Interview with Bob Schieffer on CBS News' "Face the Nation"

SCHIEFFER: Mr. President, thank you for joining us.

This economic crisis has been so severe that it has literally pushed all the other issues off the television, out of the newspapers. But, when you outlined your program for Afghanistan, and the new strategy, it really underlined, in the starkest terms, that we may not be talking about these serious issues, but there's some very serious things going on out there. So, I'd like to start there --

THE PRESIDENT: Please.

SCHIEFFER: -- if I could.

This is a hugely ambitious plan -- 22,000 more troops; you're going to increase spending by 60 percent. You said in your announcement, "We must defeat al Qaeda."

THE PRESIDENT: Right.

SCHIEFFER: This has really now become your war, hasn't it?

THE PRESIDENT: I think it's America's war. And it's the same war that we initiated after 9/11, as a consequence of those attacks on 3,000 Americans who were just going about their daily round. And the focus, over the last seven years, I think, has been lost.

What we want to do is to refocus attention on al-Qaeda. We are going to root out their networks, their bases. We are going to make sure that they cannot attack U.S. citizens, U.S. soil, U.S. interests and our allies' interests around the world.

In order for us to do that, we have to ensure that neither Afghanistan nor Pakistan can serve as a safe haven for al Qaeda. And, unfortunately, over the last several years what we've seen is, essentially, al Qaeda moving several miles from Afghanistan to Pakistan, but effectively still able to project their violence and hateful ideologies out into the world.

SCHIEFFER: You talked many times during your -- as you outlined this strategy, about al Qaeda in Pakistan. You talked about safe havens in Pakistan. Are you giving our commanders, now, in Afghanistan the "green light" to go after these people even if they're in, what used to be, safe havens in Pakistan?

THE PRESIDENT: Well, I haven't changed my approach. If we have a high-value target within our sights, after consulting with Pakistan, we're going after them.

But, our main thrust has to be to help Pakistan defeat these extremists. Now, one of the concerns that we've had building up over the last several years is a notion, I think, among the average Pakistani that this is somehow America's war, and that they are not invested. And that attitude, I think, has led to a steady creep of extremism in Pakistan that is the greatest threat to the stability of the Pakistan government and, ultimately, the greatest threat to the Pakistani people.

What we want to do is say to the Pakistani people, "You are our friends. You are our allies. We are going to give you the tools to defeat al Qaeda and to root out these safe havens. But, we also expect some accountability, and we expect that you understand the severity and the nature of the threat." In addition, what we want to do is to help Pakistan grow its economy, to be able to provide basic services to its people.

And that, I think, will help strengthen those efforts. If the Pakistan government doesn't have credibility, if they are weakened, then it's going to be much more difficult for them to deal with the extremism within their borders.

SCHIEFFER: But, you're talking about going after them. Are you talking about with American boots on the ground --

THE PRESIDENT: No.

SCHIEFFER: -- pursuing these people into these so-called safe havens?

THE PRESIDENT: No. Our plan does not change a recognition of Pakistan as a sovereign government. We need to work with them, and through them, to deal with al Qaeda -- but, we have to hold them much more accountable. And, we have to recognize that part of our task in working with Pakistan is not just military, it's also our capacity to build their capacity, through civilian interventions, through development, through aid assistance.

And that's part of what you're seeing both in Afghanistan and Pakistan, I think is fully resourcing a comprehensive strategy that doesn't just rely on bullets or bombs, but also relies on agricultural specialists, on doctors, on engineers to help create an environment in which people recognize that they have much more at stake in partnering with us, and the international community, than giving in to some of these --

SCHIEFFER: Help me out here --

THE PRESIDENT: -- extremist ideologies.

SCHIEFFER: -- though, how do you -- what if they can't do it? What if they won't do it? I mean, we have reports now about members of Pakistan's intelligence service actually actively helping the Taliban and al Qaeda.

THE PRESIDENT: Well, some of --

SCHIEFFER: What if they don't do it?

THE PRESIDENT: -- some of those reports aren't new. There are a whole host of contingencies that we've got to deal with. I mean, this is going to be hard, Bob. I'm under no illusions. If it was easy it would have already been completed.

And so we're going to have to go with a strategy that is focused, that is narrowly targeted on defeating al Qaeda. We think that if you combine military, civilian, diplomatic, development approaches; if we are doing a much better job of coordinating with our allies, that we can be successful.

But, we recognize there are going to be a lot of hurdles between now and us finally having weakened al Qaeda, or destroyed al Qaeda to the point they're -- it cannot, it doesn't pose danger to us. And we will continue to monitor and adjust our strategies to make sure that we're not just going down blind allies.

SCHIEFFER: Are you concerned at all -- because some people say the more troops you put in, it's just going to inflame the situation, it's going to make it worse. What do you say to them?

THE PRESIDENT: Well, I'm very mindful of that.

Look, I'm enough of a student of history to know that the United States -- in Vietnam, and other countries, and other epics of history have overextended to the point where they were severely weakened. And the history in Afghanistan, obviously, shows that that country has not been very favorably disposed towards foreign intervention.

And that's why a central part of our strategy is to train the Afghan national army so that they are taking the lead, increasingly, to deal with extremists in their area. That's been one of the few success stories that we've seen over the last several years, is the Afghan national army actually has great credibility; they are effective fighters. We need to grow that, and that's part of the reason why we want to make sure that there are trainers there.

But, the last point I would make, you know, a request was made for increased troop levels in Afghanistan. I have already authorized 17,000. We're now adding 4,000 trainers, specifically designed to train Afghan security forces. But, what I've also said to the Department of Defense, and what I will say to the American public, is that, you know, we now have resourced properly this strategy. It's not going to be an open-ended commitment of infinite resources. We've just got to make sure that we are focused on achieving what we need to achieve --

SCHIEFFER: But, what you seem to be --

THE PRESIDENT: -- with the resources we have.

SCHIEFFER: -- saying is, we have to win, there is no choice here. So, does that mean if more is needed -- if the commanders come back to you and say, we may need more troops, Mr. President, to do this, you're going to be ready to do that?

THE PRESIDENT: What I will not do is to simply assume that more troops always results in an improved situation. I think there was a good argument, after us scrubbing this very hard, and talking to a lot of our allies in the region -- including the Pakistan and Afghanistan governments, the European and our other NATO Allies, that this was the best strategy.

But, just because we needed to ramp-up from the greatly under- resourced levels that we had, doesn't automatically mean that if this strategy doesn't work, that what's needed is even more troops. There may be a point of diminishing returns in terms of troop levels.

We've got to also make sure that our civilian efforts -- our diplomatic efforts and our development efforts, are just as robustly encouraged. And so, for example, in the budget that I've presented to Congress I've said we've got to increase foreign aid in Afghanistan and we've got to increase foreign aid Pakistan. And I'm going to be really pushing Congress -- because sometimes foreign aid is a, you know, juicy target, particularly during tough times -- I'm going to tell them this is central to our strategy and it can save lives and troops if we properly execute it.

SCHIEFFER: But, you described this in very dark terms. I mean, and there's no question that things are worse than ever in Afghanistan, you would agree with that?

THE PRESIDENT: I do.

SCHIEFFER: But, you're saying --

THE PRESIDENT: Well, I -- let me, let me make sure I'm clear. They're not worse than they were when the Taliban was in charge --

SCHIEFFER: Yes.

THE PRESIDENT: -- and al Qaeda was operating with impunity. We have seen a deterioration over the last several years and, unless we get a handle on it now, we're going to be in trouble.

SCHIEFFER: You said the other day in the "60 Minutes" interview that you would not have thought, at this point in your presidency, that Iraq would be the least of your worries -- something to that effect. Are things going well enough there now that you may consider speeding up the withdrawal of troops from Iraq?

THE PRESIDENT: No. I think the plan that we put forward in Iraq is the right one, which is let's have a very gradual withdrawal schedule, through the national elections in Iraq.

There is still work to be done on the political side to resolve differences between the various sectarian groups around issues like oil, around issues like provincial elections. And so we're going to continue to make progress on that front. I'm confident that we are moving in the right direction.

But, Iraq is not yet completed. We still have a lot of work to do. We still have a lot of training of Iraqi forces to improve their capacity. I'm confident, though, that we're moving in the right direction.

SCHIEFFER: Let me ask you about something closer to home, and that is Mexico. You talked about sending more aid to the Mexican government, but things down there are really serious, as you well know.

It's my understand that 90 percent of the guns that they're getting down in Mexico are coming from the United States. We don't seem to be doing a very good job of cutting off the gun flow. Do you need any kind of legislative help on that front? Have you, for example, thought about asking Congress to reinstate the ban on assault weapons?

THE PRESIDENT: I think the main thing we need is better enforcement. And so this week we put forward a comprehensive initiative to assist those border regions that are being threatened by these drug cartels; to provide assistance to the Mexican government; to make sure that on our side of the border we've got more personnel, more surveillance equipment --

SCHIEFFER: Well, why are we having so much trouble with that, I mean?

THE PRESIDENT: Well, what's happened is that President Calderon, I think, has been very bold and, rightly, has decided that it's gotten carried away, that the drug cartels have too much power, are undermining and corrupting huge segments of Mexican society.

And so he has taken them on, in the same way that when, you know, Eliot Ness took on Al Capone back during Prohibition. Oftentimes that causes even more violence, and we're seeing that flare up now.

SCHIEFFER: Do you think it's a threat to the United States' security?

THE PRESIDENT: I don't think that it is a -- what would be called an existential threat, but it is a serious threat to those border communities and it's gotten out of hand. And so what we have to do is to recognize that, look, this is a two-way street --

SCHIEFFER: Would you --

THE PRESIDENT: -- as Senator Clinton indicted, we've got to reduce demand for drugs; we've got to do our part in reducing the flow of cash and guns south --

SCHIEFFER: Are we anywhere close to putting U.S. troops on the border?

THE PRESIDENT: Obviously there have been calls to increase National Guard troops on the borders. That's something that we are considering, but we want to first see whether some of the steps that we've taken can help quell some of the violence, and we want to make sure that we are consulting, as effectively as we can, with the Mexican government in moving this strategy forward.

SCHIEFFER: All right, let's take a break here, and we'll come back and talk about some domestic issues.

[Commercial break.]

SCHIEFFER: Mr. President, you're scheduled to announce on Monday what you plan to do with the auto industry as they're asking for more federal money. You've told them they're going to have to cut back; present a different business plan. Our sources tell us that, as far as the White House is concerned, they're not there yet. Do they have to do more in order to get this money?

THE PRESIDENT: Yes. They're not quite there yet. There has been some serious efforts to deal with a combination of longstanding problems in the auto industry, and the current crisis which has seen the market for new cars drop from $14 million to $9 million. Everybody's having problems, even Toyota and other very profitable companies.

And so what we're trying to let them know is that we want to have a successful auto industry -- U.S. auto industry; we think we can have a successful U.S. auto industry.

But, it's got to be one that's realistically designed to weather this storm and to emerge at other end much more lean, mean and competitive than it currently is. And that's going to mean a set of sacrifices from all parties involved -- management, labor, shareholders, creditors, suppliers, dealers, everybody's going to have to come to the table and say, it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road.

SCHIEFFER: But, they're not there yet?

THE PRESIDENT: They're not there yet.

SCHIEFFER: You campaigned on cutting taxes for the middle class, and yet lately I don't see any middle class tax cut in the version of the budget that's going through the Senate right now. You have suggested that maybe you'd let the tax cuts you've put for the middle class in stimulus bill run out next year.

Can you tell us, are you still pushing a middle-class tax cut? I know you said you want the Congress to follow the principles you set out -- your priorities, education --

THE PRESIDENT: Health care.

SCHIEFFER: -- reducing the deficit, health care, and so on -- and education, but have you abandoned the middle-class tax cut?

THE PRESIDENT: Absolutely not.

Now, first of all, let's understand, Bob, I've delivered that middle-class tax cut for two years -- in the stimulus package. So, people will be getting --

SCHIEFFER: This year and next year.

THE PRESIDENT: That's right. They will be --

SCHIEFFER: Are you going to let that run out?

THE PRESIDENT: Hold on a second. They'll be seeing their tax cuts in their paychecks starting on April 1st -- for 95 percent of working families, just as we promised.

I strongly believe that we should continue those tax cuts. We should make them permanent, because the average worker out there, the average family, saw their wages and incomes flat-line even during boom times over the last decade. And there's been a huge growth in income at the very top echelons but not for average American workers. They've been losing ground. So, I think it's the right thing to do.

What I've also said, though, is we've got to pay for it. Now, in my original budget we had a way of paying for it. And some of the proposals that we had made, members of Congress have said, well, we're not quite comfortable with that.

So, what I've said is, if you don't want to pay for it in those ways, let's find another way to pay for it. I think it's still the right thing to do, and I'm going to be pushing as hard as I can to get it done in this budget. If it's not done in this budget, then I'm going to keep on pushing for it next year and the year afterwards so that we don't see a drop off after --

SCHIEFFER: So, what you're saying --

THE PRESIDENT: -- the two years of tax cuts are out there.

SCHIEFFER: -- is you -- the Congress may want to find a different way to pay for it, but you're going to insist on the middle --

THE PRESIDENT: Absolutely. I still think it's the --

SCHIEFFER: -- a middle-class tax cut.

THE PRESIDENT: -- right thing to do.

SCHIEFFER: I want to ask you also about these bonuses, and all that, on Wall Street.

Congress expressed outrage. You seemed outraged. And then, after the Congress -- this House passed the bill to get that money back with some kind of taxes on those people, you seemed to throw a little cold water on that. You said we shouldn't legislate out of anger. Have you now, on reflection, decided that maybe you let that go a little too far?

THE PRESIDENT: No, I think that the anger was justified. And had we not seen some healthy expressions of anger, we wouldn't have gotten $50 million of those bonuses back that --

SCHIEFFER: Well, do you --

THE PRESIDENT: -- had been sent to AIG. But, what I consistently said -- and I said this even on the first day when I announced that, in fact, we were going to do everything we could to get some of those bonuses back -- I said, at the time, that it is important to keep our eye on the ball.

My most important job is to get this economy moving again, to get credit flowing again, so that businesses large and small can start rehiring, open their doors, and we can start seeing economic growth again. That's my most important job.

What I don't want is that larger project to be threatened by short-term gratifications of our frustration -- legitimate frustrations with some of the behavior that we've seen on Wall Street. And I have met with bankers -- some of the --

SCHIEFFER: Did you talk about that in your big meeting with the bankers --

THE PRESIDENT: I did.

SCHIEFFER: -- here at the White House?

THE PRESIDENT: I talked to them. And what I said was, look, first of all, there are a lot of bankers that are doing good work in the community, that are acting responsibly, that haven't taken huge risks. I understand that. But, understand that for the average single mom -- who is just barely struggling to pay her mortgage, or medical bills for her kid, who's paying her taxes, who's playing by the rules, and then finds out that a taxpayer-assisted firm is paying out multi-million-dollar bonuses -- that's just not acceptable. Show some restraint. Show some -- show that you "get" that this is a crisis and everybody has to make sacrifices.

SCHIEFFER: So, what did they say?

THE PRESIDENT: They agreed, and they recognize it.

Now, the proof of the pudding's in the eating. So, I expect to see that restraint operate. Another way of putting, as I said to those folks, let me help you -- help me help you. It's very difficult for me, as president, to call on the American people to make sacrifices to help shore up the financial system if there's no sense of mutual obligation and mutual help.

Now, the flip side is, I've got to explain to the American people we're not going to get is recovery if we don't see a recovery of the financial sector, and there is no separation between Main Street and Wall Street -- we're all in this together. And it's my job to help keep that focus as we move forward.

SCHIEFFER: One more question, Mr. President.

This week I went down to Monticello, Thomas Jefferson's home, where they have this wonderful new visitor center. And one of the historians down there reminded me that Thomas Jefferson once said the presidency is a "splendid misery."

THE PRESIDENT: (Laughs.)

SCHIEFFER: But at the end of his term he also said, quote, that "the presidency had brought him nothing but increasing drudgery and a daily loss of friends."

THE PRESIDENT: (Laughs.)

SCHIEFFER: I just wonder, have you lost any friends yet?

THE PRESIDENT: I don't think I've lost any friends, but I'm sure I've strained some friendships.

And, look, this is an invigorating job. In some ways, I feel incredibly fortunate to be in this job at a time where the presidency really matters. You know, I'm -- this is not a caretaker presidency right now. Every decision we're making counts, and my team understands that.

If I had my preferences, would I love to deal with one of these at a time -- deal with Afghanistan now and maybe put off banking until later, or deal with health care three years from now. That would be great.

I don't have that luxury because the American people don't have that luxury. They need to be kept safe now. They need health care assistance now. They need this economy back on track now. They need to educate their kids now. And, given that they're having to make a lot of difficult choices, it's important for us to work as hard as we can to help them live out their American dream.

SCHIEFFER: Thank you, Mr. President.

THE PRESIDENT: Great to talk to you, Bob. Thank you.