Transcript: President Obama, Part 1

On Friday, March 20, 2009, 60 Minutes correspondent Steve Kroft interviewed President Barack Obama on the grounds of the White House and in the Oval Office. This is part one of the full transcript. Click here for part two.

PRESIDENT BARACK OBAMA: Yeah, it's pretty spectacular. I-- you-- imagine when these flowers all start to-- bloom.

KROFT: Yeah.

OBAMA: It'll be-- it'll be pretty spectacular.

KROFT: Couple more weeks.

OBAMA: Yeah, just a few more weeks.

KROFT: So have you gotten into a routine?

OBAMA: I have. You know, I-- typically work out in the morning. Michelle's often there with me. We do our little workout, and then--

KROFT: What time?

OBAMA: Oh, you know, probably around-- 7:15, after the girls have-- gone off to school. So we see them off. And then-- after the workout, have breakfast, read the papers, re-- read-- my morning security briefing. And then I come down here and talk to our National Security team. Then we talk to the economic team. After that, who knows? Anything goes. But-- typically-- between seven and 10:00 I sort of know what I'm doing.

KROFT: That's when they make your schedule.

OBAMA: That-- yeah-- that-- that part of the schedule's pretty firm. From 10:00 -- 10:00 on, we're gonna be doing anything from traveling to California, to meeting with governors here, to-- you know, sitting down with-- my secretary of state, to calling foreign leaders. There's a whole range of things that we might be doing.

KROFT: And who sets your schedule?

OBAMA: Oh, I've got-- not only my scheduler from the campaign, Alyssa Mastromonaco, still heads up our scheduling department. And she coordinates with-- Katie Johnson, my personal assistant. And a bunch of 20 and 30 year olds basically run my life. (CHUCKLE)

KROFT: And this is the living quarters.

OBAMA: This is the living quarters, up on the second floor. We got a gym right over there-- up on the third floor. And-- the second floor is-- our bedroom's on this side, and-- we got a dining room on that side. And-- yeah, pretty nice digs.

KROFT: I gave you a hard time during the campaign about your lack of executive experience.

OBAMA: Right.

KROFT: And now you've been running the free world for the last 60 days.

OBAMA: Yeah. It hasn't fallen apart so far. (CHUCKLE)

KROFT: How are you finding the job?

OBAMA: It's exhilarating. It's challenging. The-- you know, I-- I find that-- the governance part of it, the decision making part of it-- actually comes-- comes pretty naturally. I think I've got a great team. I think we're making good decisions. The-- the hardest thing about the job is staying focused. Because there's so many demands and decisions that are pressed upon you.

And you've gotta be able to sort through what are the things that you can delegate, what are the things that deserve just a little bit of your attention, what are the things where you've gotta sit down and really think through-- what the options are? And-- and that, I think there-- it's an art as opposed to a science. There's no manual that can teach you that.

The other thing about-- being President-- that can't be taught, you have to experience, is-- there is the sheer weight of decision making. And when I make a decision to send 17,000 young Americans to Afghanistan-- you can understand that intellectually. But understanding what that means for those families, for those young people-- when you end up sitting at your desk, signing-- a condolence letter to one of the family members of a-- a fallen hero-- you're reminded each and every day, at every moment, that-- the decisions you make count.

KROFT: What's the hardest decision you've had to make in the last 60 days?

OBAMA: Well, I would say that-- the decision to send more troops-- into Afghanistan. You know, I think it's the right thing to do. But it's-- a weighty decision because we actually had to make the decision prior to the completion of-- strategic review-- that-- we were conducting. If we didn't send them-- we would not have gotten them in time for the elections in Afghanistan. It's very important to make sure that we've got stability in Afghanistan at least through the elections in August. And so-- I-- I would have preferred more time to make that decision. Sometimes you don't get the time that you want.

KROFT: What is the most frustrating par-- I mean the-- there-- what's the most frustrating part of the job?

OBAMA: (SIGH) The-- the fact that-- you are often confronted with bad choices that flow from less than optimal decisions made a year ago, two years ago, five years ago, when you weren't here. You'd love to unwind-- some of that decision making and say, "I wish I could-- have nipped this at the butt."

A lot of times, when things land at my desk-- it's a choice between bad and worse. And as somebody pointed out to me-- the only things that land on my desk are tough decisions. Because, if they were easy decisions, somebody down the food chain's already made them.

KROFT: How many decisions do you have to make a day?

OBAMA: Can't count them.

KROFT: Lots.

OBAMA: Yeah, lots.

KROFT: Every time somebody walks in your office.

OBAMA: There's a decision. Otherwise, they don't get a meeting. Yeah.

KROFT: And you're briefed for all that before it happens.

OBAMA: I am. I spend a lot of time reading. People keep on asking me, "Well, what are you reading these days?" Well, mostly briefing books. You know, you get a little time to read-- history or-- you know, policy books that are of interest. But there's a huge amount of information that has to be digested, especially right now. Because the complexities of Afghanistan-- are matched, maybe even dwarfed, by the complexities of the economic situation.

And there are a lot of moving parts to all of that. And although you can't be an expert in all these areas, in order to make good decisions, you've got to have enough depth-- that you understand what the core question is-- what the main issue is. And-- and that requires a lot of-- a lot of work.

KROFT: Do you take a day off?

OBAMA: I do. It's never a full day. But-- typically Saturdays and Sundays. And I'll wander down to the Oval Office. I'll do some work. But I'll still have time for the kids. If I go up to Camp David, I'll take a satchel with a bunch of stuff to read, and I'll be on the phone occasionally. But I've got some time to-- certainly play with the girls, and every once in a while-- while-- play a game of pool. There's a-- a pool table up there, and-- and I've been taking on the staff, seeing what they got.

KROFT: Can we-- where is the-- where's the-- the swing set?

OBAMA: Come on. Let's take a look.

KROFT: Okay.

KROFT: What-- I mean this-- there has to be a substantial learning curve on this job.

OBAMA: Well--

KROFT: Right?

OBAMA: The-- you know, there's no doubt that managing priorities, getting personnel in place-- working the kinks out of-- the organization, that that all takes some time. Now unfortunately-- we don't have a lot of time. We've had to hit the ground running in a way that no administration since FDR-- has had to do. And-- you know, I think that we've done a pretty good job of sorting out what do we have to get done-- even in less than optimal circumstances? And what are the things that-- even though they'd be nice to do, we can put off a little bit longer?

KROFT: You have a bunch of vacancies right now in the Treasury Department. And-- and you've--
(OVERTALK)

OBAMA: A source of frustration.

KROFT: Right. What-- what's the difficulty in filling those positions?

OBAMA: Well-- first of all-- it requires a set of-- it requires a certain expertise. It-- it's not a huge pool of folks who can do a lot of these jobs. A lot of these folks are coming from Wall Street. Or at least they're economists (AIRPLANE) who-- are highly marketable in the private sector. So it requires them to give up a lot of money.

It requires them to go through the kind of scrutiny that a lot of people just don't wanna go through. And what we're trying to do is work with the Senate Committees-- and try to give them a sense that, "Look, we've got a sense of urgency here. So if somebody's willing to serve-- on our behalf-- and they are-- skilled and good and decent people-- who want to-- make this country better-- we've gotta not make the process just completely miserable for them." And right now, it's-- it's pretty tough.

KROFT: So this is the-- this is the swing set?

OBAMA: It--

KROFT: And jungle gym, and--

OBAMA: This is-- this is a pretty spectacular swing set. I have to say that-- I was not-- the purchaser of this. The admiral, our chief usher, Admiral Steve Rochon, took great interest when we said that we should get a swing set, and found what I assume must be-- the-- (CHUCKLE) Rolls Royce of swing sets.

KROFT: You didn't have one of these when you were a kid?

OBAMA: I sure did not. I thought we were gonna get like two swings. But-- but they went all out. He-- he even flew up to where they made this thing to test out-- the slide himself. Now I'm not gonna-- I don't think there are photographs of-- a former admiral and Coast Guard-- going down a slide. But-- the kids love it.

And the nice thing about this is that we've got a lot of staff with young families who don't have the luxury of being literally 60 seconds away from their house. And so when they're coming in on weekends, what we're trying to do is encourage them to bring their families, you know-- have their kids out here. We can watch them-- while we're meeting in the Oval Office. And-- it creates an atmosphere.

KROFT: You can literally look out on this from the--

OBAMA: You can literally look out and watch these kids play on it. And-- and I think that-- you know, Michelle and I have both said to ourselves, you know, given-- how much-- family means to us, and how much of a strain it was during the campaign, anything we can do to relieve the pressures on some of our staff who've got young families-- we want to do it.

KROFT: Have-- the girls had kids over after school?

OBAMA: They have. And they've tested this out. And it got a thumbs up.

KROFT: (CHUCKLE) You had any of those sleepovers yet?

OBAMA: We have had more sleepovers than I expected. People don't seem to be-- my girls don't seem to be shy about having their friends over.

KROFT: Are they liking it here?

OBAMA: You know, they-- they are adapting remarkably-- in ways-- that I just would not have expected. I mean--

KROFT: Well, this is pretty cool.

OBAMA: Well-- it's cool, but what's interesting is actually how unimpressed they are with it. (CHUCKLE) I mean they-- they're going to school. They are unchanged. They're the same sweet, engaging, happy-- unpretentious kids-- that they were and they got here. We-- we-- (CHUCKLE) we took them to Camp David the first time on Marine One. And I'm thinking, "Well, this is pretty impressive." You know, you got the Marines saluting, and we're going up the-- going up the stairs.

And-- I ask them, "Well, what do you think?" They said, "Is that candy over there?" (CHUCKLE) "Is that Starburst?" And they started-- they're more impressed with the candy than the fact that we're flying by the Washington Monument. And-- and that's-- that's just how they've-- they've adapted to this place-- swiftly, without-- a lot fanfare. They seem to be doing great.

KROFT: And they're having fun.

OBAMA: They do seem to be have fun. And-- and Michelle is thriving as well. I mean she just started a-- a vegetable garden out here.

KROFT: Ah, where's that?

OBAMA: That's--

KROFT: Is that nearby? Is that--

OBAMA: No, that's pretty far down. But they just actually-- all the chefs-- from the White House staff-- went down there with her. And they started digging-- digging ground. And they're gonna be planting stuff. And this is part of the message that she wants to send about good nutrition.

Last night she had-- young girls, young women from-- across public schools in D.C., who she invited to have dinner-- with-- a bunch of-- renowned-- and-- accomplished-- older women. And, you know, she's just doing all sorts of things that-- is really opening up the White House and putting-- her own stamp on it. She seems to be doing just great.

KROFT: But you've-- the family situation, being here with the family, you see them--

OBAMA: It's--

KROFT: When do you see your kids? When do you see the family?

OBAMA: We have-- we have dinner every night together. And it's the-- the greatest blessing of this whole thing is the fact that every night I can leave this office, sit down, have dinner with the girls.

OBAMA: Well-- you know, first of all, the White House staff is remarkable. Obviously, the facilities are spectacular. The single best part of the deal is that I've got this nice home office, which means that I can walk 60 seconds away every night, have dinner with Michelle and the girls. And if I need to come back here, I can. And that's an incredible luxury, no commute time.

The bubble that the White House represents is tough. And one of the things that I am constantly struggling with is how to break out of it. And I've taken to the practice of reading ten letters selected from the 40,000 that we get every night, just to hear from voices outside of my staff. You know, we're trying to do Town Hall meetings outside of Washington, just so that we're staying connected to ordinary folks.

And you know this crept up on me during the campaign. So it's not that I'm entirely unaccustomed to it. But the inability to just go and, you know, sit at a corner coffee shop and have a chat with people, or just listen to what folks are saying at the next table, that, I think, is something that, as a president, you've got to constantly fight against.

KROFT: Uh-huh. Have you gotten lost in here yet?

OBAMA: I have. Repeatedly. (LAUGHTER)

KROFT: This was-- this was a tough week.

OBAMA: Well, you know-- when I think about-- what I'm going through-- as President, it doesn't compare to what the folks that I'm representing are going through. You know, they're losing jobs. They're trying to figure out how to pay their medical bills. They've seen retirements suddenly dissipate because of what's happening in the stock market. And so as tough as the job might be, and the politics of Washington can sometimes be I'm always reminded of how fortunate I am to be here, and what an extraordinary responsibility I have to try to deliver on some of the promises that I made during the election.

KROFT: Were you surprised by the intensity of the reaction, and the hostility from the AIG bonus debacle?

OBAMA: You know, I don't think I was surprised by it. I think it'd been building up for a time-- for some time. This just end up-- ended up becoming the a symbol, in a lot of people's minds, of something that frustrated them a lot, which is taxpayers, many of whom are struggling themselves, having to foot the bill for other people's mistakes. And when they see that some of the people who were responsible for not just putting their own institutions at risk, but also, the entire economy at risk, still drawing million dollar bonuses, that'll get you pretty hot under the collar.

So I wasn't surprised by it. Our team wasn't surprised by it. The one thing that I've tried to emphasize, though, throughout this week, and will continue to try to emphasize during the course of the next several months as we dig ourselves out of this economic hole that we're in, is what-- something I said at the joint session, which is we can't govern out of anger. We've got to try to make good decisions based on-- the facts, in order to put people back to work, to get credit flowing again. And I'm not gonna be distracted by-- what's happening day to day. I've got to stay focused on making sure that we're getting this economy moving again.

KROFT: Do you think the response is healthy?

OBAMA: Well, I-- I-- I think that it is understandable. I think it is unavoidable. People recognize that what happened with the AIG bonuses is not just a matter of dollars and cents. It has to do with values. It has to do with a sense of responsibility, a willingness to shoulder blame for mistakes. People don't resent folks getting rich. And they don't mind people getting bonuses for doing a good job.

They certainly don't understand getting bonuses for doing a bad job. And they don't understand this concept of retention bonuses when, from their perspective, the retention bonus is not losing your job. (CHUCKLE) And so, I think the anger is healthy if it's channeled. And one of the things that I've tried to emphasize during the course of this week is let's understand that what happened with AIG is representative of an entire culture that went on for years, where there was very little accountability in a lot of financial institutions.

People were taking exorbitant risks with other people's money. There wasn't transparency. There wasn't accountability. Everybody from the ratings agencies to the people selling sub prime mortgages to boards of directors who were making money, weren't paying attention to these risks. And so part of, I think, the opportunity, the teaching moment from this week is how do we transition so that we're making chief executives of corporations more accountable? We've got regulations in place so that institutions can't pose systemic risks and expect that-- all the bonuses and the benefits, when times are good, go to the private sector but the losses are all socialized. You know, and that, I think, is gonna be the big challenge.

KROFT: Congress and your party passed a measure this past week, out of anger.

OBAMA: Yeah.

KROFT: Designed to try and get that money back.

OBAMA: Right.

KROFT: And in the process, passed a bill that is gonna tax those bonuses at a level of up to 90 percent, for companies that are getting federal money. Is that a good piece of legislation? Did you like-- do you like that? Will you sign that piece of legislation?

OBAMA: We're gonna take a look at this legislation. And-- I'm gonna do so with two principles in mind. Number one, we've got to make sure that people aren't rewarded for failure with taxpayer money. Number two, we've got to keep our eye on the big picture, and the fact that we've got to get our banking system lending again. And if we are endangering the prospects of putting people back to work, and reopening small businesses, and you know getting the economy moving, then that's gonna be a problem.

And so we've got to balance those two things. I do think that the most important thing is to make sure that, instead of worrying about how to get the horse back in the barn after the doors been open for a long time, how do we make sure that we are gonna keep that door closed the next time? And I think it's also important for us to distinguish between an AIG which is basically 80 percent taxpayer owned now, or a Fannie Mae, Freddie Mac, which again, wouldn't exist if it weren't for the federal government stepping in, and some community bank that might have participated in a TARP loan, but basically was a well managed institution and is suffering because its portfolio of housing loans that were perfectly sensible is seeing a much higher rate of foreclosure because of a bad economy. So that there are a lot of decisions that we're gonna have to make. And we've got to make sure that we're making them based not on just-- anger, but also, what's gonna be required to make sure the credit flows again.

KROFT: I mean you're a constitutional law professor.

OBAMA: Yeah.

KROFT: You think this bill's constitutional?

OBAMA: Well, I think that as a general proposition, you don't want to be passing laws that are just targeting a handful of individuals. You want to pass laws that have some broad applicability. And as a general proposition, I think you certainly don't want to use the tax code to punish people.

I think that you've got a pretty egregious situation here that people are understandably upset about. And so let's see if there are ways of doing this that are both legal, that are constitutional, that upholds our basic principles of fairness, but don't hamper us from getting the banking system back on track.

KROFT: You've got a piece of legislation that could affect tens of thousands of people who make more than $250,000 a year, which, depending on where you live, isn't necessarily a huge amount of money. Some of these people probably had nothing to do had nothing to do with the with the financial crisis. And some of them probably deserve the bonuses that they got.

OBAMA: Well--

KROFT: I mean is that fair?

OBAMA: Well, and that's why we're gonna have to take a look at this legislation carefully. Clearly the AIG folks getting those bonuses didn't make sense. And one of the things that I have to do is to communicate to Wall Street that given the current crisis that we're in, they can't expect help from taxpayers but they enjoy all the benefits that they enjoyed before the crisis happened. You get a sense that, in some institutions, that has not sunk in. That you can't go back to the old way of doing business, certainly not on the taxpayers' dime.

KROFT: You've got people--

OBAMA: The flip side--

KROFT: You've got people in Detroit--

OBAMA: Right.

KROFT: --auto workers, members of the UAW, who've had to give back money under their contracts because they're getting money from the federal government.

OBAMA: Exactly.

KROFT: They have to break their contracts. Why can't you break the contracts of the people from AIG?

OBAMA: Well, the-- that's the fairness issue that's at stake here. And that's why it's so important to make sure that, on the one hand, Wall Street understands that that they've got a stake in making people feel like they get it. That we're not gonna get the banking system going again if the attitude is, "We don't have to change, but the taxpayers have to foot the bill."

Now the flip side is that Main Street has to understand, unless we get these banks moving again, and a lot of banks and a lot of bank executives were doing the right thing and managing their institutions properly, but are now caught in this maelstrom, that if we don't get them-- up and running, then we can't get this economy to recover. And we can't want to cut off our nose to spite our face.

That sense that we're all in this together, that sense that, you know, we've got some mutual responsibilities to each other, that's part of what's been missing not just over the last couple of months. That's been missing for the last decade. And my job is to focus people's attention on that big picture that, when America works together, when business and labor and consumers and law makers, when everybody understands we've all got to give something, and this is not just about our immediate short term interests, that's when we get stuff done.

KROFT: When I asked you earlier if you thought the reaction was healthy, I mean this whole thing this past week smacks a little bit of class warfare.

OBAMA: Well-- this is part of what I talked about during the course of the campaign. You've got ordinary folks, middle class, hard working people, who during a decade saw no growth in their wages and their incomes. None, when you factor in inflation. In fact, in some cases they actually were falling behind. At the same time as the people, the top one percent, were seeing huge increases in income and wealth.

When you've got a economy in which 40 percent of economic growth is happening in the financial sector, that turns out that was all an illusion, that it wasn't growth based on real products and services, but just a bunch of paper shuffling and a house of cards, then what's gonna emerge, at some point, is a sense of resentment, a sense that, you know, the system's rigged, and it's not working for ordinary people. And it's not fulfilling the basic American dream.

Which is part of the reason why, in addition to dealing with the banking crisis, it is so important that we put the economy on a sounder footing. We've got to get past this bust and boom-- or-- or this-- this boom and bust approach to economic growth. And what we've got to do is to start making things again. We've got to get our health care system on track. We've got to make sure that we are leading in the clean energy economy and not trailing other countries that are moving ahead of us. And we've got to educate our kids.

Those are all things that can create a foundation for long term economic growth. And that's what's been missing for a long time. And when-- growth is premised on an overheated housing market, financial schemes that nobody understands, people maxing out on their credit cards, then when things go south, when things go sour, there's gonna be a lot of frustrated and resentful people. And you know, when growth is steady, and based on real economic value, that's when everybody sees their prospects improving. And and that's when America pulls together.

KROFT: This past week, I think to a certain extent in the reaction to this bill has been it's been building within the financial community. You need the financial community--

OBAMA: Right.

KROFT: --to solve this crisis.

OBAMA: I do.

KROFT: Do you think that the people on Wall Street and the people in the financial community that you need trust you, believe in you?

OBAMA: Well, I-- you know, I think that there's probably a perception on the part of some on Wall Street and in-- in the financial sector that somehow I can turn off and on people's reactions to something like these bonuses. I think there's a disconnect. I think that maybe they're not spending enough time in some Midwestern town, you know, wandering through Dayton, and hearing stories about how tough things are for people.

And so maybe they're surprised by these reactions, and they expect the President or Congress or others to somehow just quell the frustrations and the angers. And part of my job is to communicate to them, "Look, I believe in the market. I believe in financial innovation. I believe in capital being able to flow to the most productive places in order to spur economic growth. And I believe in success." I want them to do well.

And our financial service sector is one of the hug competitive advantages, comparative advantages, that we have vis-à-vis other countries. But what I also know is that the financial sector was out of balance. You know, you look at how finance used to operate just 20 years ago, or 25 years ago. People, if you went into-- investment banking, you were making 20 times what a teacher made. You weren't making 200 times what a teacher made.

So there was a sense of the financial sector being above the normal rules of the economy. And my attitude is to say, "I want you to succeed. We want to reward wealth. But there's got to be sufficient balance. There's got to be some regulations that actually make the market work better and prevent the kinds of systemic risks that were seeing."

That's not anti-market. That's not anti-Wall Street. I want to protect and preserve what's best about Wall Street. But we're gonna have to get rid of some of the excesses. And that's something that's in their interests, as well in the interests of the American people.

KROFT: I think they feel, there is a perception right now, at least in New York, which is where I live and work--

OBAMA: Right.

KROFT: --that-- people feel, they thought that you were going to be supportive. They thought that you were going to be-- I think your choice of Tim Geitner and Larry Summers--

OBAMA: Right.

KROFT: --gave them confidence. And now I think there are a lot of people the say, "Look, we're not gonna be able to keep our best people. They're not gonna stay and work here for $250,000 a year when they can go work for a hedge fund, if they can find one that's still (LAUGHTER) working--

OBAMA: Well, that-- that--

KROFT: --and make a lot more.

OBAMA: Well, look. Here's what I think, I'll be telling - I've told them directly, because I've heard some of this- is they need to spend a little time outside of New York. Because you know, if you go to North Dakota, or you go to Iowa, or you go to Arkansas, where folks would be thrilled to be making $75,000 a year without a bonus, then I think they'd get a sense of why people are frustrated.

Now I am not on the Wall Street side or Main Street's side, I'm on America's side. And Wall Street and Main Street need to work together. And you know, I think we have to understand the severity of the crisis that we're in right now. The fact is that, because of bad bets made on Wall Street, there have been enormous losses. It is highly unpopular, from the perspective of Main Street, to be pouring billions of dollars of taxpayer money into these institutions.

I don't need to tell you how unpopular it is. Even before the AIG bonus issue. But we're consistent. And I said at the speech of the joint, joint session that we're gonna have to do this because our economy depends on it. And I argue fiercely for the need for us to get this banking system right, and not to arbitrarily punish people just because they're angry at the financial system.

But what we're also gonna need, on the other side, is people having a sense of responsibility and restraint, and some reflectiveness about-- you know, looking back on the last decade or two and saying, "Gosh, maybe we need to change some of our practices. Maybe the salary scales at Wall Street or in hedge funds have just gotten completely out of whack, and don't correspond, it turns out, to long term performance." I mean there were a whole bunch of folks who, on paper, if you looked at quarterly reports, were wildly successful, selling derivatives that turned out to be--

KROFT: Worthless.

OBAMA: --completely worthless.

KROFT: And insuring them.

OBAMA: And insuring them. Now you know, gosh, I don't think it's me being anti-Wall Street just to point out that the best and the brightest didn't do too well on that front, and that you know, maybe the incentive structures that have been set up have not produced the kinds of long term growth that I think everybody's looking for. You remember that old, what was it, Smith Barney commercial?

KROFT: Right, right--

OBAMA: Yeah-- yeah, we-- we-- we-- make money the old fashioned way, we earn it. Well, that's all I want to get back to.

KROFT: Right.

OBAMA: You know, I want to see us get back to that sense that this is not a game, this is not a sport. We're talking about people's pensions, people's savings. We're talking about kids' college educations that are at stake. And in terms of how we manage risk, in terms of how we incentivize good performance, in terms of how we build institutions that can last, in terms of protecting taxpayers let's put something together that, that will stand the test of time.

KROFT: Were you surprised at the depth of this reces-- surprised at the depth of this recession when you got here? Did you know it was this bad?

OBAMA: I think that we had a sense that it was gonna be bad. You know, I had a pretty clear sense, back in September and October, when we first started seeing the financial system spinning out of control, and we had that first significant intervention, that this was going to be tough. In fact, you know, my team and I joked, because at that point, we were doing pretty well, that maybe it wasn't too late to throw the election. (CHUCKLE)

And because we knew that-- that-- you know, we were gonna be inheriting a pretty big mess. I don't think that we anticipated how steep the decline would be, particularly in employment. I mean if you look at just, you know, hundreds of thousands, now millions of jobs being shed over the course of two months-- or three months, that-- that slope is a lot steeper than anything that we've said-- we've seen before.

Now there's a potential silver-- silver lining, which may be that things are so accelerated now, the modern economy is so intertwined and-- and wired, that things happen really fast for ill, but things may recover faster than they have in the past. And-- and things may bottom out quicker than they have in the past.

But we are in a deep hole. And the other thing I I think-- has surprised us is the degree to which the budget, the deficit, at least short term was significantly worse than we had anticipated because there were just a lot of gimmicks built in to how we calculate that deficit. Things like the AMT, which is supposed to be a tax that was targeting the wealthy, but because it wasn't indexed to inflation, has been creeping down into middle class tax brackets. And, and so what's been happening is that each year Congress passes what's called a patch. It's never in the budget. But it always gets added to the deficit.

The Iraq War, Afghanistan War, was never actual budgeted. And so you know, when you looked at what the real numbers were, you know, we're in a pretty deep hole. And what that means is, for the next two years, we've got to just focus on recovery, putting people back to work, stabilizing the housing system. What we will have to do after we recover is to get much more serious about bending that deficit curve so that it's sustainable over time.

KROFT: Or-- have you been surprised at the push back you've gotten to do something about it? When we talked in November, you said that there was a consensus that a lot of money needed to be spent, and deficits weren't important. But it's not turning out to be that way.

OBAMA: Well, I think economists would still agree with that. Am I surprised that it was hard to get agreement in Congress (CHUCKLE) around that concept? No. Because I've been around this town long enough to know that you know, people bicker. And are looking for potential weaknesses. And there's a sense of positioning towards the next election. And that is, you know, just part of the process. That's part of the messiness of democracy. So I haven't been surprised by that.