WE'RE HERE WITH PRESIDENT BARACK OBAMA -- SO THAT WAS GOOD.

WE TALKED A LOT ABOUT THIS IRAN DEAL.

YOU'RE FEELING VERY GOOD ABOUT THAT.

I WANNA TALK TO YOU NOW -- YOU SPOKE WITH THE VFW TODAY FOR

OUR VETERAN'S.

BOY, ROUGH RIDE FOR THE VETERAN'S RECENTLY.

THIS TERRIBLE ATTACK IN TENNESSEE.

>> HEARTBREAKING.

>> Jon: AND ALSO THOUGH A SYSTEMIC ISSUE, AND I KNOW YOU

RAISE IT WITH THE VA AND HEALTHCARE.

>> WELL YOU KNOW THE SITUATION WITH THE V.A. HAS ALWAYS BEEN,

WE MAKE A PROMISE BUT TOO OFTEN UNDER RESOURCED.

SO IT IS MY FIRM BELIEF WE HAVE A SACRED DUTY TO THESE GUYS AND

GALS THAT WHEN THEY HAVE SERVED US AS BRAVELY AS THEY HAVE,

WHEN THEY COME HOME, WE'RE SUPPOSED TO BE THERE FOR THEM.

WHEN YOU LOOK AT THE BUDGET HISTORICALLY, IT'S BEEN

SHORT-CHANGED, WORSE IN THE VIETNAM ERA WHEN THEY CAME BACK.

WE'VE BEEN ABLE TO SYSTEMATICALLY ADD RESOURCES TO

THE VA BUT YOU STILL HAVE THIS MASSIVE STRUCTURE WITH MILLIONS

OF PEOPLE BEING SERVED.

AND WHAT WE'RE HAVING TO DO IS SYSTEMATICALLY WORK THROUGH

SOME OF THE CHALLENGES OF A BIG, FREAKY BUREAUCRACY.

WHEN WE HAVE THAT PROBLEM WITH WAITING LISTS...

FOLKS ARE STILL TAKING APPOINTMENTS DOWN ON PAPER.

AND WHEN YOU'VE GOT MILLIONS OF PEOPLE WHO ARE NEEDING SERVICES,

IT JUST DOESN'T WORK ANYMORE.

SO WE'VE NOW BEEN ABLE TO CUT DOWN ON WAITING TIMES, REDUCE

THE BACKLOG FOR DISABILITY CLAIMS BY ABOUT 80%.

BUT WE ALSO HAVE MORE AND MORE PEOPLE COMING IN.

WE ALLOWED FOLKS WHO HAD SYMPTOMS OF AGENT ORANGE FOR THE

FIRST TIME TO BE ABLE TO MAKE CLAIMS.

THAT ADDED A COUPLE HUNDRED THOUSAND PEOPLE.

AS WE END TWO WARS, FOLKS COME BACK.

SO WE ACTUALLY HAVE 2.7 MILLION MORE VETERANS SPEAKING SERVICES.

IF THE AMOUNT OF RESOURCES DOESN'T CHANGE, THEN THEY GET

SHORT-CHANGED.

SO WE'VE GOT TO DO EFFICIENCY WORK ON THE VA BUT WE ALSO ASKED

CONGRESS TO GET OUT FROM UNDER THE SEQUESTER, THIS IDEA WE JUST

MAKE BLANKET BUDGET CUTS THAT SOMEHOW THAT'S GOING TO IMPROVE

OUR ECONOMY.

AND THE VERY SAME FOLKS WHO ARE GOING TO CUT SERVICES ARE THE

FIRST ONES THEN TO SAY WHY ARE THE FOLKS HAVING WAITING TIMES

SO LONG.

>> Jon: IT'S A WAITING TIME ISSUE, TO BE FAIR, HAPPENED FAR

BEFORE THE SEQUESTER.

IT BRINGS UP SORT OF A LARGER ISSUE WHICH IS, YOU KNOW, GIVEN,

OKAY, THERE IS A PARTY THAT BELIEVES THAT GOVERNMENT DOES

NOT HAVE AS LARGE A ROLE TO PLAY IN OUR LIVES AS THE PARTY THAT

YOU ARE WITH.

WHICH MEANS INSTANCES INCUMBENT MAY BE UPON THAT PARTY, THE ONE

THAT YOU ARE WITH, TO DEMONSTRATE HOW THAT WILL

WORK IN THE 21st CENTURY.

HOW CAN THE GOVERNMENT BE AGILE, AND WITH THE V.A. SEEMS TO BE A

LARGER ISSUE, YOU CAME INTO OFFICE IN 2009 EXPLICITLY SAYING

YOU SPEND A BILLION DOLLARS PRYING TO GET OPERABILITY

BETWEEN THE D.O.D AND V.A.

COULDN'T DO IT AFTER... FIVE YEARS?

WENT BACK AND SAID LET'S DO IT SEPARATELY.

MORE MONEY.

THAT DIDN'T WORK.

NOW THEY'RE BACK, THE V.A.'S GOT A PRETTY GOOD SYSTEM WAITING FOR

THE D.O.D.

THEY'VE NOT EVEN GONE OUT YET WITH A $11 BILLION CONTRACT.

YOU'RE RUNNING FOR OFFICE, YOU KNOW WHERE EVERYBODY IS --

>> SO THIS IS WHAT HAPPENS.

A COUPLE THINGS I'LL SAY.

NUMBER ONE, GOVERNMENT WORKS BETTER NOW THAN IT PROBABLY EVER

HAS GIVEN WHAT WE ASK IT TO DO.

AND ACROSS AGENCIES, THERE HAVE BEEN ALL KINDS OF REFORMS AND

IMPROVEMENTS AND PEOPLE THERE WORK HARD AND THEY CARE ABOUT

THIS STUFF DEEPLY.

BUT WHAT IS TRUE IS IF YOU HAVE A GOVERNMENT THAT WAS BUILT ON

1930 MODELS AND IT'S NOT UPDATED, THEN THERE'S GOING TO

BE A GAP IN TERMS OF WHAT THEY'RE DOING NOW RELATIVE TO

WHAT SOME OTHER FOLKS DO.

AND I.T. IS PROBABLY THE BIGGEST EXAMPLE OF THAT.

WE'RE HAVING TO COMPLETELY REDESIGN HOW THE GOVERNMENT

PURCHASES I.T. SERVICES, HOW IT DOES DIGITAL, FROM SOUP TO NUTS.

AND PART OF IT IS THE WAY IT'S BEEN SET UP IS THAT YOU HAVE THE

SPECIFICATIONS THAT ARE THIS THICK.

WHEN ON A CHAIN AND SETTING UP MY OPERATIONS I HAVE GUYS IN

T-SHIRTS IN A ROOM FIGURING OUT HOW TO DO THIS THING.

THAT'S NOT HOW THE GOVERNMENT IS SET UP.

IT'S SLOW AND IT DOESN'T FUNCTION PROPERLY.

YOU ASKED ME WHAT I WANT TO DO OVER THE NEXT 18 MONTHS.

A LOT OF THIS STUFF DOESN'T REQUIRE CONGRESS, BUT HOW IT IS

WE CAN REVAMP THE SYSTEMS AND WE'VE DONE IT SUCCESSFULLY IN

CERTAIN AREAS.

BUT WHEN YOU'VE GOT TWO MILLION EMPLOYEES THEN THERE ARE GOING

TO BE PLACES WHERE THIS SLIPS.

>> Jon: TO SOME EXTENT THAT'S THE POINT.

YOU GOT TWO MILLION EMPLOYEES AND YOU WANT THIS TO BE AGILE.

THE V.A. SYSTEM.

YOU CAN'T FIND A BETTER ISSUE POLITICALLY.

YOU CAN'T -- YOU'LL FIND BUT YOU'LL FIND ALMOST ANONYMOUS

AGREEMENT BUT WE HAVE FAILED THESE VETERANS AND UNANIMOUS

AGREEMENT THAT WE NEED TO DO BETTER YET SEVEN YEARS INTO IT,

WE HAVE NOT BEEN ABLE TO DEMONSTRATE --

>> WAIT WAIT -- THE REASON IT'S BACK UP IS YOU GOT 2.7 MILLION

NEW FOLKS COMING BACK IN.

>> Jon: WELL WHEN YOU START A LOT OF WARS -- IT'S GOTTA END.

>> HOLD ON A SECOND. HERE'S THE GENERAL POINT.

WE ASK OUR GOVERNMENT TO DO THINGS THAT OTHER FOLKS DON'T

WANT TO DO BECAUSE YOU CAN'T MAKE MONEY AT IT.

BECAUSE IT'S NOT PROFITABLE.

AND SO WE WANT GOVERNMENT TO HELP MAKE SURE THAT KIDS GET

OPPORTUNITY.

AND THEY HAVE TO REACH THE TOUGHEST TO REACH KIDS.

THE KIDS AT THE PRIVATE SCHOOLS GENERALLY SCREEN OUT.

WE WANT TO MAKE SURE THAT WE ARE SERVING OUR VETERANS INCLUDING

THE OLDEST, POOREST VETERANS.

THERE'S NOT A LOT OF MONEY IN DOING THAT.

AND SO A LOT OF TIMES PEOPLE WILL SAY WELL WHY ISN'T THIS

HAPPENING AS QUICK, AS FAST.

IF WE'RE UNDER RESOURCING OUR GOVERNMENT AND NOT STAFFING IT

THE WAY IT NEEDS TO BE TO DO EVERYTHING TO BE DONE, THEN

WE SHOULDN'T BE SURPRISED THAT THERE ARE GOING TO BE GAPS.

WHEN I CAME INTO OFFICE CAN WE MAKE STUFF A LOT BETTER THAN IT

HAS BEEN.

>> Jon: THE ENEMY OF GOOD.

>> PART OF THE PROBLEM IS I THINK WE HAVE A TENDENCY TO,

I'LL GIVE YOU AN EXAMPLE.

WHEN THERE WAS THAT PROBLEM WITH THE IRS.

EVERYBODY JUMPED INCLUDING YOU.

>> Jon: WHAT HAPPENED TO THE IRS?

>> LOOK YOU GOT THIS BACK OFFICE AND THEY'RE GOING AFTER THE TEA

PARTY.

IT TURNED OUT NO, CONGRESS HAS A CRUMMY LAW THAT DIDN'T GIVE

PEOPLE GUIDANCE IN TERMS OF WHAT THEY ARE TRYING TO DO.

THEY DID IT POORLY AND STUPIDLY.

BUT THAT BECOMES --

>> Jon: YOU REALLY ONLY DO HAVE A YEAR LEFT.

[LAUGHTER]

>> NO -- BUT HOLD ON, JON.

THIS IS IMPORTANT.

BUT THE TRUTH OF THE MATTER IS THAT THERE WAS NOT SOME BIG

CONSPIRACY THERE.

THEY WERE TRYING TO SORT OUT THESE CONFLICTING DEMANDS.

YOU DON'T WANT ALL THIS MONEY POURING THROUGH NOT-FOR-PROFITS

BUT YOU ALSO WANT TO MAKE SURE EVERYBODY IS BEING TREATED

FAIRLY.

THE REAL SCANDAL AROUND THE IRS IS THAT IT HAS BEEN SO POORLY

FUNDED THAT THEY CAN'T GO AFTER THESE, WE CANNOT GO AFTER THESE

FOLKS WHO ARE DELIBERATELY DELETING TAX PAYMENTS.

AND THE REAL SCANDAL IS TAX CODES WHERE MULTINATIONALS CAN

PAY ZERO TAXES MAKING MASSIVE PROFITS.

SO WE TEND TO GET DISTRACTED BY THE FACT THAT THERE ARE GOING TO

BE ELEMENTS, BECAUSE GOVERNMENT IS A HUMAN ENTERPRISE WHERE,

SOMEBODY SOMEWHERE IS SCREWING UP AT ANY GIVEN TIME.

BECAUSE IT'S A HUGE SYSTEM.

OVERALL, IT WORKS REALLY WELL TO HELP A LOT OF PEOPLE.

WHAT THE SCANDALOUS IS THE FACT THAT WE ARE NOT MAKING AS MUCH

PROGRESS AS WE SHOULD ON THE BASIC THINGS THAT WE KNOW OUR

GOVERNMENT SHOULD BE DOING.

REBUILDING OUR INFRASTRUCTURE, REBUILDING OUR

ROADS, REBUILDING OUR PORTS, SETTING UP A SYSTEM FOR

DISTRIBUTING ENERGY, MAKING SURE WE HAVE EARLY CHILDHOOD

EDUCATION.

YOU'RE ABSOLUTELY RIGHT THAT PART OF MY JOB FOR THE LAST

SEVEN YEARS AND PART OF MY JOB OVER THESE LAST, THIS LAST YEAR

COMING UP IS TO CONTINUALLY IMPROVE AND MAKE SURE THE

GOVERNMENT IS FUNCTIONING AS WELL AS IT COULD.

BUT YOU CAN'T USE THAT AS AN EXCUSE FOR THE BIG STRUCTURAL

PROBLEMS THAT WE'RE FACING RIGHT NOW THAT ARE NOT BEING ADDRESSED

ADDRESSED, TYPICALLY THAT HAS TO BE --

>> Jon: THAT'S WHAT I WANT TO GET TO IS THAT VISION OF WHAT

21ST CENTURY GOVERNMENT LOOKS LIKE OUTSIDE OF THE

POLITICALIZATION OF IT.

HOW DO YOU GOVERN AND DO THE SERVICES YOU'RE TALKING ABOUT

WHILE BEING IN THAT SITUATION.

AND IF IT'S FOUR GUYS IN A T-SHIRT, ISN'T THERE AN

EXECUTIVE OPTION THAT CAN, THAT CAN CUT THROUGH.

>> HERE'S WHAT WE DO.

>> Jon: YES, YOU'RE THE COMMANDER IN CHIEF.

>> AFTER THE HEALTHCARE.GOV FIASCO, WE BROUGHT IN A TEAM

OF GUYS BASICALLY VOLUNTEERING THEIR OWN TIME FROM GOOGLE,

FACEBOOK, GUYS IN T-SHIRTS.

THEY'RE NOT WEARING T-SHIRTS NOW.

THEY'VE DRESSED UP A LITTLE BIT, ALTHOUGH NOT THAT WELL.

[LAUGHTER]

AND WE HAVE CREATED WHAT WE'RE CALLING THE U.S. DIGITAL

SERVICES AND WE'RE BASICALLY GETTING THEM IN FOR A

YEAR OR TWO YEARS AND WE'RE JUST PUTTING THEM ON A WHOLE BUNCH OF

THESE PROBLEMS.

WHETHER IT'S HOW DO WE MAKE AN S.B.A. LOAN EASIER TO GET.

HOW DO WE MAKE SURE THAT THIS AGENCY IS MORE CUSTOMER

FRIENDLY.

HOW DO WE MAKE SURE THAT PEOPLE CAN GO TO ONE WEBSITE INSTEAD OF

16 TO FIND OUT THE INFORMATION THEY NEED.

SO THESE GUYS ARE SPREADING OUT THROUGHOUT THE GOVERNMENT AND

THEY ARE IN FACT SYSTEMATICALLY CHIPPING AWAY AT A LOT OF THESE

PROBLEMS.

AND I THINK WE WILL, BY THE TIME I LEAVE HERE, WE'RE GOING TO BE

ABLE TO SAY THAT GOVERNMENT IS WORKING MUCH BETTER, MUCH MORE

EFFICIENTLY, MUCH MORE CUSTOMER FRIENDLY THAN WHEN I CAME INTO

OFFICE.

>> Jon: IT FRUSTRATES YOU BECAUSE I CAN TELL WE'RE TALKING

HAVING A NICE TIME TALKING ABOUT THE IRAN DEAL, I THINK IT'S

FRUSTRATING TO YOU.

>> OF COURSE.

>> Jon: BECAUSE YOU FEEL LIKE WE'RE AMPLIFYING THINGS OUT OF

PROPORTION.

I MIGHT AGREE WITH THAT ON CERTAIN ISSUES.

>> THAT IS ABSOLUTELY TRUE.

>> Jon: THE V.A. THOUGH, I WOULD TAKE ISSUES --

>> NO, NO.

THE ISSUES WITH THE V.A. IS -- IF THERE'S ONE VETERNA NOT

GETTING THE SERVICES THEY NEED, THEN WE'RE FAILING THAT

VERTERAN, AND THAT'S ABSOLUTELY CRITICAL.

LET'S TALK ABOUT HOMLESSNESS AMONG VETERANS.

WE'VE CUT THAT BY A THIRD.

WE'VE GOT TWO THIRDS OF THESE FOLKS WE'VE GOT TO MAKE SURE

HAVE PROPER HOUSING BECAUSE IF THEY FOUGHT FOR US THEY SHOULD

BE ABLE TO FIND A HOME HERE IN THE UNITED STATES OF AMERICA.

>> Jon: SURE.

[APPLAUSE]

>> BUT THIS GOES FOR THE LARGER POINT.

YOU ASKED ME HOW AM I DOING AND AM I FEELING PRETTY GOOD RIGHT

NOW.

ONE OF THE THINGS I'M PROUD OF, AND THIS IS NOT JUST ME, IS WE

HAVE LOOKED AT A WHOLE SLEW OF PROBLEMS WHEN WE CAME INTO

OFFICE.

AND WE SAID WHERE CAN WE ADVANCE THE BALL DOWN THE FIELD EACH AND

EVERY TIME ACROSS THE BOARD.

AND WE DON'T SCORE A TOUCH DOWN EVERY TIME, BUT WE MOVE THE BALL

FORWARD.

>> Jon: DO YOU FEEL LIKE YOU'VE HIT THE METRICS THAT YOU

WANTED TO HIT.

>> YOU'RE ALWAYS GOING TO FALL SHORT BECAUSE IF YOU'RE HITTING

YOUR MARK THAT MEANS YOU DIDN'T SET THEM HIGH ENOUGH, RIGHT.

SO IN HEALTHCARE --

>> Jon: AM I BEING UNREASONABLE TO YOU, AM I BEING UNFAIR

SUGGESTING IN THIS ONE INSTANCE, GOVERNMENT FAILED TO ADDRESS A