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  • The President: Well, thank you so much, Facebook, for hosting this,

  • first of all.

  • (applause)

  • My name is Barack Obama, and I'm the guy who got Mark to wear a

  • jacket and tie.

  • (applause)

  • Thank you.

  • (laughter)

  • I'm very proud of that.

  • (laughter)

  • Mr. Zuckerberg: Second time.

  • The President: I know.

  • (laughter)

  • I will say -- and I hate to tell stories on Mark,

  • but the first time we had dinner together and he wore this jacket

  • and tie, I'd say halfway through dinner he's starting to sweat a

  • little bit.

  • It's really uncomfortable for him.

  • So I helped him out of his jacket.

  • (laughter)

  • And in fact, if you'd like, Mark,

  • we can take our jackets off.

  • Mr. Zuckerberg: That's good.

  • (applause)

  • The President: Woo, that's better, isn't it?

  • Mr. Zuckerberg: Yes, but you're a lot better at this stuff than me.

  • (laughter)

  • The President: So, first of all, I just want to say thank you to all of you for

  • taking the time -- not only people who are here in the

  • audience, but also folks all over the country and some around

  • the world who are watching this town hall.

  • The main reason we wanted to do this is, first of all,

  • because more and more people, especially young people,

  • are getting their information through different media.

  • And obviously what all of you have built together is helping

  • to revolutionize how people get information,

  • how they process information, how they're connecting with each other.

  • And historically, part of what makes for a healthy democracy,

  • what is a good politics, is when you've got citizens who are

  • informed, who are engaged.

  • And what Facebook allows us to do is make sure this isn't just

  • a one-way conversation; makes sure that not only am I speaking

  • to you but you're also speaking back and we're in a

  • conversation, we're in a dialogue.

  • So I love doing town hall meetings.

  • This format and this company I think is an ideal means for us

  • to be able to carry on this conversation.

  • And as Mark mentioned, obviously we're having a very serious

  • debate right now about the future direction of our country.

  • We are living through as tumultuous a time as certainly

  • I've seen in my lifetime.

  • Admittedly, my lifetime is a lot longer than most of yours so far.

  • This is a pretty young crowd.

  • But we're seeing, domestically, a whole series of challenges,

  • starting with the worst recession we've had since the

  • Great Depression.

  • We're just now coming out of it.

  • We've got all sorts of disruptions,

  • technological disruptions that are taking place,

  • most of which hold the promise of making our lives a lot

  • better, but also mean that there are a lot of adjustments that

  • people are having to make throughout the economy.

  • We still have a very high unemployment rate that is

  • starting to come down, but there are an awful lot of people who

  • are being challenged out there, day in, day out,

  • worrying about whether they can pay the bills,

  • whether they can keep their home.

  • Internationally, we're seeing the sorts of changes that we

  • haven't seen in a generation.

  • We've got certain challenges like energy and climate change

  • that no one nation can solve but we're going to have to solve together.

  • And we don't yet have all the institutions that are in place

  • in order to do that.

  • But what makes me incredibly optimistic -- and that's why

  • being here at Facebook is so exciting for me -- is that at

  • every juncture in our history, whenever we face challenges like

  • this, whether it's been the shift from a agricultural age to

  • a industrial age, or whether it was facing the challenges of the

  • Cold War, or trying to figure out how we make this country

  • more fair and more inclusive, at every juncture we've always been

  • able to adapt.

  • We've been able to change and we've been able to get ahead of the curve.

  • And that's true today as well, and you guys are at the cutting

  • edge of what's happening.

  • And so I'm going to be interested in talking to all of

  • you about why this debate that we're having around debt and our

  • deficits is so important, because it's going to help

  • determine whether we can invest in our future and basic research

  • and innovation and infrastructure that will allow

  • us to compete in the 21st century and still preserve a

  • safety net for the most vulnerable among us.

  • But I'm also going to want to share ideas with you about how

  • we can make our democracy work better and our politics work

  • better -- because I don't think there's a problem out there that

  • we can't solve if we decide that we're going to solve it together.

  • And for that, I'm grateful for the opportunity to speak to you.

  • And instead of just giving a lot of long speeches I want to make

  • sure that we've got time for as many questions as possible.

  • So, Mark, I understand you got the first one.

  • Mr. Zuckerberg: Yes, let's start off.

  • So let's start off with the conversation about the debt.

  • So I understand that yesterday morning you had a town hall in

  • Virginia where you talked about your framework not only for

  • resolving the short-term budget issues,

  • but the longer-term debt.

  • And you spent some time talking about tax reform and some cost

  • cutting, but you also spent a lot of time talking about things

  • that you didn't think that we could cut -- in education,

  • infrastructure and clean energy.

  • So my question to kind of start off is: What specifically do you

  • think we should do, and what specifically do you think we can

  • cut in order to make this all add up?

  • The President: Well, let me, first of all, Mark, share with you sort

  • of the nature of the problem, because I think a lot of folks

  • understand that it's a problem but aren't sure how it came about.

  • In 2000, at the end of the Clinton administration,

  • we not only had a balanced budget but we actually had a surplus.

  • And that was in part because of some tough decisions that had

  • been made by President Clinton, Republican Congresses,

  • Democratic Congresses, and President George H. W. Bush.

  • And what they had said was let's make sure that we're spending

  • wisely on the things that matter;

  • let's spend less on things that don't matter;

  • and let's make sure that we're living within our means,

  • that we're taking in enough revenue to pay for some of these

  • basic obligations.

  • What happened then was we went through 10 years where we forgot

  • what had created the surplus in the first place.

  • So we had a massive tax cut that wasn't offset by cuts in spending.

  • We had two wars that weren't paid for.

  • And this was the first time in history where we had gone to war

  • and not asked for additional sacrifice from American citizens.

  • We had a huge prescription drug plan that wasn't paid for.

  • And so by the time I started office we already had about a

  • trillion-dollar annual deficit and we had massive accumulated

  • debt with interest payments to boot.

  • Then you have this huge recession.

  • And so what happens is less revenue is coming in -- because

  • company sales are lower, individuals are making less

  • money -- at the same time there's more need out there.

  • So we're having to help states and we're having to help local governments.

  • And that -- a lot of what the recovery was about was us making

  • sure that the economy didn't tilt over into a depression by

  • making sure that teachers weren't laid off and

  • firefighters weren't laid off, and there was still construction

  • for roads and so forth -- all of which was expensive.

  • I mean, that added about another trillion dollars worth of debt.

  • So now what we've got is a situation not only do we have

  • this accumulated debt, but the baby boomers are just now

  • starting to retire.

  • And what's scary is not only that the baby boomers are

  • retiring at a greater rate, which means they're making

  • greater demands on Social Security,

  • but primarily Medicare and Medicaid,

  • but health care costs go up a lot faster than inflation and

  • older populations use more health care costs.

  • You put that all together, and we have an unsustainable situation.

  • So right now we face a critical time where we're going to have

  • to make some decisions how do we bring down the debt in the short

  • term, and how do we bring down the debt over the long term.

  • In the short term, Democrats and Republicans now agree we've got

  • to reduce the debt by about $4 trillion over the next 10 years.

  • And I know that sounds like a lot of money -- it is.

  • But it's doable if we do it in a balanced way.

  • What I proposed was that about $2 trillion over 10 to 12 years

  • is reduction in spending.

  • Government wastes, just like every other major institution

  • does, and so there are things that we do that we can afford

  • not to do.

  • Now, there are some things that I'd like to do, are fun to do,

  • but we just can't afford them right now.

  • So we've made cuts in every area.

  • A good example is Pentagon spending,

  • where Congress oftentimes stuffs weapons systems in the Pentagon

  • budget that the Pentagon itself says we don't need.

  • But special interests and constituencies helped to bloat

  • the Pentagon budget.

  • So we've already reduced the Pentagon budget by about $400 billion.

  • We think we can do about another $400 billion.

  • So we've got to look at spending both on non-security issues as

  • well as defense spending.

  • And then what we've said is let's take another trillion of

  • that that we raise through a reform in the tax system that

  • allows people like me -- and, frankly, you,

  • Mark -- for paying a little more in taxes.

  • (laughter)

  • Mr. Zuckerberg: I'm cool with that.

  • The President: I know you're okay with that.

  • (laughter)

  • Keep in mind, what we're talking about is going

  • back to the rates that existed when Bill Clinton was President.

  • Now, a lot of you were --

  • (laughter)

  • -- I'm trying to say this delicately --

  • still in diapers at that time.

  • (laughter)

  • But for those of you who recall, the economy was booming,

  • and wealthy people were getting wealthier.

  • There wasn't a problem at that time.

  • If we go back to those rates alone,

  • that by itself would do a lot in terms of us reducing our overall spending.

  • And if we can get a trillion dollars on the revenue side,

  • $2 trillion in cutting spending, we can still make investments in

  • basic research.

  • We can still invest in something we call ARPA-E,

  • which is like DARPA except just focused on energy,

  • so that we can figure out what are the next breakthrough

  • technologies that can help us reduce our reliance on fossil fuels.

  • We can still make investments in education,

  • so we've already expanded the Pell Grant program so that more

  • young people can go to college.

  • We're investing more in STEM education -- math and science

  • and technology education.

  • We can still make those investments.

  • We can still rebuild our roads and our bridges,

  • and invest in high-speed rail, and invest in the next

  • generation of broadband and wireless,

  • and make sure everybody has access to the Internet.

  • We can do all those things while still bringing down the deficit

  • medium term.

  • Now, there's one last component of this -- and I know this is a

  • long answer but I wanted to make sure everybody had the basic

  • foundations for it.

  • Even if we get this $4 trillion, we do still have a long-term

  • problem with Medicare and Medicaid,

  • because health care costs, the inflation goes up so much faster

  • than wages and salaries.

  • And this is where there's another big philosophical debate

  • with the Republicans, because what I've said is the best way

  • for us to change it is to build on the health reform we had last

  • year and start getting a better bang for our health care dollar.

  • We waste so much on health care.

  • We spend about 20% more than any other country on Earth,

  • and we have worse outcomes because we end up having

  • multiple tests when we could just do one test and have it

  • shared among physicians on Facebook, for example.

  • We could focus on the chronically ill;

  • 20% of the patients account for 80% of the costs.

  • So doing something simple like reimbursing hospitals and

  • doctors for reducing their readmissions