Gregory challenged Gibbs hard on the economy, and housing, specifically about the relatively little action that has come out of mortgage modification programs. And he asked what about reform on Fannie Mae and Freddie Mac, the government controlled entities that make up approximately 90% of the mortgage debt.
MR. GREGORY: But can you say that the president's focused like, like a laser beam on the economy if he hasn't really zeroed in on the housing problems? With, with the kind of--and you have, you have agencies that take on, guarantee 90 percent of the mortgage debt and you're still not reforming them.
MR. GIBBS: Well, again, there's a process that's under way, David, to do that. But understand, in a fragile economy and, certainly, as you mentioned, a fragile housing market, we can't do everything at the same time. We put in place a financial recovery plan that is growing the economy and is adding jobs. We're on the verge of passing financial reform, which will put new rules in place, and the next step of that will be reforming Fannie and Freddie.
On ABC's This Week, host Jake Tapper asked White House political strategist David Axelrod about the caustic carping being made more frequently by business leaders against the administration, indicating a lack of confidence in the Obama economic agenda.
Tapper: Now, I know you reject the notion that the White House and the president is anti-business. But if that -- that perception's out there, and it's having an effect on the business community's willingness to create jobs, is that not a failure of the Obama administration?
AXELROD: Let me -- let's just review history here. When we took office -- no, no, no, this is important.
TAPPER: Don't go -- don't go that far.
AXELROD: This is important, Jake, because you -- you have to recognize what the kind of -- you know, there's no doubt that there was a kind of "Katie, bar the doors" philosophy in Washington during the eight years previous to us. And what it led to was a financial disaster.
And all these companies were -- were in very difficult straits. In fact, their -- their profits are up 65 percent since -- since that time, over the last two years. Our financial system is now stable instead of collapsing, which would have been a devastating thing for every business in this country, large and small.
But, yes, and we're working closely with business and we want to continue to work closely with business, but working closely doesn't mean that we -- that -- that we simply turn away from the kinds of corrective measures that are necessary to prevent that kind of disaster from happening again, and that's what we're pursuing.
With unemployment still at an desirable 9.5% rate, Republicans have spent months bashing the Obama economic agenda. But on Fox News Sunday Chris Wallace asked Arizona Republican Senator Jon Kyle what bright ideas he had in opposition.
Kyle suggested that the Bush tax cuts for the rich passed in 2001 and 2003, due to expire in the coming year, should be maintained. Wallace challenged that assertion:
Wallace:The fact is those would cost $678 billion over 10 years. At a time Republicans are saying that they can't extend unemployment benefits unless you pay for them, tell me, how are you going to pay that $678 billion to keep those Bush tax cuts for the wealthy?
KYL: Chris, that is a loaded question. The Bush tax cuts applied to every single American. In fact...
WALLACE: I'm talking about the Bush tax cuts for the wealthy, sir.
KYL: Well, OK. So let's, first of all, start with those that don't apply to the wealthy. Shouldn't those be extended? Shouldn't you have a 10 percent tax bracket so that people don't have to pay income taxes who don't make very much money? Shouldn't you do away with the marriage penalty? Shouldn't you have the child tax credit at $1,000 per child, and so on? All of that goes away.
Now, with respect to those that apply to the upper brackets, it's very clear that you're going to clobber small business because the bulk of small business taxes are paid in the top income tax rate.
WALLACE: But, sir, how are you going to -- because we are running out of time, how are you going to pay the $678 billion just on the tax cuts for people over -- making more than...$200,000 a year?
KYL: ... you should never raise taxes in order to cut taxes. Surely Congress has the authority, and it would be right to -- if we decide we want to cut taxes to spur the economy, not to have to raise taxes in order to offset those costs.
You do need to offset the cost of increased spending, and that's what Republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.