Press Briefing by Director of the National Economic Council Sperling, Chairman of the Council of Economic Advisers Goolsbee and Press Secretary Gibbs

James S. Brady Press Briefing Room

1:43 P.M. EST

MR. GIBBS: Good afternoon. Before we get started, we have a few special guests -- you recognize Austan and Gene -- who are here to talk a little bit about a report we have released today, our innovation strategy, and they'll talk about that in a few seconds. Let me quickly go through the week ahead, I'll turn it over to these guys, we'll take a few questions to them, and then we will get back to our regularly scheduled programming.

On Monday, the President will deliver remarks to the United States Chamber of Commerce here in Washington.

On Tuesday and Wednesday, the President will attend meetings here at the White House.

On Thursday the President will travel to Marquette, Michigan -- yes, dress warmly; expected high for the day 13° -- where local businesses have been able to grow as a result of broadband access, with particular benefit in exporting goods to new markets around the world.

In his State of the Union address the President called for a national wireless initiative to help businesses extend the next generation of wireless coverage to 98 percent of the population. The next generation wireless network in Marquette is an effective demonstration of how the President's proposal to open up the airwaves will spark new innovation, put people back to work, grow the economy, and help America win the future.

On Friday, the President will attend meetings here at the White House.

So with that, let me first turn it over to Gene Sperling and then to Austan Goolsbee to talk about today's report.

MR. SPERLING: Well, the report on the President's innovation strategy that we have put out today really just provides a summary of the President's comprehensive innovation strategy, which is a critical part of his economic vision to win the future and will be laid out in more detail as we put our budget out. Since I had a chance to go over a certain amount of these things with many of you on the day of the State of the Union and many of the details will be later, let me just do a sketch of the overall approach.

Obviously a key aspect will be a significant commitment to research and development. And again, this is -- all has to be done in the context of a budget which is cutting non-security spending to its lowest levels by 2015 since the Eisenhower administration. So these are the priorities that we are still making room for because it is part of his vision for growth and competitiveness for our country going forward.

You will see in the budget a very strong increase, despite that freeze, in basic research across the board, including putting on the path to doubling the funding of National Science Foundation, NIST, or the National Institute of Standards and Technology, the Department of Energy's Office of Science.

As we discussed before, you'll see an increase to $8 billion in R&D on clean energy technology. That includes a doubling of his new ARPA-E initiative and the doubling of the energy innovation hubs. These are two new innovations that President Obama put forward in his budget that have received very strong reviews, which he will be doubling.

And then you'll also see and what you saw this week is more the administration showing the degree that we want to see these things deployed, so they are creating jobs now going forward. You saw that Monday as Austan and I and others, with Steve Case, rolled out the Startup America, which is very much building off the President's Small Business Job Initiative and connecting of innovation to small businesses and job creation.

You saw that in the Vice President laying out the electric vehicles goal -- the goal of hitting 1 million advanced technology vehicles by 2015 -- and you saw it yesterday when the President actually went to one of the regional innovation hubs. There's three -- this one that focuses on building efficiency -- and there announced an aggressive strategy for retrofits and building efficiency in the commercial sector. That included a tax credit which we believe will be maybe even ten times more effective in take-up, because it's a credit as opposed to deduction, and it goes to companies as they're making incremental improvement -- the kind of Race to the Green grant program where communities can apply.

I think it's kind of a "Fields of Dreams" approach that if you can build the infrastructure and technology -- for example, electric vehicles -- that those will become more viable in those communities and they can become examples for the rest of the country. And you saw that he put forward a goal of reaching 20 percent greater efficiency in commercial buildings and really a call to action, and he asked Jeff Immelt, the head of his new council, jobs council, and obviously CEO of GE, together with former president Bill Clinton, to lead that kind of call to action.

And on the education side, obviously, you've heard us talk before about the goal to have 100,000 new STEM teachers -- science, technology, engineering, and math. And you also see in our report something that hadn't been out before, which is again, to take the same ARPA approach to education so that we're using the technology -- developing the technology innovations that help kids and adults learn. If we can use technology so well to occupy my 16 year-old at the video games, there is no question that we should have the capacity to do that to help kids learn in a way that keeps us competitive.

And this week coming up, you will see the more innovative aspects of the President's infrastructure initiative, which, beyond the roads and bridges and railways, focuses on, as Robert talked about, wireless initiative, smart grid technologies, next generation for air traffic. So those are the broad outlines.

Let me at this point turn it over to Austan, and we will both be around for some questions.

MR. GOOLSBEE: Thanks, Gene. The innovation strategy that we're releasing in this report is really based on two parts. Gene outlined the fundamental building blocks -- the education, infrastructure, research and development -- that it rests on. And then the second part of the report is that we must extend the innovation capacity into the private sector.

So extending beyond just the public investments, there are three components in the innovation strategy: an emphasis on small business, the emphasis on startups and new firms, and an emphasis on inventors in the patent system.

Small businesses: We now see that over the last 17 years of the net new jobs created, more than two-thirds of them were created by small businesses. That's why it puts the focus there.

Startup America and new firms are an even greater -- of even greater importance to the job engine. We released a whiteboard about Startup America. It is a four-point program to unite public and private sectors to try to help startups in the country by giving them more access to capital; by getting them business mentors to help with their business development; streamlining and reducing regulations that affect small businesses and startups; and continuing the tax relief to startups, which the President has cut taxes for small business 17 times.

The third category are for inventors. The patent system has a 700,000-application backlog. It takes almost three years to get your patent application reviewed. That's unacceptable. It doesn't work for small businesses and small inventors for them to be waiting for three years to be able to get a patent on the product that they're trying to sell. The strategy will cut that permission time almost in half. And today we are announcing a fast-track patent which will allow inventors to get approval in less than one year.

So the market-based foundation is small business, startups and inventors. And the basic idea of the innovation strategy is that America has been the great innovative engine of the entire world for many years. We have the majority of the Nobel Prize research. We have the greatest universities. There is no country that has more successful startups than we have, and truly every American deserves a chance to change the world.

And with that I think we can open up to any questions.

MR. GIBBS: Questions for Austan and Gene.

Q: Gene, Austan, whoever, these initiatives, the innovation, entrepreneurship, competitiveness are -- seem to be -- kind of have a long-term view toward job creation. And today we see very small job growth last month, more people dropping out of the job market. You're talking about winning the future. What do you have for winning the present? What can you offer?

MR. GOOLSBEE: Well, let me highlight. Let's take one step back and talk for one second about the jobs numbers. There are two surveys. One is of people, and that's where the unemployment rate comes from. The other is of businesses, and that's where the payroll employment figure comes from.

Everyone now recognizes there was some significant severe weather impact on the business component of how many people were on the job working, and we will learn more about this report from the next two jobs reports than perhaps this report itself tells us.

But in the survey of people, the picture is substantially better. The labor force participation rate did not change substantially at all. It is not the case that the reason the unemployment rate fell sharply was because of reductions in labor force participation.

In -- startups and small businesses will show up first in the survey of people, because obviously they are not yet in the system to be interviewed about their payroll. So winning the "right now," startups and small business is both a future investment but is also about the here and now, I would say.

MR. SPERLING: Let me just add a couple of things. First of all, as Austan said, this was a very unusual jobs number. And I think the important thing is to look at the -- what we'll see as the overall trend.

But a couple of points. One is that, first of all, in terms of things we've just done, obviously the passage of what the President passed in his tax cut in December, which is just taking effect right now, will unquestionably have a very positive impact on growth and jobs over what anyone could have expected in December. You see that through $112 billion payroll tax cut, of which this is the first month we're seeing. You see that in terms of the 100 percent expensing, which tells every company in the United States that they can expense 100 percent off of what they are investing this year.

So those are things that are having a very -- have a strong effect in the here and now right now on accelerating investment and job creation.

Secondly, there are important signaling in the policies that you put forward. When you have a commitment to advanced battery technology, when you have a strong commitment to clean R&D and clean technology, that sends an important signal right now to people who have cash on the sidelines that these are national priorities, these are important areas of growth. And when you get these things together, they can have a powerful effect in unleashing investment now.

And I'll just give you an example that will be relevant to next week. We've had conversations with some telecom companies, indicate that the fact that we have 100 percent expensing, that several of them are now planning to accelerate their investment. You get that acceleration investment together with a national priority on national wireless to get to 98 percent. Those things come together and can get more people starting to invest in the future, but starting that investment now in a way that can have a strong impact on jobs.

And one -- just one thing in today -- even in today's numbers and the last couple numbers. We have seen some real strength in manufacturing -- 49,000 jobs today -- and I understand this was an unusual jobs report -- but 152,000 over the last year. It has not been since '97 to '98 that you've seen a year period where over 150,000 manufacturing jobs were created. The ISM, the manufacturing purchasing index, as you know, was over 60 for the first time in a very long time. And the employment index on it reached its highest levels since 1973.

So we do see in the manufacturing area and the places present we'll be traveling some good news and I think with some significant relation to policies that the President has implemented and proposed.

MR. GIBBS: Yes, let me first rib Gene for always mentioning when he was last in the White House. (Laughter.) I'm just having fun.

MR. SPERLING: I'm not allowed to mention the whole decade? (Laughter.)

MR. GIBBS: I'm just having fun. I'm just having fun. (Laughter.)

Let me also, though -- Gene touched on advanced battery manufacturing. I think this is something that fits in with a future-oriented, innovative agenda, and it goes very directly to out-educating, out-innovating and out-building. Because five years ago, six years ago, it was not thought, as you've heard me say before as it relates to the auto industry, it was not thought that American workers would build these advanced batteries. It was somewhat unlikely that we'd drive these cars. And if we did, that technology would be imported into this country rather than built by Americans in America.

We now know that's not the case anymore. I believe the last time the President was in Michigan, where we'll go next week, was in fact to break ground on yet another advanced battery manufacturing facility to produce batteries for cars that are being built by our auto companies. Some of those cars are being exported. Those cars are being driven today on our roads. And some of those batteries are being exported.

So if we don't take some of the ideas that are in this report and think about what are going to be the jobs of tomorrow but ensure that the jobs of tomorrow are in this country today, which advanced batteries is a good example of, we're going to have a hard time competing both today and in the future. And I think that's one example of something where we've got to look ahead because we can put people back to work right now.

Yes, sir.

Q: Gene, Robert mentioned the President's speech on Monday to the Chamber of Commerce. I'm wondering if you could just -- to throw things forward a little bit -- talk about how you think the relationship with the business community is improving in the last couple months, if it is, and what steps maybe these measures or others that you two are undertaking will do to help that?

MR. SPERLING: I think the last few months you have seen a strengthening of confidence across the board. I think there's been signs of greater confidence on consumers in the consumer index. And I think there's been greater signs of increased confidence among the business community. And I think what a lot of Americans want to see is that -- and as we are fighting our way out of the very deep, deep hole this President inherited -- that we're willing to work together.

And I think in December really was a turning point because the failure to have worked together would have created a degree of uncertainty in the month that we're in now, or in January, that would have been -- had a very negative impact. I mean, it's hard to imagine having gone into this year with every American thinking their taxes had been increased; 30 million Americans not knowing how to file an alternative minimum tax -- you take that to entire country seeing this President working together to not only extend the tax cuts, to do a new payroll tax cut, to a new business incentive. I think people can talk about tone, but results matter.

And I think what people have seen is they've seen the President really leading to bring people together to get things done. And I think a lot of the things that we're doing now, whether it's Startup America, et cetera, have a lot of that sense. They are the private sector working with us, with the administration, with labor, with the business community. I think you take this -- this commercial building retrofits I think will be a great example where you will see labor and business working together on national goals.

So I think -- yes, I think the relationship has -- feels stronger going forward, but I think it's part of an overall feeling of increased confidence that people see the President willing and able to work together to help get some things done that matter on the economy and jobs.

MR. GIBBS: April.

Q: Gene and Austan, I want to ask you a question on innovation. Is there a concern with this 112th Congress, that there could be cuts in funding for the green jobs programs? And if so, how are you going to promote innovation with the green jobs, particularly in the minority sectors to get African Americans and Hispanics to get on board with the green jobs?

MR. SPERLING: I think that's part of the discussion we're going to have as a country going forward. The President put forward in the State of the Union and in his budget an economic strategy -- an economic strategy for accelerating jobs and investment now, but an economic strategy for winning the future, strengthening our competitiveness. And a critical component of that is getting our fiscal house in order, reducing spending, and getting the deficit on a significant downward path.

We worked very hard to achieve that critical component of improving our fiscal path in a way that ensured we still could be making the investments that we think are critical for our country, competing for the high-wage jobs of the future. It is a very tough budget; it will get tougher each year. When you are freezing, it is a real cut, and it's a real cut that gets bigger each year. And we're -- we felt that this was a degree of fiscal constraint that we could do, that was very difficult, but could still be consistent with a strategy for investing in innovation, education, and research.

Whether or not -- and people will be able to see all of the details of our budget on February 14th, and they'll be able to debate and judge whether we drew the balance the right way. We think we did. I think as people have to look at other budgets that go out, where -- that share the same goal we do in reducing spending, they're going to have to look at the details and see whether those budgets also match the same commitment to making sure we're dong things that are pro-growth and pro-jobs for the future.

Q: -- Austan was going --

MR. GOOLSBEE: Well, I wasn't going to comment on the budget. I think the President has made clear, though, that the green jobs area and the energy sector is a critical priority of investment, that that's part of -- a wide section of the innovation strategy is geared towards that environmental area. And if you're going to chew up the seed corn and spit it out before it's planted, which would be cutting the investments for the future that we're going to need to grow, that's making a big mistake.

I think all sides agree that we've got to cut and be fiscally responsible. The question is where do we do that, and the priorities cannot be to get away from clean energy.

Q: I have a follow-up on that. What are you to the people who --

MR. GOOLSBEE: I actually meant to say chew up the seed corn and spit it out before it was planted, but -- (laughter.)

Q: Gene, why don't you come -- why don't you come to the podium --

MR. GIBBS: He said that in 1997. Weird. (Laughter.)

Q: I was here then. I was here with Gene. Gene, let me ask you this. What do you think about what people are saying with budget cutting right now at a time of recession? It's just -- it doesn't make any sense. You should be doing that when there is a recovery versus doing that now.

MR. SPERLING: Well, remember that when you look at our entire budget, yes, we are starting on the path of fiscal restraint and we are freezing non-security spending. And, yes, that is -- there's no question that that is -- calls for a degree of fiscal restraint there.

But we think that the confidence that that provides that we are on a path to cutting discretionary spending by $400 billion, getting down to a level, as a percentage of our economy, the lowest since Eisenhower, is a reasonable step forward that will not be harmful to the economy when you look that it is coming in combination with a $112 billion payroll tax cut, in combination with the 100 percent expensing, which actually accelerates over $100 billion of tax relief in 2011 for business investment.

I think it has the right combination. As we said, it's an overall strategy. You have to look how it works together. This does start -- it starts the process of restraint, but not to such a deep degree that it would hurt job growth. And that happens in combination with the measures that the President passed in December that have a very high bang for the buck in terms of investment and job growth in 2011.

MR. GIBBS: Laura. And then we'll let these guys get back.

Q: Thanks, Robert. You've talked quite a bit about discretionary spending and of the need for fiscal restraint. Of course, discretionary spending is a small part of the overall budget; entitlements are a big part. The President to date has not picked up the -- his own fiscal commission's recommendations on entitlements, and in fact, in the State of the Union, on Social Security, seemed to go the other way. Could you talk specifically on Social Security and in general on entitlements, what the thinking is at the White House right now?

MR. SPERLING: Well, I mean, first of all, the President, through the American Care Act, has made a very significant dent in lowering health care spending, particularly in the second decade, but as you saw, when those -- when people sought to repeal his health care reform act, that was going to increase the deficit by $250 billion. So there are a lot of savings and efficiencies and lowering the cost of health care growth in what he has passed so far. You'll have to see our own budget. There will be some additional steps there for -- to see.

The President did make very clear when he was in the State of the Union that as tough as his spending restraint is, he acknowledged that's only one slice of the budget; that anything else we had to do as a country would have to be both parties and both houses working together.

But I will say one thing that I think is important on Social Security, which is, this is not about short-term deficits. It's not about using this as a mechanism to a lower deficit path. The reason why the President is open to bipartisan measures on Social Security solvency is because he believes that Social Security is a sacred trust, that it has been the hallmark of increased dignity for people in retirement for past generations, and he wants it to be for future generations.

So when we look at Social Security, we will be looking at it through one measure, and that is to ensure that what has really been a crown jewel of policy in the United States for providing dignified retirement for older Americans continues to exist in a way that is strong, protects the vulnerable, those with disabilities and is not subject to the whims of the market, and is the one thing that people can count on in good times and bad times in their retirement. And that's it. That's our sole goal for that.

So while that may be in other people's fiscal plans for us, it is very much about trying to reform and strengthen something he thinks is very, very important to the economic dignity of seniors.

Q: And what they're thinking about whether to actually tackle that anytime soon?

MR. GIBBS: I would say our current thinking is the budget will be released on the 14th. All right?

Q: Can you tell us more about the patent reforms for --

MR. GIBBS: Patent reform? Uh oh.

MR. GOOLSBEE: Well, the --

MR. GIBBS: He bet me nobody would ask about this. (Laughter.)

MR. GOOLSBEE: It will need -- you told me no one would. (Laughter.) I am very glad you asked the question. Look, it is not just their -- the strategy goes through -- and if you want to go through in some more detail -- but it cannot just be done purely by executive action. It will take some legislation.

But the key is to, on two tracks, let the patent office make the investments they need to get the backlogs down and speed up their process. And the second is the fast-track patenting, which enables essentially a faster track; that people can make higher payments of their fees to get on a track of patents that allow them to get a decision very rapidly if they believe that their invention is timing sensitive.

Q: What's it cost?

MR. GOOLSBEE: It doesn't -- it wouldn't cost anything if you --

Q: But you said it would require some investments --

MR. GOOLSBEE: It requires legislation. It requires legislation.

Q: And investments to fast-track reforms?

MR. GOOLSBEE: The patent -- I mean, do we want to go into -- the patent system -- there are fees to the patent system. So for example, to fast-track patents, you would get more --

Q: You'd charge more for --

MR. GOOLSBEE: -- you would get faster because you would have a different fee. It's just a different track. But it's worked through in the report.

Q: Not more government money -- more money for the person wanting the patent.

MR. GOOLSBEE: Well, in these there are different approaches, obviously, for the different parts. One is you want the examiners and the system that they have of examining the patents now is perceived by almost everybody to be excessively bureaucratic. And so we've got to streamline that system just to get the processing times down.

Is this a hazing joke? Why are you guys laughing? (Laughter.)

Q: It's the guy behind you that is making faces.

MR. GIBBS: I will bet you a thousand dollars that Chuck is not in danger of doing a patent story in the next --

MR. GOOLSBEE: Okay, Aneesh Chopra, the chief technology officer -- I want to give him a shout out --

Q: Is that a challenge?

MR. GIBBS: Yes.

MR. GOOLSBEE: But you can contact Aneesh Chopra or me and we would love to talk to you -- love to talk to you about that.

MR. GIBBS: Let me know if you get that on --

Q: Would you actually pay him $1,000?

MR. GIBBS: Let me know if you get that in the news. I will.

Q: A challenge --

MR. GIBBS: I know we've got about half an hour or so before --

Q: Well, let's use it all up.

MR. GIBBS: Let's -- why not? I know there's more patent questions.

Q: How about one and one --

Q: We'll do one and one for you --

Q: One, and then we get more questions with the President, what do you say?

MR. GIBBS: No, you've already exceeded one and one. Take us away.

Q: On Egypt, what's the administration conveying today to President Mubarak and the Egyptian government? And what's the President's reaction to what he's seen on the streets there?

MR. GIBBS: Well, first and foremost, I think that the message that has been delivered, again, through our embassy and through all levels of our engagement with the Egyptian government, first and foremost, continued restraint and the ability for protesters in Cairo to protest peacefully.

I will say -- and I talked to the President about this, this morning -- we continue to receive very disturbing reports about what you could only say is very systematic targeting of journalists, particularly international journalists. I have dealt with our embassy on trying to get assistance for journalists to get out of the country, some of whom have been held, many of whom have been beaten.

I said this yesterday, and I will reiterate this again today: That type of activity is deplorable. If journalists are being held, they must be released immediately. The world watches the actions of all of those in Egypt, and they speak volumes about the seriousness with which the government looks at an orderly transition.

We are heartened that I think what many thought might come to pass broadly today, at least when I walked out here, had not happened. Our main message besides restraint and nonviolence, Jim, is that as the President said a few days ago, the government of Egypt must undertake, through negotiations with a broad base of those not currently in the government, direct negotiations to -- toward an orderly transition that gets us to free and fair elections.

They have to be real -- that has to be real. They have to be legitimate. They need to take some concrete steps for this process to happen. And I think it is clear that without those concrete steps and without those direct negotiations toward that transition, you are simply going to see -- continue to see more uncertainty and more unrest. And I think --

Q: Does a concrete step include Mubarak stepping aside and maybe Suleiman or some other caretaker stepping in?

MR. GIBBS: Well, as we have said from the very beginning of this, these are solutions that can and will only be determined by the Egyptian people in solving the problems that we see today in Egypt.

I think that continues -- that continues to be true. The message for President Mubarak, Vice President Suleiman and others, again, has to be the need to take quick, concrete steps towards that transition. I think the world is waiting to see that.

Q: Are you presenting those options to the --

MR. GIBBS: Well, again, this is -- these are -- this is not for us to determine, Jim. This is the addressing of individual rights and the freedoms that so many in Egypt feel they lack can only be addressed by the government of Egypt. They're not going to be provided by our government. They have to be addressed and provided by their government. And I think instability will continue until that's done.

Yes, sir.

Q: Robert, is the White House concerned that there would be a power vacuum if President Mubarak stepped down now?

MR. GIBBS: Well, as I said a minute ago, Jeff, I think there's -- I think there is the likelihood of greater instability and uncertainty without the government taking those concrete steps toward real change.

Q: That wasn't the question. The question is if he steps down now, are you concerned about --

MR. GIBBS: Well, no, no -- let me -- I want to be clear, Jeff, I wasn't answering your question because I think what we're likely -- what we are likely to see and the reason why we continue to watch the television of protesters today and we're likely to see that into the days of the future is not because the government is moving too quickly towards a transition. It's exactly the opposite, because the government has not done enough in a concrete way, with a broad enough base of a coalition of people that are outside of what constitutes the current government -- that signal has not come. And unless or until that happens, instability is actually going to increase. I think that's the answer.

Q: How would you respond, then, to Mubarak's comments yesterday that he'd like to step down but he's afraid if he does --

MR. GIBBS: I think there are concrete actions that he can take and that the Vice President can take toward moving in the path of real change that can lessen instability and can ensure that we don't descend into the chaos that he describes.

I think -- just as I outlined, I think it is -- the government, the Vice President and the President, need to sit down with a coalition that constitutes a broad cross-section of Egyptian society, of civil society, of opposition political groups -- people that are in Egypt and not represented in their government.

There are a series of things that we're not to prescribe to the Egyptians that must take place along that pathway toward free and fair elections. And unless or until that happens, my guess is the people that you see on TV aren't going anywhere. I think that in order to see the transition happen in an orderly way, the people need to see some concrete steps.

Q: Are U.S. allies involved in that discussion, Robert?

MR. GIBBS: I think this is a discussion that is being assisted by allies in and -- around the world, both in the region and outside the region.

Yes, sir.

Q: Robert, for days now you have been saying it's not for us to decide, it's for the Egyptian people to decide. You just said we're not prescribing anything to the Egyptians. So what is going on then behind the scenes? I mean, there are all these high-level meetings, back-and-forth of equals. If you weren't offering suggestions or options, then what are you doing?

MR. GIBBS: Well, I -- Dan, I just outlined a series of steps right here in public that I think the government can and should take to address that very instability and that very uncertainty. And I said I think on the very first day of this crisis, my guess is that this will be said at this podium for months to come. These are -- this is not a solution that can be imposed on or that can be forced on anybody in Egypt.

As I said earlier, it is not -- I doubt there's anybody in Cairo that is looking for my definition of their freedom of speech. And that's not going to be determined here. It's going to be determined in Cairo. That's why they're marching there.

But look, it is safe to assume that this country has for the past several decades had a very important relationship with the government and the people of Egypt. The Camp David Accords signed by Egypt and adhered to by Egypt have provided a cornerstone for regional security for more than three decades. We have a vested interest in the foreign policy in Egypt and throughout the region as it relates to our national interests.

So as I said a few days ago, there are meetings here about a whole range of issues and a whole range of scenarios. And I was in one of those meetings at 8:30 a.m. this morning. Those meetings will continue with the President over the weekend.

Q: How much intelligence did the White House have about this kind of unrest potentially happening?

MR. GIBBS: We have seen and I think White Houses and administrations here for many years have seen intelligence about the instability in countries in the Middle East and throughout the region. I think the question that you're alluding to, Dan, is, did we -- did somebody foreshadow the specific events in Tunisia? And as we recall, a fruit vendor in Tunisia had his fruit stolen and lit himself on fire, and that started in Tunisia a series of events that have greatly impacted that country. I don't think anybody expects that we would have gotten a report in December that might have predicted a particular fruit vendor doing something like that.

Obviously, as things transpired in Tunisia, as I've said in this room before, we saw -- I read intelligence that talked about what the result might be in countries throughout the region because, as the President has said throughout this, governments must be responsible to the people that they represent. And when they're not, you have uncertainty and unrest.

Q: So there was no intelligence that predicted this kind of unrest, not necessarily how or what the trigger mechanism would be, but --

MR. GIBBS: No, no, no, I didn't say that, I didn't say that -- I didn't say that. I want to be clear, I did not say that. I said, was there specific intelligence about the specific incident that started in Tunisia? No.

Q: Right. Well, I wasn't asking that, not the specific incident that started it --

MR. GIBBS: No, no --

Q: -- but what the result could be.

MR. GIBBS: And I think some reporting has intimated that somehow that there was some intelligence failure that that didn't happened. Rest assured that there are volumes of reports that have been read by this administration and past administrations about the potential for instability and unrest in Tunisia, in Egypt and throughout the world.

Understand the -- I think some of the passion that you see in Cairo is not because -- not necessarily because people have felt as if their government hasn't fully represented their views and respected their individual rights in 2011. I think this is something that goes back quite some time, which is why administrations that predated ours have brought up with President Mubarak the steps that they believe needed to take place just as President Obama brought up with President Mubarak the steps that we felt needed to take place to address the lack of freedoms that we knew they weren't adhering to.

Q: And is the President satisfied with the level of intelligence that he received on Tunisia and Egypt?

MR. GIBBS: The President expects that in any case, that he will be provided with relevant, timely and accurate intelligence assessments, and that's exactly what's been done throughout this crisis.

Q: Robert, on the orderly transition that the government has called for, that you guys have called for, on Wednesday you were quite direct by saying "now" means yesterday, meaning Tuesday when President Obama first called for that. Three days have gone by since. Days do matter in this instance. Are you satisfied with the change that has taken place on Cairo's side?

MR. GIBBS: I don't think we are and I don't -- it appears, based on the pictures I've seen on television today, neither are the people in Cairo or throughout Egypt. And that's why, when we talk about whether or not we're going to see unrest or whether or not we're going to see stability, we are, until or unless some real change is made and some progress -- people can see and feel progress on that path toward free and fair elections.

Q: Again, days matter. So how soon would you like to see that tangible change?

MR. GIBBS: Tuesday. I mean, again, I wasn't -- President Mubarak said we needed that transition. President Obama agreed that that transition needed to happen and that the time for that was now. And I think it's readily apparent that those in Cairo, those in Egypt, need to see this process happen and they need to see this process begin. And it needs to begin in a real and concrete and legitimate way. It cannot be for show. It has to include -- as I've mentioned, it has to include that broad section of people, many of whom we see protesting for their rights in Egypt.

Q: And about the back-and-forth going on between the different -- about the orderly transition, do you believe that a transitional government headed by the Egyptian Vice President would satisfy the demands of the protesters in the street?

MR. GIBBS: I don't know that I'm in any position to say what exact steps would satisfy those in Cairo marching because they don't feel as if they've been heard or respected in terms of their individual rights. I know that -- as I said earlier, I think the instability continues without anybody in Cairo seeing those concrete steps begin.

Q: You just mentioned the kinds of meetings discussing various scenarios that are going on around here. Is this government still in contact with the government in Cairo, with the military in Cairo, is discussing those kinds of scenarios and possibilities?

MR. GIBBS: I would say that I don't have a call -- I don't know that -- when I came out, I don't believe the President had spoken with anybody in the Egyptian government today.

Q: But have other members of this government spoken to people in the Egyptian government?

MR. GIBBS: Yes, yes. I know that --

Q: And they continue to do so?

MR. GIBBS: Absolutely. There's important contact, first and foremost, at the embassy with the Ministry of Foreign Affairs.

Q: Are they discussing these scenarios for Mubarak's departure?

MR. GIBBS: Well, I'm not going to get into the specifics of each and every one of those calls. There's, again, embassy-to-MFA contact. There's Pentagon-to-military contact, the important mil-to-mil relationships that I think have helped in the exercise of restraint that we've seen over the past couple days.

Again, Bill, safe to say that a whole host of conversations are being had. And the main message in each and every one of those conversations is, as I said a minute ago, which are that the government must take concrete steps. We're not going to provide each and every step that needs to take place. That's for the government of Egypt to understand through dialogue and through negotiation with that broad cross-section of people.

Q: But aren't they in kind of a bind because the people in the street aren't going to accept or talk to a new government until Mubarak is gone? But for Mubarak to form a new government, he has to take an active part I think under Egyptian law. So they're at an impasse. What can the U.S. do to help that?

MR. GIBBS: Well, I think the biggest role -- the most important and biggest role that we can play is encouraging the government of Egypt to become involved in those negotiations.

Q: Yes, but you've been doing that for five days, and you keep saying, it's yesterday, yesterday -- Tuesday. We got nothing.

MR. GIBBS: And, Bill, it's -- and what do we see every day? More and more people come out. More and more reporters that are beaten. This is not going to be solved here. It is going to be solved by the Egyptians. And if they don't begin to take those steps, you're not going to see a relief in the instability that we've watched. And I think --

Q: I guess my question then is how hard is the U.S. pushing? I mean we've got $1.5 billion on the line here.

MR. GIBBS: We have more than $1.5 billion on the line. We have important relationships and a very important national interest in stability and order in the country and in the region. And I can assure you that every call begins with two things -- a call for restraint and a call for concrete direct negotiations so that the people can see the government is willing and able and actively making changes that will lead to free and fair elections.

Wendell.

Q: Are we making specific proposals about how those negotiations, those exchanges, can take place?

MR. GIBBS: We have been broad, but we have -- and I don't think anybody expects that we are going to outline each and everything that has to happen. Again, I feel confident in saying that the biggest step that we can push for is for the government to begin that negotiation and begin it with a representative and broad cross-section of the people.

Q: What about the opposition, which apparently says it does not want to talk to the government until Mubarak steps down? Are we pushing them to begin talks?

MR. GIBBS: Well, this is -- absolutely.

Q: Now?

MR. GIBBS: But it -- I think what we have --

Q: Specifically to drop that demand?

MR. GIBBS: No, I mean, we're not -- I have not heard that. I think what -- again, I think the greatest impediment to making this progress is beginning the process, and beginning the process at a level where the government is taking seriously the involvement of some of the broad opposition groups that you speak about.

Q: Then the onus is all on the government now and not on the opposition?

MR. GIBBS: Well, I think it's important that the government begin to show concrete steps that it's willing to take.

Q: On intelligence, was there a failure of intelligence, a failure to heed, or neither?

MR. GIBBS: I would I guess direct you to what I said to Dan. I think the President felt -- has felt as if he's gotten timely and accurate intelligence, and that, as I said, there are volumes of reports on instability throughout the region.

Q: But there was a report in late 2010 according to Stephanie O'Sullivan that specifically said Egypt was ripe for instability. That was her testimony, yes?

MR. GIBBS: My guess is there's a report that dates back each and every year about instability in many of these countries. I don't think you need a report from the intelligence community to let you know there's potential instability in Egypt or in the Middle East.

Q: Secretary of State Clinton says we're in uncharted territory here. Are U.S.-Egyptian relations ever going to be the same?

MR. GIBBS: We have an important relationship, as I said earlier, with the country and with the people of Egypt. And we expect that whatever government comes next, we expect that we will again have the type of relationship that has provided, as I said, through the actions of the Egyptian government, a cornerstone for safety and security and regional stability in the Middle East. It is -- it has been an important relationship, and it will be in the future.

Q: It has been important primarily because of Egypt's peace treaty with Israel. Does the new relationship have to be based on a much more democratic Egypt? Can it be the same with an Egypt that does not fundamentally implement democratic reforms?

MR. GIBBS: Well, look, again, that's a solution I think that's going to come at the ground on Egypt -- in Egypt. I don't think we're looking at something that is less than what we have now or -- lest we wouldn't have the images that we're seeing. And I know you alluded to the Camp David Accords. Our expectation would be that whatever the next government of Egypt is, that they would adhere to treaties signed by the government of Egypt.

Chuck.

Q: Just to follow up on that, by expectation, does that mean we would use our -- if it took our influence via military aid that we give to make sure that they -- use whatever tools we had to make sure they abided by this peace treaty?

MR. GIBBS: Let's not presuppose through -- by me through here what tools we would use. But again --

Q: But we'd use tools.

MR. GIBBS: There's a treaty -- this treaty is not with a particular president. It is with the government, the country and the people of Egypt. We would expect that that treaty, just as if this government changed hands in an election, that you adhere to the treaties that previous presidents have signed and have been ratified in the past.

Q: Let me ask you another variation of what Bill asked, which is, have we asked or suggested to Mubarak to transfer some power to the Vice President?

MR. GIBBS: I'm not going to get into, again, conversations that are had in the Situation Room or between our President and other presidents.

Q: Vice President Suleiman came out today and said no transfers would take place, and it was sort of an odd way that it was -- he announced this, implying that there was some suggestion that Mubarak should transfer some power.

MR. GIBBS: Let me -- I shouldn't wing it. Let me -- I'm happy to look at some -- a particular quote on that.

Jonathan.

Q: Mr. ElBaradei said today that he had spoken to the ambassador of the United States, the ambassador of Britain, the ambassador of Australia, the Prime Minister of Greece. And I'm wondering what kind of effort right now the United States is trying to do to get the international community involved. And what does the President see the advantage of that being?

MR. GIBBS: Well, I think you just mentioned in many ways the broad arc of -- whether it's the Europeans, whether it's in the greater Middle Eastern region -- the important equities that countries have and relationships that they have with Egypt, and the importance that they see in the same sort of regional and country stability that we hope for.

I don't think there's any doubt that we are better served by a number of countries delivering the same message you've heard the President deliver. I think that it is important, again, as the world watches these images, that the world is involved in reiterating the message that we have sent and continue to send to the government of Egypt about the steps that they need to take.

Q: Are we -- is the United States right now trying to play an informal intermediary role right now between the government of Egypt and the opposition?

MR. GIBBS: Jonathan, I think Ambassador Scobey spoke with Mohamed ElBaradei, as she has and will with a host of civil society and political opposition groups throughout Egypt. That is a robust expectation that our government and I think any U.S. government would have of their mission in Cairo. So we are, and the embassy was, well before anything started in Cairo, maintains a relationship with many of those groups and with many in civil society.

Nick.

Q: In the week since the President spoke and over the days that you've been making statements as well, do you feel that any progress is being made in bringing the two sides together to end these protests, or is it still at the same spot it was a week ago when the President first came out?

MR. GIBBS: Well, no, I think we have -- I think we -- have we seen enough progress? I think the answer to that clearly is no. I think very -- as we sit here a week later, and as I've said here before, we have watched events happen in a country we have not seen in -- in a country with a very rich history that we have not seen over the course of many thousand years. What we are seeing is not something that happens every couple of years in Egypt. These are remarkable times.

So I think in one sense we have undoubtedly seen, from where we sit right now, a week since both President Mubarak and President Obama first spoke, both on the phone and publicly making statements, we've seen change from Friday to Tuesday in acknowledgement of President Mubarak not seeking reelection. But I think it is clear that we still see those in the street looking for the type of concrete transition that both men spoke about just a few days ago.

Q: Is the situation on the street better now or worse?

MR. GIBBS: Well, I think we are heartened -- I'll split the question into two. I think we are heartened by two things. One, that we have broadly seen restraint, as we deplore the scenes and the stories that -- as I mentioned earlier of diplomats, human rights groups and journalists -- so I think that is heartening. And as I said yesterday, we take what the Prime Minister said yesterday -- we take seriously and hope that the government of Egypt takes seriously the words of the Prime Minister in saying that those responsible for the violence on Wednesday will and should be held accountable.

Q: Who are the individuals that --

Q: Wait, I didn't get the answer to that. You split it and I don't think you put it back together. I mean, is it better or worse? You mentioned these two things that are --

MR. GIBBS: Well, again, I think it's better because we haven't seen -- I think, again, many of us -- I think many of us thought as night fell in Cairo last Friday that we were unsure what we'd wake up on Saturday.

So from the perspective of the type of broad violence that you certainly hoped wouldn't happen, again, we have -- we're certainly glad about that. And I think the same went for the events of today. Obviously, today was -- there were a lot of people out, and we were -- as we have been -- concerned about what that would mean. So I think we have seen some hopeful signs as it relates to restraint. But again, I think the type of political change that many have talked about, we haven't seen.

Scott.

Q: Do you know anything about an assassination attempt on Vice President Suleiman a couple days ago?

MR. GIBBS: I'm not going to get into that question.

Q: I guess that's a yes.

Q: Robert, can we change the subject?

MR. GIBBS: Sure.

Q: Does the administration have any further reaction to the job numbers today in terms of what it expects going forward, given the problems with today's number?

MR. GIBBS: Well, as you heard Austan and Gene -- and I should be careful because Austan is actually a trained economist and I just play one in here. So, look, I think -- as he talked about, you've got two different surveys. You've got a survey that calls up a house and says, "Do you have a job?" That is a survey that -- ultimately you derive from that survey the unemployment rate. Then there's what's known as the establishment survey that calls a business and says, "Who's at work, what's happened, are you hiring?" And that goes into a BLS payroll number.

I think, and I've -- and we have talked about in here and I've watched the commentary and listened to it and read more about, you obviously have some very divergent survey data. You have undoubtedly some weather impact in the establishment survey, particularly in industries like construction and transportation, where one might easily presume that weather would affect the numbers coming out of that survey.

I think it's important to understand that we -- I don't think we would ever look at -- through a series of data that we see over a week or a month and hang any of our hat on one particular number either way. I think we are encouraged in the sense that we see continued progress, private sector hiring. That progress in the President's viewpoint, though, continues not at the pace that we would like to see it.

As Austan said, I think we will learn more about what this report means in the coming months as we look through some of the numbers underneath what do the construction numbers mean, what do the transportation numbers mean, what do the overall workforce numbers mean. Again, the bottom line for us, there's a lot more to be done to put 8 million people unemployed as a result of the financial calamity back to work. That work would have continued, though, regardless of what the numbers today showed.

Goyal.

Q: A quick question, one. Is President aware of, Robert, that U.S. diplomat is still held in Pakistan, and Pakistanis are very angry at the United States?

MR. GIBBS: I'm sorry, U.S. diplomat?

Q: U.S. diplomat is still being held by the Pakistanis, Pakistani courts.

MR. GIBBS: I think I would direct you to either the Pakistani government or our embassy in Islamabad on that question.

Q: Is the President aware of it?

MR. GIBBS: The President is aware of a lot of things, Goyal.

Yes, Glenn.

Q: Robert, there was a report today that the President expressed "disappointment" to DNI Clapper over the level of intelligence and analysis he's gotten on Egypt. Is that accurate or inaccurate?

MR. GIBBS: I think I answered broadly about the President's view on intelligence that he's gotten. I also think it is largely safe to assume that I am not going to get into conversations that may or may not have happened in the President's daily briefing.

Q: And one other. Just in general, are we supporting these protesters in Cairo? How would you sort of characterize that?

MR. GIBBS: As I did the first day of this. We support the aspirations of those in Cairo, in Alexandria, in countries throughout the world to see governments respect their basic rights: the right to assemble, the right to speak freely, the right to associate. In this instance, we've seen the rights to freely communicate over the Internet through social networking tools cut off. And our government, as it has in this instance and as it will in countries throughout the world, supports those aspirations.

Q: When the President sees these images, these very moving images in the square there, have you seen his reaction? I mean, how does he actually react when he sees these people holding a person in a wheelchair over their heads?

MR. GIBBS: Well, again, I think that, as the President has said, I think you're watching -- I think you're watching what happens when people in a country do not believe their government fully appreciates the rights that they lack. That's the case, again, not just in Egypt, but as the President has had discussions with leaders throughout the world.

Q: Who are the --

Q: Robert -- no, excuse me, he called on me. Robert --

MR. GIBBS: We got to --

Q: Yes, but can I get my question out?

MR. GIBBS: Go ahead. I got only a couple of minutes and I'll try to do this quickly.

Q: Okay.

MR. GIBBS: We'll play rapid fire. Go.

Q: Okay, sure. Rahm Emanuel -- what is the President doing for him?

MR. GIBBS: I have nothing on that.

Q: Has he made calls? Sources in Chicago are saying he's made personal calls for Rahm, on behalf of Rahm.

MR. GIBBS: I can check. I don't have any guidance on that. I think Rahm is still shoveling the President's sidewalk.

Savannah.

Q: You've mentioned that the U.S. supports the demonstrators. You've mentioned the President's speech in Cairo --

MR. GIBBS: I said -- no, no, let me be clear. I said --

Q: -- the democratic aspirations of the --

MR. GIBBS: Yes.

Q: Got you -- listening comprehension. (Laughter.) You've pointed to the comments --

MR. GIBBS: B-minus. (Laughter.)

Q: You've pointed to the comments of the President in Cairo, supporting democracy in Egypt. But in 2009 the administration, this administration, actually, cut funding to democracy groups and civil society groups in Egypt. So how do you square the words with the action?

MR. GIBBS: Well, look, we are -- I think you're going to see in the budget that the President releases, we are not going to -- on a whole host of things that are important to him, that are important to the other political party, that are going to have to be reduced as a result of 10 or 12 years of spending well beyond our means.

But I think the notion somehow that our -- the support of the aspirations of those that seek greater freedoms is only supported by a level of funding in your budget, I think is -- don't necessarily match up, particularly at a time in which you're going to see reductions in a whole host of programs that are important.

Q: You don't think cutting the funding had any effect on the pace of reform, for example?

MR. GIBBS: No, I don't -- my guess is we've -- there have been a number of expenditures over the past 30 years to support groups with similar causes in Egypt. And I don't -- we're just now seeing the manifestation of the cares and concerns of those involved.

Yes, sir. Stephen, and then I'll come back.

Q: Today the Supreme Leader of Iran made his first intervention in Friday prayers for seven months, saying that this was an uprising against -- in Egypt against an ally of Israel, the United States. Do you have a response to that? And the longer this goes on, are you concerned that foes of the United States could try and whip up extremist allies in this power vacuum there is at the moment?

MR. GIBBS: I will say it's remarkable that Iran would make a statement in -- given the -- given their actions when it came to their people exercising the same rights that people are exercising now in Cairo.

I think the world, Stephen, would welcome the acknowledgment from the Islamic Republic of Iran, if they're so inclined, to allow their people to exercise the same rights that you see in Cairo peacefully. I think that would represent some real progress across the Middle East, and I think the world would challenge them to have their words match their actions, which we recall, based on the violence that we saw in 2009, they're not good at living up to.

Yes, sir.

Q: Thank you, Robert. Do you believe the United States still has leverage with the government of Mubarak? And can you tell us why U.S. assistance shouldn't be used now to get him to heed your calls for immediate transition?

MR. GIBBS: Let me do this quickly because I do have to -- you guys have to get to a press conference as well, I'm told.

I do think we can -- look, we continue to speak, as I said, at a full range of levels to the Egyptian government, and I do think that the -- I do think the conversations that many have had with the military have been helpful. Again, I think the actions that we will see from the top of the Egyptian government have to be in response to the -- have to be solved by and have to be in response to what we're seeing on the ground in Cairo. Again, I don't think that -- I don't think we can impose that.

In terms of our assistance -- and then I'm going to run -- as I said I think about a week ago, we will continue to watch the actions of the Egyptian government and evaluate what those actions might mean.

Again, we are heartened to see restraint. We deplore the images and the violence that we've seen for human rights groups, and that have impacted particularly international journalists, and call again on the government of Egypt to take some concrete steps toward direct negotiations that will bring about the type of change that we need to see on a path towards an orderly transition and free and fair elections.

Q: Will the President make a statement?

MR. GIBBS: The President will make a statement shortly, which is -- I will see you there.

Thanks, guys.

END 2:56 P.M. EST