It is great to see all of you.

Many of you I've had a chance to see individually or in small

groups over the last several months,

but it's good to be back at the Business Roundtable.

Jim, thanks for your leadership.

Originally, my team had prepared some remarks.

They always get nervous when I'm out there on my own --

never know what I might say.

Given the dialogue that we had the last time,

I thought it was useful for me to abbreviate my remarks,

speak off the cuff at the top, and then spend most of our time

just having a conversation.

Let me begin by saying that all of you in this room are not just

business leaders, not just CEOs of your companies,

but you're also economic leaders and thought leaders in

this country.

And I recognize that all of you have an enormous investment not

only in your own companies but in the well-being of America.

There are a lot of patriots in this room,

people who care deeply about not only your bottom lines but also

the future of this country.

You've shown that over the last four years.

We've gone through as difficult an economic period as we've seen

in most of our lifetimes, and we've emerged not yet where we

need to be but we've certainly made progress.

And the reason we've made progress in part has been

because of the outstanding management and productivity

gains and efficiencies and competitiveness that you've been

able to achieve in each and every one of your companies.

And I've said this to some of the small groups,

let me repeat it to the large group --

I am passionately rooting for your success,

because if the companies in this room are doing well,

then small businesses and medium-sized businesses up and

down the chain are doing well.

If companies in this room are doing well, then folks get jobs,

consumers get confidence, and we're going to be able to

compete around the world.

Now, the good news is that despite the extraordinary

challenges that we've seen over the last four years,

there is progress in some key sectors of our economy.

We've seen housing finally begin to bounce back for

the first time.

And that obviously has an enormous ripple effect

throughout the economy.

Consumer confidence is as high as it's been.

Many of you, over the last two, three years,

have experienced record profits or near record profits,

and have a lot of money where you're prepared to invest in

plants and equipment and hire folks.

Obviously, globally, the economy is still soft.

Europe is going to be in the doldrums for quite some time.

Asia is not charging forward, and some of the emerging markets

are not charging forward as quickly as they were maybe a

few years ago.

But I think what all of you recognize and many of you have

told me is that everybody is looking to America because they

understand that if we're able to put forward a long-term agenda

for growth and prosperity that's broad-based here in the United

States, that confidence will not just increase here in the United

States, it will increase globally,

and we can get the kind of virtuous cycle that I think all

of us have been waiting for and want to see.

What's holding us back right now, ironically,

is a lot of stuff that's going on in this town.

And I know that many of you have come down here to try to see is

there a way that we can break through the logjam and go ahead

and get things done.

And I'm here to tell you that nobody wants to get this done

more than me.

I know that you've gotten a lot of briefings,

but let me just try to describe where the situation is right now

with respect to our fiscal situation,

both what the opportunities are but what also the

challenges are.

I campaigned over the last year on the idea that we need to make

sure that this economy is growing and that we're providing

ladders of opportunity for folks --

(audio cuts out)

(camera shutters clicking)

I can speak pretty loud.

Can people hear me in the back?

You're all good?

Let me just continue because I don't want to take up

too much time.

Speaker: What about the hand-held mic?

The President: The hand-held's working?

All right.

During the entire campaign, I talked about the importance of

short-term measures to boost growth but also a long-term plan

to make sure that we've got our fiscal house in order,

and I called for a balanced and responsible plan.

My budget reflects a balanced, responsible plan,

and I've shown myself willing to make some tough decisions when

it comes to government spending --

because, despite, I think, my reputation or the reputation of

Democrats, I don't think every government program works exactly

the way it should.

I think there are efficiencies that can be gained;

there are some programs that used to work and just don't work

now the way they were intended.

And as a consequence, working with Democrats and Republicans

last year, we were able to cut over a trillion dollars of

spending -- the largest cut, by the way,

in discretionary spending in history.

So we're prepared to make some tough decisions when it comes to

spending cuts.

But if you look at what's needed in order for us to stabilize our

budget, stabilize our deficit-to-GDP ratio,

our debt-to-GDP ratio, then every credible economist will

tell you that you can't just do it on spending cuts.

We can't cut our way to prosperity,

that there's got to be a balanced approach in which we

also are bringing in new revenues --

partly because our revenue levels are as low as they've

been in most of our lifetimes.

And what I've proposed, what I put forward in the campaign and

what I think a majority of the American people agreed with --

in fact, there's some folks who didn't vote for me that focus

groups and polls show nevertheless they agreed with my

concept when it comes to deficit reduction --

is that an approach that says we're going to raise additional

revenue particularly from those who have done best in the

economy over the last decade, combined with some smart cuts

and with entitlement reform that can strengthen our social safety

net over the long term but do so in a responsible way --

that's the way to go forward.

And that's what we've put forward.

Now, the question I think on the minds of a lot of you is how do

you get there -- because I know that,

speaking to many of you privately, you agree with

this approach.

I've been struck by the number of CEOs who said,

we're willing to pay slightly higher taxes if it means that

we've got the kind of certainty and stability over the long term

that allows us to invest and hire with confidence.

So most of the folks in this room I think are onboard for a

balanced plan.

The problem that we had up until fairly recently --

and this was extensively debated during the campaign --

was the belief that either, A, we could balance our budgets

entirely on spending cuts, or a variation that has emerged is,

is that we can do so while still lowering rates simply by closing

loopholes and deductions.

And you've heard from my team, but let me just repeat,

we don't have any objection to tax reform, tax simplification,

closing loopholes, closing deductions.

But there is a bottom-line amount of revenue that is

required in order for us to get a real,

meaningful deficit reduction plan that hits the numbers that

are required for us to stabilize our debt and deficits.

And all the math that we've done --

and we analyzed this stuff pretty carefully --

shows that it is not possible for us to raise the amount of

revenue that's required for a balanced package if all you are

relying on is closing deductions and loopholes.

Let me amend that.

It is possible to do, theoretically;

it is not possible or wise to do as a practical matter.

And the reason is, is that in order for us to raise the amount

of revenue that's needed just by closing deductions and loopholes

for high earners, we'd have to, for example,

eliminate or severely cap the charitable deduction.

And folks in this room, you guys are not only CEOs --

I can't imagine there's a person here who doesn't sit on a number

of non-for-profit boards, university boards,

hospital boards.

In your respective communities, you are supporting an entire

infrastructure that is the glue that holds our

communities together.

So the notion that somehow we're going to just eliminate

charitable deductions is unlikely.

What that means is, is that any formula that says we can't

increase tax rates probably only yields about

$300-$400 billion, realistically.

And that's well short of the amount of revenue that's needed

for a balanced package.

So what we've said instead is let's allow higher rates to go

up for the top 2% -- that includes all of you, yes,

but not in any way that's going to affect your spending,

your lifestyles, or the economy in any significant way;

let's make sure that 98% of Americans don't see a single

dime in tax increases next year, 97% of small businesses don't

see a single dime in tax increases next year --

and by doing that alone we raise almost a trillion dollars

without any adverse effects on the economy.

Let's combine that, then, with some additional spending cuts

and some long-term entitlement reform that can get us to a

number close to $4 trillion, which stabilizes our debt and

our deficits relative to GDP for at least a decade, perhaps more.

That's our plan.

That's what we've presented.

The holdup right now is that Speaker Boehner took a position

I think the day after the campaign that said we're willing

to bring in revenue but we're not willing to increase rates.

And I just explained to you why we don't think that works.

We're not trying to -- we're not insisting on rates just out of

spite or out of any kind of partisan bickering,

but rather because we need to raise a certain amount

of revenue.

Now, we've seen some movement over the last several days among

some Republicans.

I think there's a recognition that maybe they can accept some

rate increases as long as it's combined with serious

entitlement reform and additional spending cuts.

And if we can get the leadership on the Republican side to take

that framework, to acknowledge that reality,

then the numbers actually aren't that far apart.

Another way of putting this is we can probably solve this in

about a week; it's not that tough.

But we need that conceptual breakthrough that says we need

to do a balanced plan; that's what's best for the economy;

that's what the American people voted for;

that's how we're going to get it done.

Let me make one last point and then I'll start

taking questions.

There have been reports -- and these are not necessarily

confirmed, and maybe some of you have more insight than I do on

this -- that perhaps the Republicans go ahead and let the

middle-class tax cuts get extended,

the upper-income tax cuts go up, otherwise we don't get a deal,

and next year we come back and the thinking is Republicans will

have more leverage because there will be another vote on the debt

ceiling and we will try to extract more concessions with

a stronger hand on the debt ceiling.

I have to just tell you that is a bad strategy for America.

It is a bad strategy for our businesses.