid of those as well. all right. april ryan? caught you by surprise, april. >> you did, sir. thank you. mr. president, i want to focus in on the least of these. you started your career of service as a community organizer

and now we are hearing from people like organizations like the cbc saying rebuilding our economy on the backs of the most vulnerable americans is something that is simply not acceptable like the cuts to the community service block grants, pel grants and freezing salaries of federal workers. now roger harrison of the joint center for political and economic study says it's not good to make these type of cuts at a time of recession instead of doing it at a time of recovery. and also i need to ask you have you been placing calls for your friend rahm emanuel for his mayoral campaign in chicago? thank you. >> i'll take the last question first. i don't have to make calls for rahm emanuel. he seems to be doing just fine on his own. you know, he has been very busy shoveling snow out there. you know? i've been very impressed with that. i never saw him shoveling around here.

let me use pell grants as an example of how we're approaching these difficult budgets choices in a way that is sustainable, but preserves our core commitment to expanding opportunity. when i came into office, i said i want to once again have america have the highest graduation rates, college graduation rates of any country in the world, that we have been slipping. so i significantly increased the pell grant program by tens of billions of dollars. and so millions of young people are going to have opportunities through the pell grant program that they didn't before and the size of the pell grant itself went up. what we also did, partly because we were in a recessionary situation and so more people were having to go back to school as opposed to work, what we also did was, for example, say that you can get pell grants for

summer school. now we're in a budget crunch. the take-up rate on the pell grant program has skyrocketed. the costs have gone up significantly. if we continue on this pace, sooner later, what is going to happen we're just going to have to chop off eligibility. we're just going to have to say, that's it, we can't do this any more, it's too expensive. what we did how do we take a scalpel to the program and keep the krins for each pell grant and make sure that the young people who are being served by the pell grant program are still being served, but, for example, on the summer school thing, let's eliminate that. that will save us some money, but the core functions of the program are sustained. that is how we're approaching all of these cuts. on the home heating assistance

program, we doubled the home heating assistance program when i first came into office, in part, because there was a huge energy spike, and so folks, if we had just kept it at the same level, folks would have been in real trouble. energy prices have now gone down but the costs of the program have stayed the same. what we have said is, well, let's go back to a more sustainable level. if it turns out that -- once again, you see a huge energy spike -- then we can revisit it but let's not just assume, because it's at a 5 billion dollar level, each year we sustain it at a 5 billion dollar year level, regardless of what is happening on the energy front. that doesn't mean, you know, that these aren't still tough cuts because there are always more people who could use some help across the country than we

have resources. and so it's still a tough decision and i understand peoples frustration with some of these decisions. having said that, my goal is to make sure that we're looking after the vulnerable, we're looking after the disabled and we're looking after our seniors and making sure our education system is serving our kids so that they can compete in the 21st century and we're investing in the future. and doing that in a way that is sustainable and that we are paying for it, as opposed to having these huge imbalances where there is some things that aren't working that we're paying a lot of money for, there are some things that are underfunded. we're trying to make adjustments so that we have got a sustainable budget that works for us over the long term and, by the way, there are just some things that aren't working at all so we have eliminated a couple of hundred programs in this budget. on the education front, we're consolidating from 33 programs to 11 programs. there is waste in efficiency there that, you know, is long

overdue. and we identify a number of these programs that just don't work. let's take that money out of those programs that don't work and put money -- that money in programs that do. [ inaudible question ] >> present feeling -- especially as you were community organizer. >> look. i definitely feel folks' pain. you know? somebody is doing a book about the ten letters that i get every day and they came by to talk to me yesterday. and they said, you know, what is the overwhelming impression that you get when you read these ten letters a day? and what i told them is i'm so inspired by the strength and resilience of the american people. but sometimes i'm also just frustrated by the number of

people out there that are struggling and, you know, you want to help every single one individual. and, you know, you almost feel like you want to be a case worker and just start picking up the phone and advocating for each of these poem who are working hard and trying do right by their families and oftentimes through no fault of their own, they have had a tough time particularly over the last couple of years. yeah, it's frustrating. but my job is to make sure that we are focused over the long term. where is it that we need to go? and the most important thing i can do as president is make sure we are living within our means, getting a budget that is sustainable, investing in the future, and growing the economy. if i do that, then that is probably the most help i can give to the most number of people. jake tavern? >> thanks, mr. president. house republicans, as you know,

want to start cutting now. want to start cutting this year's budget. are you willing to work with them in the next few weeks so as to avoid a government shutdown? there has been talk of a down payment on budget cuts, that they would like to make to this year's budget. also, i was wondering if you could talk about the attempts to get american diplomat ray davis freed from pakistan. some have criticized the administration for putting pressure too publicly on what is essentially a weak government and i'm wondering if you could walk us through that process. thanks. >> my goal is to work with the republicans, both on the continuing resolution and for those who are watching that don't know, washingtonese. the cr is a continuing resolution, a way to just keep government going when you don't have an overall budget settled and we didn't settle our overall budget from last year, so this is carryover business from last

year, funding vital government functions this year. so i want to work with everybody. democrats and republicans, to get that resolved. i think it is important to make sure that we don't try to make a series of symbolic cuts this year that could endanger the recovery. that is point number one. what i'm going to be looking for is some common sense that the recovery is still fragile, we passed this tax cut package precisely to make sure that people had more money in their pockets, that their paychecks were larger, were provided the tax credits and incentives for businesses, but if the steps that we take then prompt thousands of layoffs in state or local government, or core vital functions of government are performed properly, that could also have a dampening impact on our recovery as well. so my measure is going to be, you know, are we doing things in sensible way, meeting core

functions? not endangering our recovery. in some cases, like defense, for example, secretary gates has already testified if we're operating, even operating under the current continuing resolution is putting significant strains on our ability to make sure our troops have what they need to perform their missions in afghanistan. further slashes would impair our ability to meet our mission. and so, you know, we have got to be careful. again, let's use yahoo! a scalpel and not a machete and if we do that, should be no reason at all for a government shutdown. i think people should be careful about, you know, being too loose in terms of talking about a government shutdown because this has -- this is not an abstraction. you know? people don't get their social security checks, they don't get their veterans payments. you know, basic functions shut

down and that also would have a adverse effect on our economic recovery. it would be destabilizing at a time when i think everybody is hopeful we can start growing this economy quicker. so i'm looking forward to having a conversation, but the key here is for people to be practical and not to score political points. that is true for all of us. and i think if we take that approach, we can navigate the situation short term and then deal with the problem long term. with respect to mr. davis, our diplomat in pakistan, we've got a very simple principle here that every country in the world that is party to the vienna convention on diplomatic relations has upheld in the past and should uphold in the future, and that is if our diplomats are in another country, then they are not subject to that country's local prosecution.

we respect it with respect to diplomats who are here. we expect pakistan that is a signatory and recognize mr. davis as a diplomat to abide by the same convention. and the reason this is an important principle is it starts being fair game on our ambassadors around the world including in dangerous places, where we may have differences with those governments, and, you know, our ambassadors are our various embassy personnel are having to deliver tough messages to countries where we disagree with them on x, y, z. they start being vulnerable to prosecution locally, that -- that is untenable. it means they can't do their job. and that is why we respect these conventions in every country should as well. so we're going to be continuing to work with the pakistani

government to get this person released and, you know, obviously, part of -- for those who aren't familiar with the background on this, a couple of pakistanis were killed in a incident between mr. davis -- in pakistan. so, obviously, we're concerned about the loss of life. you know, we're not callus about that but is there a broader principle at stake that i think we have to uphold. >> pakistani government if they don't hand him over? >> i'm not going to discuss the specific exchanges that we have had but we have been very firm about this being an important priority. ed henry? >> thank you, mr. president. i want to go back to egypt because there was some perception around the world that maybe you were too cautious during that crisis and were kind

of a step behind the protesters. i know that, as you said, there was dramatic change in three weeks, and some of us wanted it to go faster than that. i realize it's a complicated situation. it was evolving rapidly but now as these protests grow throughout the middle east and north africa, you said before your message to the governments involved make sure you're not violent with peaceful protesters. what is your message to the protesters? do you want them to taste freedom? or do you want them to taste freedom only if it also will bring stability to our interests in the region? >> well, first of all, without revisiting all of the events over the last three weeks, i think history will end up recording that at every juncture in the situation in egypt, that we were on the right side of history. what we didn't do was pretend that we could dictate the outcome in egypt because we can't.

so we were very mindful that it was important for this to remain an egyptian event, that the united states did not become the issue, but that we sent out a very clear message that we believed in an orderly transition, a meaningful transition, and a transition that needed to happen not later, but sooner. and we were consistent on that message throughout. so, you know, particularly if you look at my statements, i started talking about reform two weeks or two and a half weeks before mr. mubarak ultimately

stepped down and at each junctu juncture, i think we calibrated it about right. i think part of the test what we ended up seeing a peaceful transition, relatively little violence and relatively little, if any, anti-american sentiment. or anti-israel sentiment or anti-western sentiment. and i think that testifies to the fact that in a complicated situation, we got it about right. my message, i think, to demonstrators going forward is your aspirations for greater opportunity, for the ability to speak your mind, for a free press, those are absolutely aspirations we support. as was true in egypt, you know,

ultimately, what happens in each of these countries will be determined by the citizens of those countries. and even as we uphold these universal values, we do want to make sure that that transitions do not degenerate into chaos and violence. that's not just good for us, that's good for those countries. you know, the history of successful transitions to democracy have generally been ones in which peaceful protests led to dialogue, led to discussion, led to reform, and, ultimately, led to democracy. and that's true in countries like eastern europe. that was also true in countries like indonesia, a majority muslim country that went through some of these similar tra

transitions but didn't do it in such a chaotic fashion that it ended up dividing the societies fundamentally. >> chances of something like middle east peace or has it made it more complicated, in your mind? >> i think it offers an opportunity, as well as a challenge. i think the opportunity is that when you have the kinds of young people who are in tahrir square feeling that they have hope and they have opportunity, then they are less likely to channel all of their frustration into anti-israel sentiment or anti-western sentiment, because they see the prospect of building their own country. that is a positive. you know, the challenge is that,

you know, democracy is messy, right? so, you know, if you're trying to negotiate with a democracy, you don't just have one person negotiate with, you have to negotiate with a wider range of views. but i like -- i like the odds of actually getting a better outcome in the former circumstance than in the latter. all right. mike emmanuel? >> thank you, mr. president. the number one concern for many americans right now is jobs. taking a look at your budget, there are tax hikes proposed for energy, for higher income people, and also for replenishing the state unemployment funds. do you worry about the impact on jobs, sir? >> well, actually, if you look at that budget, there's a whole bunch of stuff in there for job creation.

i think some folks noted, for example, our infrastructure proposals, which would create millions of jobs around the country. our investments in research and development and clean energy had the potential for creating job growth in, you know, industries of the future. you know, my belief that the high-end tax cuts for -- or the bush tax cuts for the high-end of the population, folks like me, my belief is that that doesn't, in any way, impede job growth. and most economists agree. you know? we had this debate in december. now, we compromised in order to achieve an overall package that reduced taxes for all americans, and so i believe -- i continue to believe that was a smart compromise, but whether it comes

to over the long term, maintaining tax breaks for millionaires and billionaires, when that will mean additional deficits of a trillion dollars, if you're serious about deficit reduction, you don't do that. and as i said, you know, i think most economists, even ones that tend to lean to the right, lean more conservative, would agree that that's not -- that's not the best way for us to approach deficit reduction and debt reduction. so i do think it's important, as we think about corporate tax reform, as we think about individual tax reform, to try to keep taxes as simple as possible and as low as possible. but we also have to acknowledge that in the same way that

families have to pay for what they buy, well, government has to pay for what it buys. and if we believe that it's important for us to have a strong military, that doesn't come for free. we got to pay for it. if we think we have to take care of our veterans when they come home and not just is a allowed on memorial day, but we have to actually work with folks who have post-traumatic stress disorder or traumatic brain injury. that requires services that are labor intensive and expensive. if we think it's important that our senior citizens continue to enjoy health care in their golden years, that costs money. you know, if we think that, you know, after a flood we help out our neighbors and our fellow citizens so that they can recover, we got to pay for it.

so the circumstance that has changed -- earlier, julie anna asked why i think i might get a deal, think some of the questions here generally have centered about, you know, what is going to be different this time -- my hope is that what is different this time, as we have an adult conversation where everybody says here is what -- here's what is important and here is how we're going to pay for it. now, there are going to be some significant disagreements about what people think is important and then that's how democracy should work and, you know, at the margins, i think that, you know, i'll end up having to compromise on some things. hopefully, others will have that same spirit. >> as part of that adult conversation, sir, what if they say deeper spending cuts before you consider tax hikes?

>> well, i think it just depends on what exactly you're talking about and i think that there should be a full, open debate with the american people, are we willing to cut millions of young people off whether it comes to student loans that help kids and families on their college education? you know, are we only serious about education in the abstract but when it's concrete, we are not willing to put the money into it? if we're cutting, you know, infant formula to poor kids, you know, is that who we are as a people? i mean, we're going to have to have those debates. particularly if it turns out that making those cuts doesn't really make a big dent in the long term, debt and deficits,

then i think the american people may conclude, you know, let's have a more balanced approach. but that's what we're going to be talking about over the next couple of months. as i said, i know everybody would like to see it get resolved today. it probably will not be. that is a fair prediction. all right. i'm going to take one last question here. jackie jones? >> thank you, mr. president. i had lk given up there. >> oh, don't give up. >> you've correctly suggested that the media can be impatient about, you know, seeing you -- you seeing both sides come to a deal. but this is your third budget, your third year of your presidency. you've said many times that you'd rather be a one-term president if it means you've done the hard things that need to be done. now i know you're not going to stand there and invite republicans to the negotiating table today to start hashing it all out, but why not?

and since you're not, though, what more are you doing to build the spirit of cooperation you mentioned earlier needs to happen before there is bipartisanship? and, finally, do you think the markets will wait -- >> i should have written all of this down. jackie, i'm running out of room here. >> i'm happy to repeat my question. >> well, let me just speak to this generally. it's true that this is my third budget. the first two budgets, we're in the midst of the worst recession since the great depression so we had a different set of priorities. i said it each time. in each of those budgets, what i said is the deficit is going up and we are compiling some additional debt, but the reason is because it is so important for us to avoid going into a

depression or having a longer recession than is necessary. because the most important thing that we had to do in order to limit the amount of increased debt and bigger deficits is to grow the economy some more. so that was our priority. that was our focus. this third budget reflects a change in focus. the economy is now growing again. people are more hopeful. and, you know, we have created more than a million jobs over the last year. employers are starting to hire again and businesses are starting to invest again. and in that environment, now that we're out of the depths of the crisis, we have to look at these long-term problems and these medium-termed problems in much more urgent and in a much more serious way. now, in terms of what i'm doing with the republicans, i'm having conversations with them and

democratic leadership. i did before this budget was released and i will do so afterwards. and, you know, i probably will not give you a play-by-play of every negotiation that takes place. i expect that, you know, all sides will have to do a little bit of posturing on television and speak to their constituencies and, you know, rally the troops and so forth, but, ultimately, what we need is a reasonable, responsible and initially probably somewhat quiet and toned down conversation about, all right, where can we compromise and get something done. and i'm confident that will be the spirit that congressional leaders take over the coming months. because i don't think anybody wants to see our recovery derailed and all of us agree that we have to cut spending and all of us agree we have to get

our deficits under control and our debt under control. and all of us agree that part of it has to be entitlements. so there's a framework there that speaks, by the way, to the point i made with you, chuck, about the commission. i think the commission changed the conversation. i think they gave us a basic framework and within that framework, we're going to have to have some tough conversations and the devil is going to be in the details. but, look. i was glad to see yesterday, republican leaders say how come you don't talk about entitlements? i think that is progress because what we had been hearing made it sound as if we just slashed deeper on education or, you know, other provisions in domestic spending that somehow that alone was going to solve the problem. so i welcome. i think it was significant progress that there is an interest on all sides on those issues.

in terms of the markets, i think what the markets want to see is progress. the markets understand that we didn't get here overnight and we're not going to get out overnight. what they want to see is that we have the capacity to work together. if they see us chipping away at this problem in a serious way, even if we haven't solved 100% of it all in one fell swoop, then that will provide more confidence that washington can work and, more than anything i it's not just what the markets want what the american people want. they want some confirmation that this can work and i think it can, all right? thank you, everybody. >> dealing with the budget and a rapidly changing middle east, the president clearly has a full

plate domestically and internationally. he defended his budget for 2012 saying like families, the government has to live within its means while investing in the future. he said discussion of cutting entitlements like medicare and medicaid will take place over the next few months with democrats and republicans, but, clearly, that's a very risky proposition for both parties. he also -- republicans are saying more spending cuts are necessary. they are taking aim at the current budget trying to cut 100 billion dollars from that, spurred on partially by members of the tea party. the president said he is hoping for an adult conversation with republicans. it remains to be seen, of course, if that will take place. in terms of the protests that are spreading in countries like yemen and ba ran and iran, the president said each country is different. america cannot dictate what transpires in those countries but can adhere to its universal

principles of promoting freedom of speech and assembly. much more about the president's conference on your local news and on this cbs station and cbsnews.com